##### 









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|           |  | For the fiscal year ended December 31, 2005                                                 
|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                                                                       |  | 54-1807038                              
|(State or Other Jurisdiction of
    Incorporation or Organization)             |  | (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


S-K 10-K 10-K. o


12b-2


o þ o


12b-2 o þ






DOCUMENTS INCORPORATED BY REFERENCE


10-K


10-K.










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TABLE OF CONTENTS


|         |  |                                                                                                                  |  |      |    | 
|-------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                                                  |  | Page |   
|         |  |                                                                                                                  |  |      |   
|PART I  
|Item 1.  |  | Business                                                                                                         |  |      | 3  | 
|Item 2.  |  | Properties                                                                                                       |  |      | 21 | 
|Item 3.  |  | Legal Proceedings                                                                                                |  |      | 21 | 
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                              |  |      | 21 | 
|        
|PART II 
|Item 5.  |  | Market for Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities |  |      | 22 | 
|Item 6.  |  | Selected Financial Data                                                                                          |  |      | 23 | 
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition
    and Results of Operations                        |  |      | 24 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                                                       |  |      | 41 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                                                      |  |      | 42 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure                         |  |      | 76 | 
|Item 9A. |  | Controls and Procedures                                                                                          |  |      | 76 | 
|Item 9B. |  | Other information                                                                                                |  |      | 77 | 
|        
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                                               |  |      | 78 | 
|Item 11. |  | Executive Compensation                                                                                           |  |      | 78 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters               |  |      | 78 | 
|Item 13. |  | Certain Relationships and Related Transactions                                                                   |  |      | 78 | 
|Item 14. |  | Principal Accountant Fees and Services                                                                           |  |      | 78 | 
|        
|PART IV 
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                       |  |      | 78 | 

2



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This Annual Report on
Form 10-K 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. 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


10-K


end-to




Industry Background




| |                                     
| | ------------------------------------
| | Wireless Telecommunications Networks





3



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| |                                                                     
| | --------------------------------------------------------------------
| | Growth and Evolution of the Wireless Telecommunications
    Industry



e-mail,






| |                                      
| | -------------------------------------
| | 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                                                                                                                                                                                                                                                                                                                                                                                                                                             

4



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | 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. 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 introduction of new
    services and technologies such as wireless broadband and
    broadcast has resulted in opportunities for new classes of
    wireless service providers. Wireless broadband technologies are
    considered both complimentary and competitive to fixed service
    providers such as DSL, cable, and satellite operators.
    Proprietary and standard mobile TV broadcast technologies are
    currently being implemented by new entrants to the wireless
    service provider community.
|
| |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



| |                         
| | ------------------------
| | 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






| |   |                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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,

5



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | including: (i) Global System for Mobile Communications
    (GSM) and its evolution path including Universal Mobile
    Telecommunications System (UMTS) and High Speed Downlink
    Packet Access (HSDPA); (ii) Time Division Multiple Access
    (TDMA); (iii) Code Division Multiple Access (CDMA) and
    its evolution path including Single Carrier Radio Transmission
    Technology (1xRTT) and 1x Evolution-Data Optimized (1xEV-DO);
    (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;
    (vii) Satellite Digital Audio Radio Service (S-DARS);
    (viii) Digital Video Broadcasting for mobile TV (DVBIH);
    and (ix) core network technologies.                                                                                                                                                                                                                   
|
| |  | 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 Saudi Arabia, Algeria, Brazil,
    Germany, 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.





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Speed to market. Our expertise, global presence and
    processes enable us to respond quickly to support our
    customers 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 professionals
    collectively have experience designing and deploying networks in
    the major markets in the United States as well as many countries
    throughout the world. As of December 31, 2005,
    approximately 61% of our billable employees were employed
    outside the United States. 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.

LCC Services






| |                              
| | -----------------------------
| | Technical Consulting Services



6



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| |                
| | ---------------
| | Design Services

Radio frequency and fixed network engineering.




Competitive benchmarking.




| |                    
| | -------------------
| | Deployment Services

Program management.


Site acquisition and development.


Architecture and engineering.


Construction and procurement management.




| |                                    
| | -----------------------------------
| | Operations and Maintenance Services

day-to


7



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Geographic Organization








Business Strategy


end-to




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Benefit from adjacent market opportunities by leveraging our
    current knowledge and customer base. We are actively
    pursuing a new strategy to leverage our knowledge base and
    customer relationships and expand our offerings into adjacent
    markets and new services or product offerings. For example, our
    Research and Development team coupled with our worldwide
    practical field experience, generates opportunities to offer our
    customers innovative methods to dimension, design, monitor and
    optimize wireless telecommunications networks. This provides an
    opportunity to leverage patented processes and know-how
    developed by our technical community to provide services built
    around proprietary tools. These tools are typically developed by
    our teams to solve new and complex problems that require
    innovative, robust and cost efficient solutions. We recently
    announced the companys entrée into the network
    optimization, quality of service (QoS), and performance
    management tools business with this asset-based services
    approach, which gives us the opportunity to derive profitable
    revenues in the short term while establishing a market presence
    that can be leveraged over time. We believe the rapid growth in
    worldwide use of wireless telecommunications for rich media
    applications, as well as an increasing focus on the end-user
    experience in a mobile media environment, has created the need
    for innovative approaches to design and quality of service
    issues. Consistent with our history as a leader in facilitating
    the development and adoption of new wireless technologies, we
    have been active in the development and testing of fixed and
    mobile broadband technology through engagements and involvement
    with broadband carriers and equipment vendors. As a result, our
    recent offerings target wireless networks challenged by
    high-bandwidth and high capacity applications, such as 3G, WiMAX
    and other broadband technologies. We intend to expand our
    asset-based services to create host-based services that provide
    natural synergies with our engineering business and provide a
    cost effective means to extend our reach to new customers,
    particularly smaller carriers and those carriers in emerging
    markets who do not necessarily have the ability to
    cost-effectively implement these solutions in the current market
    environment. We believe these and other industry trends provide
    opportunities to expand our portfolio beyond our current
    services offerings into areas that offer attractive recurring
    revenue opportunities. We intend to pursue organic growth into
    adjacent markets as well as take advantage of opportunities that
    may arise to acquire or partner with high quality companies that
    enhance our capabilities.

8



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 2005, we were able to leverage
    our established relationship with Algeria Telecom Mobilis as a
    consulting and engineering services provider into a turnkey
    deployment services engagement. 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. Given purchasing trends
    in the US markets, in 2005 we amended certain of our deployment
    contracts to limit construction activities to construction
    management where we retain program management responsibility
    while the client engages in a direct contractual relationship
    with construction material vendors serving under our management.
    While the US market has become less attractive for deployment
    engagements, we intend to continue pursuing deployment projects
    in markets that provide compelling opportunities.
|
| |  | 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, 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:
    (i) completed strategic acquisitions and investments in the
    UK, The Netherlands and Italy; (ii) we opened a marketing
    office in Dubai from which we have pursued and secured projects
    in Saudi Arabia, Pakistan, and Qatar; and (iii) we have
    also opened an office in Algeria to coordinate our projects
    being performed in that country. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | 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,
    2005, we had 977 total employees, of which 816 were billable
    employees. As of that date, approximately 61% 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, Dean J. Douglas,
    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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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Customers and Backlog






| |              
| | -------------
| | Cingular     
| | Ericsson     
| | Nokia        
| | Telfort      
| | T-Mobile     
| | U.S. Cellular
| | Huawei       
| | Vodafone     



work-in


Sales and Marketing






| |      
| | -----
| | Sales





| |          
| | ---------
| | Marketing



10



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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 management 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.                     





end-to


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Employees




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.



12



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.





| |                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.





| |                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                



13



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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.

work-in




| |   |                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.

percentage-of percentage-of


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| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                    

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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.



16



---



##### 





| |                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------
| | We may not be able to successfully achieve the expected
    benefits of our future acquisitions or strategic partnering
    relationships.





| |                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Future acquisitions of new companies or technologies and
    future strategic partnering relationships may result in
    disruption to our business and expose us to risks associated
    with acquisitions and such relationships.





| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | diversion of managements attention and resources;                                                   
|
| |  | potential loss of key employees and customers of acquired
    companies;                             
|
| |  | difficult and costly integration of operations;                                                      
|
| |  | lack of experience operating in the geographic market or
    industry sector of an acquired business;
|
| |  | disputes with a strategic partner;                                                                   
|
| |  | an increase in our expenses and working capital
    requirements; and                                
|
| |  | exposure to unanticipated contingent liabilities.                                                    





| |                                                                              
| | -----------------------------------------------------------------------------
| | 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.



17



---



##### 



build-to




| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.





| |                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If wireless service providers, network equipment vendors
    and enterprises perform more network deployment services
    themselves, our business will suffer.



18



---



##### 







| |                                                              
| | -------------------------------------------------------------
| | 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



---



##### 







| |                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------
| | 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;

20



---



##### 





| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | the passage of legislation or other regulatory developments that
    adversely affect us or our industry;
|
| |  | 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


10-K, 10-K, 10-Q, 8-K




|        |           
|------- | ----------
|Item 2. | Properties



13-year








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings





|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



21



---



##### 



PART II




|        |                                                                                                                      
|------- | ---------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuers Purchases of Equity
    Securities



|               |  |      |               | 
|-------------- |  | ---- | ------------- | 
|Quarter Ended: |  | 2004 |              
|               |  |      |              
|March 31       |  | $    | 5.06 to $9.81 | 
|June 30        |  | $    | 3.36 to $6.48 | 
|September 30   |  | $    | 3.02 to $4.98 | 
|December 31    |  | $    | 3.06 to $6.05 | 

|               |  |      |               | 
|-------------- |  | ---- | ------------- | 
|Quarter Ended: |  | 2005 |              
|               |  |      |              
|March 31       |  | $    | 3.80 to $5.88 | 
|June 30        |  | $    | 3.00 to $4.69 | 
|September 30   |  | $    | 2.01 to $3.93 | 
|December 31    |  | $    | 2.35 to $3.33 | 



Equity Compensation Plan Information




|                                                           |                                                    |                      |           |           |                      |                         |                       |                         |  |  |           |           | 
|---------------------------------------------------------- | -------------------------------------------------- | -------------------- | --------- | --------- | -------------------- | ----------------------- | --------------------- | ----------------------- |  |  | --------- | --------- | 
|                                                           |                                                    |                      |           |           |                      | Number of securities    |                      
|                                                           |                                                    |                      |           |           |                      | remaining available for |                      
|                                                           |                                                    | Number of securities |           |           |                      |                         | future issuance under |                        
|                                                           |                                                    | to be issued upon    |           |           | Weighted-average     |                         |                       | equity compensation     | 
|                                                           |                                                    | exercise of          |           |           | exercise price of    |                         |                       | plans (excluding        | 
|                                                           |                                                    | outstanding options, |           |           | outstanding options, |                         |                       | securities reflected in | 
|                                                           |                                                    | warrants and rights  |           |           | warrants and rights  |                         |                       | column (a))             | 
|Plan category                                              |                                                    | (a)                  |           |           | (b)                  |                         |                       | (c)                     | 
|                                                           |                                                    |                      |           |           |                      |                         |                       |                         | 
|Equity compensation plans approved by securities holders   |                                                    |                      |           |           |                      |                         |                       |                         |  |  |           |          
|                                                           | Amended and Restated Equity Incentive Plan         |                      |           | 3,313,609 |                      |                         | $                     | 4.56                    |  |  |           | 1,629,583 | 
|                                                           | Directors Stock Option Plan (Class A Common Stock) |                      |           | 152,400   |                      |                         |                       | 8.33                    |  |  |           | 91,600    | 
|                                                           | Employee Stock Purchase Plan                       |                      |           |          |                      |                         |                       |                        |  |  |           | 369,504   | 
|Equity compensation plans not approved by security holders |                                                    |                      |          |           |                      |                         |                      |                         |  |  |          |          
|                                                           |                                                    |                      |           |           |                      |                         |                       |                         | 
|Total                                                      |                                                    |                      | 3,466,009 |           |                      | $                       | 4.73                  |                         |  |  | 2,090,687 |          
|                                                           |                                                    |                      |           |           |                      |                         |                       |                         | 

Note:


22



---



##### 





|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

Managements Discussion and
Analysis of Financial Condition and Results of Operations 10-K.


|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |         |         |        |   |         |         |        |  
|----------------------------------------------------------------------- | ------------------------------------------------------- | ------------------------------------- | ------- | ------- | ------ | - | ------- | ------ | ------ | - | ------- | ------- | ------ | ---- | ------- | ------- | ------ | - | ------- | ------- | ------ | -
|                                                                        |                                                         | Years Ended December 31,              |        
|                                                                        |                                                         |                                       |        
|                                                                        |                                                         | 2001                                  |         |         | 2002   |   |         | 2003   |        |   | 2004    |         |        | 2005 |        
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|                                                                        |                                                         | (In thousands, except per share data) |        
|Revenues                                                                |                                                         | $                                     | 130,609 |         |        | $ | 67,069  |        |        | $ | 108,439 |         |        | $    | 193,158 |         |        | $ | 193,973 |        
|Cost of revenues (exclusive of depreciation shown separately
    below) |                                                         |                                       | 103,535 |         |        |   | 58,429  |        |        |   | 88,998  |         |        |      | 158,847 |         |        |   | 160,878 |        
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|Gross profit                                                            |                                                         |                                       | 27,074  |         |        |   | 8,640   |        |        |   | 19,441  |         |        |      | 34,311  |         |        |   | 33,095  |        
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|Operating expenses:                                                     |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |         |         |        |   |         |        
|                                                                        | Sales and marketing                                     |                                       |         | 7,068   |        |   |         | 8,095  |        |   |         | 6,624   |        |      |         | 7,986   |        |   |         | 8,128   |       
|                                                                        | General and administrative                              |                                       |         | 15,978  |        |   |         | 20,311 |        |   |         | 18,508  |        |      |         | 27,446  |        |   |         | 30,141  |       
|                                                                        | Restructuring charge (recovery)                         |                                       |         |        |        |   |         | 13,522 |        |   |         | (2      | )      |      |         | (1,166  | )      |   |         | 598     |       
|                                                                        | Gain on sale of tower portfolio and administration, net |                                       |         | (2,998  | )      |   |         | (2,000 | )      |   |         |        |        |      |         |        |        |   |         |        |       
|                                                                        | Depreciation and amortization                           |                                       |         | 3,012   |        |   |         | 2,884  |        |   |         | 3,860   |        |      |         | 2,715   |        |   |         | 2,996   |       
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|                                                                        |                                                         | Total operating expenses              |         |         | 23,060 |   |         |        | 42,812 |   |         |         | 28,990 |      |         |         | 36,981 |   |         |         | 41,863 |  
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|Operating income (loss)                                                 |                                                         |                                       | 4,014   |         |        |   | (34,172 | )      |        |   | (9,549  | )       |        |      | (2,670  | )       |        |   | (8,768  | )      
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|Other income (expense)                                                  |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |         |         |        |   |         |        
|                                                                        | Interest income (expense), net                          |                                       |         | 1,886   |        |   |         | 818    |        |   |         | 325     |        |      |         | (79     | )      |   |         | (152    | )     
|                                                                        | Other                                                   |                                       |         | 22,113  |        |   |         | (3,767 | )      |   |         | 1,218   |        |      |         | 1,395   |        |   |         | (890    | )     
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|                                                                        |                                                         | Total other income (expense)          |         |         | 23,999 |   |         |        | (2,949 | ) |         |         | 1,543  |      |         |         | 1,316  |   |         |         | (1,042 | )
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|Income (loss) before income taxes                                       |                                                         |                                       | 28,013  |         |        |   | (37,121 | )      |        |   | (8,006  | )       |        |      | (1,354  | )       |        |   | (9,810  | )      
|Provision (benefit) for income taxes                                    |                                                         |                                       | 11,041  |         |        |   | (8,451  | )      |        |   | (1,483  | )       |        |      | 4,957   |         |        |   | 2,717   |        
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|Net income (loss)                                                       |                                                         | $                                     | 16,972  |         |        | $ | (28,670 | )      |        | $ | (6,523  | )       |        | $    | (6,311  | )       |        | $ | (12,527 | )      
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|Net income (loss) per share:                                            |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |         |         |        |   |         |        
|                                                                        | Basic                                                   |                                       | $       | 0.83    |        |   | $       | (1.37  | )      |   | $       | (0.31   | )      |      | $       | (0.26   | )      |   | $       | (0.51   | )     
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|                                                                        | Diluted                                                 |                                       | $       | 0.81    |        |   | $       | (1.37  | )      |   | $       | (0.31   | )      |      | $       | (0.26   | )      |   | $       | (0.51   | )     
|                                                                        |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |        
|Weighted average shares outstanding:                                    |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |         |         |        |   |         |        
|                                                                        | Basic                                                   |                                       |         | 20,571  |        |   |         | 20,902 |        |   |         | 21,292  |        |      |         | 24,381  |        |   |         | 24,524  |       
|                                                                        | Diluted                                                 |                                       |         | 20,916  |        |   |         | 20,902 |        |   |         | 21,292  |        |      |         | 24,381  |        |   |         | 24,524  |       
|Consolidated Balance Sheet Data (at year-end):                          |                                                         |                                       |         |         |        |   |         |        |        |   |         |         |        |      |         |         |        |   |         |        
|                                                                        | Cash and short-term investments                         |                                       | $       | 53,142  |        |   | $       | 39,329 |        |   | $       | 31,031  |        |      | $       | 23,092  |        |   | $       | 15,337  |       
|                                                                        | Working capital                                         |                                       |         | 72,134  |        |   |         | 49,959 |        |   |         | 54,980  |        |      |         | 49,658  |        |   |         | 37,770  |       
|                                                                        | Goodwill and intangibles, net                           |                                       |         | 637     |        |   |         | 11,273 |        |   |         | 11,958  |        |      |         | 12,848  |        |   |         | 11,326  |       
|                                                                        | Total assets                                            |                                       |         | 112,231 |        |   |         | 96,723 |        |   |         | 118,591 |        |      |         | 120,807 |        |   |         | 118,953 |       
|                                                                        | Total debt                                              |                                       |         |        |        |   |         |       |        |   |         | 1,840   |        |      |         | 147     |        |   |         | 2,975   |       
|                                                                        | Shareholders equity                                    |                                       |         | 85,804  |        |   |         | 61,088 |        |   |         | 69,768  |        |      |         | 67,705  |        |   |         | 53,751  |       

23



---



##### 





|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

10-K.


Overview


end-to




Americas:


EMEA:


Nonreportable segments:


percentage-of








24



---



##### 







year-to


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;                                         
|
| |  | 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;
|
| |  | customers agreeing to exclude construction services from
    fixed-price contracts,and                                                            
|
| |  | increased spending by wireless service providers in the areas of
    network design, deployment and optimization.                                 





25



---



##### 











26



---



##### 



Results of Operations




Revenues, Cost of Revenues and Gross Margins


|          |                        |                          |         |        |      |  |                |      |  |   |         |                |  |  |  |  |  |   |         |         |  |  |  |  | 
|--------- | ---------------------- | ------------------------ | ------- | ------ | ---- |  | -------------- | ---- |  | - | ------- | -------------- |  |  |  |  |  | - | ------- | ------- |  |  |  |  | 
|          |                        | Years Ended December 31, |        
|          |                        |                          |        
|          |                        | 2003                     |         |        | 2004 |  |                | 2005 | 
|          |                        |                          |         |        |      |  |                |      | 
|          |                        | (in thousands)           |         |        |      |  | (in thousands) |      |  |   |         | (in thousands) |  |  | 
|Revenues: |                        |                          |         |        |      |  |                |      |  |   |         |                |  |  |  |  |  |   |         |         |  |  |  | 
|          | Americas               |                          | $       | 53,086 |      |  |                |      |  |   | $       | 110,007        |  |  |  |  |  |   | $       | 84,809  |  |  |  |  | 
|          | EMEA                   |                          |         | 53,296 |      |  |                |      |  |   |         | 78,172         |  |  |  |  |  |   |         | 107,844 |  |  |  |  | 
|          | Nonreportable segments |                          |         | 2,057  |      |  |                |      |  |   |         | 4,979          |  |  |  |  |  |   |         | 1,320   |  |  |  |  | 
|          |                        |                          |         |        |      |  |                |      |  |   |         |                |  |  |  |  |  |  
|          |                        | $                        | 108,439 |        |      |  |                |      |  | $ | 193,158 |                |  |  |  |  |  | $ | 193,973 |         |  |  |  | 
|          |                        |                          |         |        |      |  |                |      |  |   |         |                |  |  |  |  |  |  

|                  |                        |   |        |                |  |  |      |      |                |   |         |        |  |                |      |      |   |   |         |        |  |  |      |      |  
|----------------- | ---------------------- | - | ------ | -------------- |  |  | ---- | ---- | -------------- | - | ------- | ------ |  | -------------- | ---- | ---- | - | - | ------- | ------ |  |  | ---- | ---- | -
|                  |                        |   |        | (% of revenue) |  |  |      |      | (% of revenue) |   |         |        |  | (% of revenue) |     
|Cost of revenues: |                        |   |        |                |  |  |      |      |                |   |         |        |  |                |      |      |   |   |         |        |  |  |      |     
|                  | Americas               |   | $      | 45,403         |  |  |      | 85.5 | %              |   | $       | 94,664 |  |                |      | 86.1 | % |   | $       | 78,459 |  |  |      | 92.5 | %
|                  | EMEA                   |   |        | 42,196         |  |  |      | 79.2 | %              |   |         | 60,511 |  |                |      | 77.4 | % |   |         | 81,471 |  |  |      | 75.5 | %
|                  | Nonreportable segments |   |        | 1,399          |  |  |      | 68.0 | %              |   |         | 3,672  |  |                |      | 73.7 | % |   |         | 948    |  |  |      | 71.8 | %
|                  |                        |   |        |                |  |  |      |      |                |   |         |        |  |                |      |      |   |  
|                  |                        | $ | 88,998 |                |  |  | 82.1 | %    |                | $ | 158,847 |        |  |                | 82.2 | %    |   | $ | 160,878 |        |  |  | 82.9 | %   
|                  |                        |   |        |                |  |  |      |      |                |   |         |        |  |                |      |      |   |  
|Gross margin:     |                        |   |        |                |  |  |      |      |                |   |         |        |  |                |      |      |   |   |         |        |  |  |      |     
|                  | Americas               |   | $      | 7,683          |  |  |      | 14.5 | %              |   | $       | 15,343 |  |                |      | 13.9 | % |   | $       | 6,350  |  |  |      | 7.5  | %
|                  | EMEA                   |   |        | 11,100         |  |  |      | 20.8 | %              |   |         | 17,661 |  |                |      | 22.6 | % |   |         | 26,373 |  |  |      | 24.5 | %
|                  | Nonreportable segments |   |        | 658            |  |  |      | 32.0 | %              |   |         | 1,307  |  |                |      | 26.3 | % |   |         | 372    |  |  |      | 28.2 | %
|                  |                        |   |        |                |  |  |      |      |                |   |         |        |  |                |      |      |   |  
|                  |                        | $ | 19,441 |                |  |  | 17.9 | %    |                | $ | 34,311  |        |  |                | 17.8 | %    |   | $ | 33,095  |        |  |  | 17.1 | %   
|                  |                        |   |        |                |  |  |      |      |                |   |         |        |  |                |      |      |   |  

Americas






27



---



##### 



inception-to inception-to




EMEA








Nonreportable Segments




28



---



##### 









Operating Expenses


|                                 |                        |                         |        |        |             |  |        |        |  |  |        |        | 
|-------------------------------- | ---------------------- | ----------------------- | ------ | ------ | ----------- |  | ------ | ------ |  |  | ------ | ------ | 
|                                 |                        | Year Ended December 31, |       
|                                 |                        |                         |       
|                                 |                        | 2003                    |        |        | 2004        |  |        | 2005   | 
|                                 |                        |                         |        |        |             |  |        |        | 
|                                 |                        | (i                      |        |        | n thusands) |  |        |       
|Sales and marketing              |                        |                         |        |        |             |  |        |        |  |  |        |       
|                                 | Americas               |                         | $      | 3,554  |             |  | $      | 3,436  |  |  | $      | 2,333  | 
|                                 | EMEA                   |                         |        | 1,831  |             |  |        | 3,682  |  |  |        | 5,482  | 
|                                 | Nonreportable segments |                         |        | 1,239  |             |  |        | 868    |  |  |        | 313    | 
|                                 |                        |                         |        |        |             |  |        |        | 
|                                 |                        |                         | 6,624  |        |             |  | 7,986  |        |  |  | 8,128  |       
|Bad debt expense (recovery)      |                        |                         |        |        |             |  |        |        |  |  |        |       
|                                 | Americas               |                         |        | 23     |             |  |        | 100    |  |  |        | 223    | 
|                                 | EMEA                   |                         |        | (2,052 | )           |  |        | 26     |  |  |        | 254    | 
|                                 | Nonreportable segments |                         |        | (390   | )           |  |        | 19     |  |  |        | 251    | 
|                                 |                        |                         |        |        |             |  |        |        | 
|                                 |                        |                         | (2,419 | )      |             |  | 145    |        |  |  | 728    |       
|Shareholder note compensation    |                        |                         |        |        |             |  |        |        |  |  |        |       
|                                 | Americas               |                         |        |       |             |  |        |       |  |  |        |       | 
|                                 | EMEA                   |                         |        |       |             |  |        |       |  |  |        |       | 
|                                 | Nonreportable segments |                         |        |       |             |  |        | 1,240  |  |  |        |       | 
|                                 |                        |                         |        |        |             |  |        |        | 
|                                 |                        |                         |       |        |             |  | 1,240  |        |  |  |       |       
|Other general and administrative |                        |                         |        |        |             |  |        |        |  |  |        |       
|                                 | Americas               |                         |        | 1,901  |             |  |        | 2,047  |  |  |        | 2,770  | 
|                                 | EMEA                   |                         |        | 8,217  |             |  |        | 11,192 |  |  |        | 10,974 | 
|                                 | Nonreportable segments |                         |        | 10,809 |             |  |        | 12,822 |  |  |        | 15,669 | 
|                                 |                        |                         |        |        |             |  |        |        | 
|                                 |                        |                         | 20,927 |        |             |  | 26,061 |        |  |  | 29,413 |       
|Total general and administrative |                        |                         |        |        |             |  |        |        |  |  |        |       
|                                 | Americas               |                         |        | 1,924  |             |  |        | 2,147  |  |  |        | 2,993  | 
|                                 | EMEA                   |                         |        | 6,165  |             |  |        | 11,218 |  |  |        | 11,228 | 
|                                 | Nonreportable segments |                         |        | 10,419 |             |  |        | 14,081 |  |  |        | 15,920 | 
|                                 |                        |                         |        |        |             |  |        |        | 
|                                 |                        |                         | 18,508 |        |             |  | 27,446 |        |  |  | 30,141 |       

29



---



##### 



|                                |                        |                         |        |        |             |   |        |        |   |   |        |        |  
|------------------------------- | ---------------------- | ----------------------- | ------ | ------ | ----------- | - | ------ | ------ | - | - | ------ | ------ | -
|                                |                        | Year Ended December 31, |       
|                                |                        |                         |       
|                                |                        | 2003                    |        |        | 2004        |   |        | 2005   |  
|                                |                        |                         |        |        |             |   |        |        |  
|                                |                        | (i                      |        |        | n thusands) |   |        |       
|Restructuring charge (recovery) |                        |                         |        |        |             |   |        |        |   |   |        |       
|                                | Americas               |                         |        | (460   | )           |   |        | (29    | ) |   |        | 641    |  
|                                | EMEA                   |                         |        | 458    |             |   |        | (567   | ) |   |        |       |  
|                                | Nonreportable segments |                         |        |       |             |   |        | (570   | ) |   |        | (43    | )
|                                |                        |                         |        |        |             |   |        |        |  
|                                |                        |                         | (2     | )      |             |   | (1,166 | )      |   |   | 598    |       
|Depreciation and amortization   |                        |                         |        |        |             |   |        |        |   |   |        |       
|                                | Americas               |                         |        | 401    |             |   |        | 492    |   |   |        | 635    |  
|                                | EMEA                   |                         |        | 2,873  |             |   |        | 1,818  |   |   |        | 2,016  |  
|                                | Nonreportable segments |                         |        | 586    |             |   |        | 405    |   |   |        | 345    |  
|                                |                        |                         |        |        |             |   |        |        |  
|                                |                        |                         | 3,860  |        |             |   | 2,715  |        |   |   | 2,996  |       
|Total                           |                        |                         |        |        |             |   |        |        |   |   |        |       
|                                | Americas               |                         |        | 5,419  |             |   |        | 6,046  |   |   |        | 6,602  |  
|                                | EMEA                   |                         |        | 11,327 |             |   |        | 16,151 |   |   |        | 18,726 |  
|                                | Nonreportable segments |                         |        | 12,244 |             |   |        | 14,784 |   |   |        | 16,535 |  
|                                |                        |                         |        |        |             |   |        |        |  
|                                |                        | $                       | 28,990 |        |             | $ | 36,981 |        |   | $ | 41,863 |       



| |                             
| | ----------------------------
| | Sales and marketing expenses







| |                                
| | -------------------------------
| | Net bad debt expense (recovery)





| |                              
| | -----------------------------
| | Shareholder note compensation



30



---



##### 





| |                                          
| | -----------------------------------------
| | Other general and administrative expenses





| |              
| | -------------
| | Restructuring







| |             
| | ------------
| | Depreciation



31



---



##### 



Other Income and Expense


|                                 |                        |                          |       |       |          |   |       |       |   |   |        |      |  
|-------------------------------- | ---------------------- | ------------------------ | ----- | ----- | -------- | - | ----- | ----- | - | - | ------ | ---- | -
|                                 |                        | Years Ended December 31, |      
|                                 |                        |                          |      
|                                 |                        | 2003                     |       |       | 2004     |   |       | 2005  |  
|                                 |                        |                          |       |       |          |   |       |       |  
|                                 |                        | (In                      |       |       | thusands |   |       | )     |  
|Other income (expense):          |                        |                          |       |       |          |   |       |       |   |   |        |     
|Interest income                  |                        |                          |       |       |          |   |       |       |   |   |        |     
|                                 | Americas               |                          |       | 22    |          |   |       | 27    |   |   |        | 52   |  
|                                 | EMEA                   |                          |       | 144   |          |   |       | 29    |   |   |        | 16   |  
|                                 | Nonreportable segments |                          |       | 281   |          |   |       | 118   |   |   |        | 98   |  
|                                 |                        |                          |       |       |          |   |       |       |  
|                                 |                        |                          | 447   |       |          |   | 174   |       |   |   | 166    |     
|Interest expense                 |                        |                          |       |       |          |   |       |       |   |   |        |     
|                                 | Americas               |                          |       | (6    | )        |   |       | (6    | ) |   |        | (4   | )
|                                 | EMEA                   |                          |       | (116  | )        |   |       | (243  | ) |   |        | (16  | )
|                                 | Nonreportable segments |                          |       |      |          |   |       | (4    | ) |   |        | (298 | )
|                                 |                        |                          |       |       |          |   |       |       |  
|                                 |                        |                          | (122  | )     |          |   | (253  | )     |   |   | (318   | )   
|Gain (loss) on equity investment |                        |                          |       |       |          |   |       |       |   |   |        |     
|                                 | Americas               |                          |       |      |          |   |       |      |   |   |        |     |  
|                                 | EMEA                   |                          |       |      |          |   |       |      |   |   |        | 19   |  
|                                 | Nonreportable segments |                          |       | 1,000 |          |   |       | 766   |   |   |        | (34  | )
|                                 |                        |                          |       |       |          |   |       |       |  
|                                 |                        |                          | 1,000 |       |          |   | 766   |       |   |   | (15    | )   
|Impairment of assets             |                        |                          |       |       |          |   |       |       |   |   |        |     
|                                 | Americas               |                          |       |      |          |   |       |      |   |   |        |     |  
|                                 | EMEA                   |                          |       |      |          |   |       |      |   |   |        |     |  
|                                 | Nonreportable segments |                          |       |      |          |   |       | (181  | ) |   |        |     |  
|                                 |                        |                          |       |       |          |   |       |       |  
|                                 |                        |                          |      |       |          |   | (181  | )     |   |   |       |     
|Other                            |                        |                          |       |       |          |   |       |       |   |   |        |     
|                                 | Americas               |                          |       | 1     |          |   |       | (31   | ) |   |        | (6   | )
|                                 | EMEA                   |                          |       | 314   |          |   |       | 122   |   |   |        | (159 | )
|                                 | Nonreportable segments |                          |       | (97   | )        |   |       | 719   |   |   |        | (710 | )
|                                 |                        |                          |       |       |          |   |       |       |  
|                                 |                        |                          | 218   |       |          |   | 810   |       |   |   | (875   | )   
|Total other                      |                        |                          |       |       |          |   |       |       |   |   |        |     
|                                 | Americas               |                          |       | 1     |          |   |       | (31   | ) |   |        | (6   | )
|                                 | EMEA                   |                          |       | 314   |          |   |       | 122   |   |   |        | (140 | )
|                                 | Nonreportable segments |                          |       | 903   |          |   |       | 1,304 |   |   |        | (744 | )
|                                 |                        |                          |       |       |          |   |       |       |  
|                                 |                        |                          | 1,218 |       |          |   | 1,395 |       |   |   | (890   | )   
|Total                            |                        |                          |       |       |          |   |       |       |   |   |        |     
|                                 | Americas               |                          |       | 17    |          |   |       | (10   | ) |   |        | 42   |  
|                                 | EMEA                   |                          |       | 342   |          |   |       | (92   | ) |   |        | (140 | )
|                                 | Nonreportable segments |                          |       | 1,184 |          |   |       | 1,418 |   |   |        | (944 | )
|                                 |                        |                          |       |       |          |   |       |       |  
|                                 |                        | $                        | 1,543 |       |          | $ | 1,316 |       |   | $ | (1,042 | )   

32



---



##### 





| |                
| | ---------------
| | Interest income





| |                 
| | ----------------
| | Interest Expense







| |                           
| | --------------------------
| | Gain (loss) on investments





| |                          
| | -------------------------
| | Impairment of investments





| |                    
| | -------------------
| | Other income (loss)



33



---



##### 



Income (Loss) Before Taxes


|                                |                            |                          |        |         |      |   |        |         |   |   |        |         |  
|------------------------------- | -------------------------- | ------------------------ | ------ | ------- | ---- | - | ------ | ------- | - | - | ------ | ------- | -
|                                |                            | Years Ended December 31, |       
|                                |                            |                          |       
|                                |                            | 2003                     |        |         | 2004 |   |        | 2005    |  
|                                |                            |                          |        |         |      |   |        |         |  
|                                |                            | (In thousands)           |       
|Segment Income Before Taxes     |                            |                          |        |         |      |   |        |         |   |   |        |        
|                                | Americas                   |                          | $      | 1,821   |      |   | $      | 9,258   |   |   | $      | 431     |  
|                                | EMEA                       |                          |        | 573     |      |   |        | 851     |   |   |        | 7,507   |  
|                                | Nonreportable transactions |                          |        | (10,402 | )    |   |        | (12,629 | ) |   |        | (17,150 | )
|                                |                            |                          |        |         |      |   |        |         |  
|                                |                            |                          | (8,008 | )       |      |   | (2,520 | )       |   |   | (9,212 | )      
|Restructuring charge (recovery) |                            |                          |        |         |      |   |        |         |   |   |        |        
|                                | Americas                   |                          |        | (460    | )    |   |        | (29     | ) |   |        | 641     |  
|                                | EMEA                       |                          |        | 458     |      |   |        | (567    | ) |   |        |        |  
|                                | Nonreportable transactions |                          |        |        |      |   |        | (570    | ) |   |        | (43     | )
|                                |                            |                          |        |         |      |   |        |         |  
|                                |                            |                          | (2     | )       |      |   | (1,166 | )       |   |   | 598    |        
|Income (Loss) Before Taxes      |                            |                          |        |         |      |   |        |         |   |   |        |        
|                                | Americas                   |                          |        | 2,281   |      |   |        | 9,287   |   |   |        | (210    | )
|                                | EMEA                       |                          |        | 115     |      |   |        | 1,418   |   |   |        | 7,507   |  
|                                | Nonreportable transactions |                          |        | (10,402 | )    |   |        | (12,059 | ) |   |        | (17,107 | )
|                                |                            |                          |        |         |      |   |        |         |  
|                                |                            | $                        | (8,006 | )       |      | $ | (1,354 | )       |   | $ | (9,810 | )      

Tax Expense








Net Loss




34



---



##### 







Liquidity and Capital Resources






| |                         
| | ------------------------
| | Sources and Uses of Cash

|                                                      |                                           |                          |         |        |           |   |        |        |   |   |        |        |  
|----------------------------------------------------- | ----------------------------------------- | ------------------------ | ------- | ------ | --------- | - | ------ | ------ | - | - | ------ | ------ | -
|                                                      |                                           | Years Ended December 31, |        
|                                                      |                                           |                          |        
|                                                      |                                           | 2003                     |         |        | 2004      |   |        | 2005   |  
|                                                      |                                           |                          |         |        |           |   |        |        |  
|                                                      |                                           | (in                      |         |        | thosands) |   |        |       
|Net cash used in operating activities                 |                                           | $                        | (20,055 | )      |           | $ | (4,696 | )      |   | $ | (8,079 | )     
|Net cash used in investing activities                 |                                           |                          | (2,715  | )      |           |   | (3,347 | )      |   |   | (2,462 | )     
|Net cash provided by (used in) financing activities   |                                           |                          | 13,842  |        |           |   | 723    |        |   |   | 3,421  |       
|Effect of exchange rates on cash and cash equivalents |                                           |                          | 364     |        |           |   | 307    |        |   |   | (614   | )     
|                                                      |                                           |                          |         |        |           |   |        |        |  
|                                                      | Net decrease in cash and cash equivalents |                          | $       | (8,564 | )         |   | $      | (7,013 | ) |   | $      | (7,734 | )
|                                                      |                                           |                          |         |        |           |   |        |        |  







35



---



##### 





| |                  
| | -----------------
| | Cash Requirements

|                          |                                       |                          |        |        |      |   |        |        | 
|------------------------- | ------------------------------------- | ------------------------ | ------ | ------ | ---- | - | ------ | ------ | 
|                          |                                       | Years Ended December 31, |       
|                          |                                       |                          |       
|                          |                                       | 2004                     |        |        | 2005 |  
|                          |                                       |                          |        |        |      |  
|                          |                                       | (in thousands)           |       
|Cash and cash equivalents |                                       | $                        | 21,930 |        |      | $ | 14,196 |       
|Restricted cash           |                                       |                          | 1,162  |        |      |   | 1,141  |       
|Short-term investments    |                                       |                          |       |        |      |   |       |       
|                          |                                       |                          |        |        |      |  
|                          | Total cash and short-term investments |                          | $      | 23,092 |      |   | $      | 15,337 | 
|                          |                                       |                          |        |        |      |  
|                          | Line of credit                        |                          | $      | 147    |      |   | $      | 2,975  | 
|                          |                                       |                          |        |        |      |  
|                          | Working capital                       |                          | $      | 49,658 |      |   | $      | 37,770 | 
|                          |                                       |                          |        |        |      |  





|                            |  |                       |        |           |        |   |       |           |           |   |           |  |  |         |       |  |  |   |       | 
|--------------------------- |  | --------------------- | ------ | --------- | ------ | - | ----- | --------- | --------- | - | --------- |  |  | ------- | ----- |  |  | - | ----- | 
|                            |  | Payment Due by Period |       
|                            |  |                       |       
|                            |  |                       |        | Less than |        |   |       |           | More than |  
|Contractual Obligations     |  | Total                 |        |           | 1 Year |   |       | 1-3 Years |           |   | 4-5 Years |  |  | 5 Years |      
|                            |  |                       |        |           |        |   |       |           |           |   |           |  |  |         |      
|Operating lease obligations |  | $                     | 21,179 |           |        | $ | 8,281 |           |           | $ | 10,197    |  |  | $       | 1,401 |  |  | $ | 1,300 | 
|Sublease income             |  | $                     | 3,591  |           |        | $ | 1,553 |           |           | $ | 1,228     |  |  | $       | 324   |  |  | $ | 486   | 









36



---



##### 















37



---



##### 





Critical Accounting Policies






| |   |                                 
| | - | --------------------------------
| |  | revenue recognition;            
|
| |  | allowance for doubtful accounts;
|
| |  | accounting for income taxes; and
|
| |  | restructuring charge.           



| |                    
| | -------------------
| | Revenue Recognition

percentage-of percentage-of




| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts





| |                            
| | ---------------------------
| | Accounting for Income Taxes



38



---



##### 









| |                     
| | --------------------
| | Restructuring Charge





Related Party Transactions






39



---



##### 









Recent Accounting Pronouncements


Share-Based
Payment Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees.


Accounting Changes and Error Corrections Accounting
Changes Reporting
Accounting Changes in Interim Financial Statements-An Amendment
of APB Opinion No. 20


40



---



##### 







|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk





non-U.S. non-U.S.






41



---



##### 





|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

Managements Report on Internal Control Over Financial
Reporting


13a-15(f) 15d-15(f)




| |   |                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                                                      







| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company did not have effective policies and procedures
    related to 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 technical expertise related to accounting for
    contracts under the
    percentage-of-completion
    method. As a result, material misstatements were identified in
    revenues and cost of revenues in the Companys preliminary
    2005 consolidated financial statements. Such misstatements were
    corrected prior to the issuance of the 2005 consolidated
    financial statements.





42



---



##### 



Report of Independent Registered Public Accounting Firm


















| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company did not have effective policies and procedures
    related to 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 technical expertise related to accounting for
    contracts under the
    percentage-of-completion
    method. As a result, material misstatements were identified in
    revenues and cost of revenues in the Companys preliminary
    2005 consolidated financial statements.



43



---



##### 













44



---



##### 



Report of Independent Registered Public Accounting Firm




















45



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


Years ended December 31, 2003, 2004 and 2005


(In thousands, except per share data)


|                                                                        |                                          |      |         |        |      |   |         |        |   |   |         |        |  
|----------------------------------------------------------------------- | ---------------------------------------- | ---- | ------- | ------ | ---- | - | ------- | ------ | - | - | ------- | ------ | -
|                                                                        |                                          | 2003 |         |        | 2004 |   |         | 2005   |  
|                                                                        |                                          |      |         |        |      |   |         |        |  
|REVENUES                                                                |                                          | $    | 108,439 |        |      | $ | 193,158 |        |   | $ | 193,973 |       
|COST OF REVENUES (exclusive of depreciation shown separately
    below) |                                          |      | 88,998  |        |      |   | 158,847 |        |   |   | 160,878 |       
|                                                                        |                                          |      |         |        |      |   |         |        |  
|GROSS PROFIT                                                            |                                          |      | 19,441  |        |      |   | 34,311  |        |   |   | 33,095  |       
|                                                                        |                                          |      |         |        |      |   |         |        |  
|OPERATING EXPENSES:                                                     |                                          |      |         |        |      |   |         |        |   |   |         |       
|                                                                        | Sales and marketing                      |      |         | 6,624  |      |   |         | 7,986  |   |   |         | 8,128  |  
|                                                                        | General and administrative               |      |         | 18,508 |      |   |         | 27,446 |   |   |         | 30,141 |  
|                                                                        | Restructuring charge (recovery) (note 5) |      |         | (2     | )    |   |         | (1,166 | ) |   |         | 598    |  
|                                                                        | Depreciation and amortization            |      |         | 3,860  |      |   |         | 2,715  |   |   |         | 2,996  |  
|                                                                        |                                          |      |         |        |      |   |         |        |  
|Total operating expenses                                                |                                          |      | 28,990  |        |      |   | 36,981  |        |   |   | 41,863  |       
|                                                                        |                                          |      |         |        |      |   |         |        |  
|OPERATING LOSS                                                          |                                          |      | (9,549  | )      |      |   | (2,670  | )      |   |   | (8,768  | )     
|                                                                        |                                          |      |         |        |      |   |         |        |  
|OTHER INCOME (EXPENSE):                                                 |                                          |      |         |        |      |   |         |        |   |   |         |       
|                                                                        | Interest income                          |      |         | 447    |      |   |         | 174    |   |   |         | 166    |  
|                                                                        | Interest expense                         |      |         | (122   | )    |   |         | (253   | ) |   |         | (318   | )
|                                                                        | Other (note 6)                           |      |         | 1,218  |      |   |         | 1,395  |   |   |         | (890   | )
|                                                                        |                                          |      |         |        |      |   |         |        |  
|Total other income (expense)                                            |                                          |      | 1,543   |        |      |   | 1,316   |        |   |   | (1,042  | )     
|                                                                        |                                          |      |         |        |      |   |         |        |  
|LOSS FROM OPERATIONS BEFORE INCOME TAXES                                |                                          |      | (8,006  | )      |      |   | (1,354  | )      |   |   | (9,810  | )     
|PROVISION (BENEFIT) FOR INCOME TAXES (note 9)                           |                                          |      | (1,483  | )      |      |   | 4,957   |        |   |   | 2,717   |       
|                                                                        |                                          |      |         |        |      |   |         |        |  
|NET LOSS                                                                |                                          | $    | (6,523  | )      |      | $ | (6,311  | )      |   | $ | (12,527 | )     
|                                                                        |                                          |      |         |        |      |   |         |        |  
|NET LOSS PER SHARE:                                                     |                                          |      |         |        |      |   |         |        |   |   |         |       
|                                                                        | Basic                                    |      | $       | (0.31  | )    |   | $       | (0.26  | ) |   | $       | (0.51  | )
|                                                                        |                                          |      |         |        |      |   |         |        |  
|                                                                        | Diluted                                  |      | $       | (0.31  | )    |   | $       | (0.26  | ) |   | $       | (0.51  | )
|                                                                        |                                          |      |         |        |      |   |         |        |  
|WEIGHTED AVERAGE SHARES USED IN CALCULATION OF NET LOSS PER
    SHARE:  |                                          |      |         |        |      |   |         |        |   |   |         |       
|                                                                        | Basic                                    |      |         | 21,292 |      |   |         | 24,381 |   |   |         | 24,524 |  
|                                                                        |                                          |      |         |        |      |   |         |        |  
|                                                                        | Diluted                                  |      |         | 21,292 |      |   |         | 24,381 |   |   |         | 24,524 |  
|                                                                        |                                          |      |         |        |      |   |         |        |  



46



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


(In thousands, except per share data)


|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |         |         |         |        |         | 
|------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | 
|                                                                                      |                                            | December 31,                                                                                                                                                                                |                           
|                                                                                      |                                            |                                                                                                                                                                                             |                           
|                                                                                      |                                            | 2004                                                                                                                                                                                        |                            |         | 2005   |        
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        
|ASSETS:                                                                              
|Current assets:                                                                       |                                            |                                                                                                                                                                                             |                            |         |        |         |         |        
|                                                                                      | Cash and cash equivalents                  |                                                                                                                                                                                             | $                          | 21,930  |        |         | $       | 14,196  |       
|                                                                                      | Restricted cash                            |                                                                                                                                                                                             |                            | 1,162   |        |         |         | 1,141   |       
|                                                                                      |                                            | Receivables, net of allowance for doubtful accounts of $620 and
    $317 at December 31, 2004 and 2005, respectively                                                                        |                            |         |        |         |         |         |        |        
|                                                                                      |                                            | Trade accounts receivable (note 3)                                                                                                                                                          |                            |         | 46,214 |         |         |         | 47,448 |        
|                                                                                      |                                            | Unbilled receivables (note 3)                                                                                                                                                               |                            |         | 28,696 |         |         |         | 35,791 |        
|                                                                                      |                                            | Due from related parties and affiliates (note 16)                                                                                                                                           |                            |         | 80     |         |         |         | 15     |        
|                                                                                      | Deferred income taxes, net (note 9)        |                                                                                                                                                                                             |                            | 290     |        |         |         |        |       
|                                                                                      | Prepaid expenses and other current assets  |                                                                                                                                                                                             |                            | 1,586   |        |         |         | 1,998   |       
|                                                                                      | Prepaid tax receivable and prepaid taxes   |                                                                                                                                                                                             |                            | 683     |        |         |         | 1,195   |       
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        
|                                                                                      |                                            |                                                                                                                                                                                             | Total current assets       |         |        | 100,641 |         |         |        | 101,784 | 
|Property and equipment, net (note 4)                                                  |                                            |                                                                                                                                                                                             | 4,218                      |         |        |         | 3,642   |        
|Investments in affiliates (note 6)                                                    |                                            |                                                                                                                                                                                             | 677                        |         |        |         |        |        
|Deferred income taxes, net (note 9)                                                   |                                            |                                                                                                                                                                                             | 858                        |         |        |         | 1,171   |        
|Goodwill (note 7)                                                                     |                                            |                                                                                                                                                                                             | 12,246                     |         |        |         | 11,014  |        
|Other intangibles                                                                     |                                            |                                                                                                                                                                                             | 602                        |         |        |         | 312     |        
|Other assets                                                                          |                                            |                                                                                                                                                                                             | 1,565                      |         |        |         | 1,030   |        
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        
|                                                                                      |                                            | $                                                                                                                                                                                           | 120,807                    |         |        | $       | 118,953 |        
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        
|                                                                                     
|LIABILITIES AND SHAREHOLDERS EQUITY:                                                
|Current liabilities:                                                                  |                                            |                                                                                                                                                                                             |                            |         |        |         |         |        
|                                                                                      | Line of credit (note 8)                    |                                                                                                                                                                                             | $                          | 147     |        |         | $       | 2,975   |       
|                                                                                      | Accounts payable                           |                                                                                                                                                                                             |                            | 19,790  |        |         |         | 27,876  |       
|                                                                                      | Accrued expenses                           |                                                                                                                                                                                             |                            | 21,840  |        |         |         | 22,480  |       
|                                                                                      | Accrued employee compensation and benefits |                                                                                                                                                                                             |                            | 4,850   |        |         |         | 5,390   |       
|                                                                                      | Deferred revenue                           |                                                                                                                                                                                             |                            | 985     |        |         |         | 1,142   |       
|                                                                                      | Income taxes payable (note 9)              |                                                                                                                                                                                             |                            | 1,570   |        |         |         | 2,891   |       
|                                                                                      | Accrued restructuring current (note 5)     |                                                                                                                                                                                             |                            | 1,562   |        |         |         | 1,072   |       
|                                                                                      | Other current liabilities                  |                                                                                                                                                                                             |                            | 239     |        |         |         | 188     |       
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        
|                                                                                      |                                            |                                                                                                                                                                                             | Total current liabilities  |         |        | 50,983  |         |         |        | 64,014  | 
|Accrued restructuring noncurrent (note 5)                                             |                                            |                                                                                                                                                                                             | 1,339                      |         |        |         | 492     |        
|Other liabilities                                                                     |                                            |                                                                                                                                                                                             | 780                        |         |        |         | 696     |        
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        
|                                                                                      |                                            |                                                                                                                                                                                             | Total liabilities          |         |        | 53,102  |         |         |        | 65,202  | 
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        
|Commitments and contingencies (notes 8 and 13)                                        |                                            |                                                                                                                                                                                             |                            |         |        |         |         |        
|Shareholders equity:                                                                 |                                            |                                                                                                                                                                                             |                            |         |        |         |         |        
|                                                                                      | Preferred stock:                           |                                                                                                                                                                                             |                            |         |        |         |         |         |       
|                                                                                      |                                            | 10,000 shares authorized; -0- shares issued and outstanding                                                                                                                                 |                            |         |       |         |         |         |       |        
|                                                                                      | Class A common stock; $.01 par value:      |                                                                                                                                                                                             |                            |         |        |         |         |         |       
|                                                                                      |                                            | 70,000 shares authorized; 20,209 shares issued and
    20,050 shares outstanding and 20,485 shares issued and
    20,326 shares outstanding at December 31, 2004 and
    2005, respectively |                            |         | 202    |         |         |         | 205    |        
|                                                                                      | Class 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                                                          |                            |         | 44     |         |         |         | 44     |        
|                                                                                      | Paid-in capital                            |                                                                                                                                                                                             |                            | 107,773 |        |         |         | 108,902 |       
|                                                                                      | Accumulated deficit                        |                                                                                                                                                                                             |                            | (42,913 | )      |         |         | (55,440 | )     
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        
|                                                                                      |                                            |                                                                                                                                                                                             | Subtotal                   |         |        | 65,106  |         |         |        | 53,711  | 
|Accumulated other comprehensive income  foreign
    currency translation adjustments |                                            |                                                                                                                                                                                             | 3,481                      |         |        |         | 922     |        
|Treasury stock (159,209 shares)                                                       |                                            |                                                                                                                                                                                             | (882                       | )       |        |         | (882    | )      
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        
|                                                                                      |                                            |                                                                                                                                                                                             | Total shareholders equity |         |        | 67,705  |         |         |        | 53,751  | 
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        
|                                                                                      |                                            | $                                                                                                                                                                                           | 120,807                    |         |        | $       | 118,953 |        
|                                                                                      |                                            |                                                                                                                                                                                             |                            |         |        |        



47



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
COMPREHENSIVE LOSS


Years ended December 31, 2003, 2004 and 2005


(In thousands)


|                                                                          |  |           |   |              |         |   |     |         |  |   |               |            |      |             |         |               |              |   |         |          |  |   |          |   |  |       |        |   |       |   |        |   |  |   |      |   |  |   |         |  
|------------------------------------------------------------------------- |  | --------- | - | ------------ | ------- | - | --- | ------- |  | - | ------------- | ---------- | ---- | ----------- | ------- | ------------- | ------------ | - | ------- | -------- |  | - | -------- | - |  | ----- | ------ | - | ----- | - | ------ | - |  | - | ---- | - |  | - | ------- | -
|                                                                          |  |           |   |              |         |   |     |         |  |   |               |            |      | Notes       |         |               | Accumulated  |   |         |          |  |  
|                                                                          |  |           |   |              |         |   |     |         |  |   |               | Receivable |      |             | Other   |               |              |   |         |         
|                                                                          |  |           |   | Common Stock |         |   |     |         |  |   |               |            | from |             |         | Comprehensive |              |   |         |          | 
|                                                                          |  | Preferred |   |              |         |   |     | Paid-in |  |   | Comprehensive |            |      | Accumulated |         |               | Shareholders |   |         | Income   |  |   | Treasury |   |  |      
|                                                                          |  | Stock     |   |              | Class A |   |     | Class B |  |   | Capital       |            |      | Loss        |         |               | Deficit      |   |         | (note 6) |  |   | (Loss)   |   |  | Stock |        |   | Total |  
|                                                                          |  |           |   |              |         |   |     |         |  |   |               |            |      |             |         |               |              |   |         |          |  |   |          |   |  |       |        |   |       |  
|Balances at December 31, 2002                                             |  |           |  |              |         |   | 146 |         |  |   | 63            |            |      |             | 94,132  |               |              |   |         |          |  |   | (30,079  | ) |  |       | (1,625 | ) |       |   | (1,549 | ) |  |   |     |   |  |   | 61,088  |  
|Exercise/issuance of stock options                                        |  |           |  |              |         |   | 2   |         |  |   |              |            |      |             | 588     |               |              |   |         |          |  |   |         |   |  |       |       |   |       |   |       |   |  |   |     |   |  |   | 590     |  
|Issuance of common stock                                                  |  |           |  |              |         |   | 47  |         |  |   | (17           | )          |      |             | 11,542  |               |              |   |         |          |  |   |         |   |  |       |       |   |       |   |       |   |  |   |     |   |  |   | 11,572  |  
|Payment from shareholder                                                  |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              |   |         |          |  |   |         |   |  |       | 68     |   |       |   |       |   |  |   |     |   |  |   | 68      |  
|Net loss                                                                  |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              | $ | (6,523  | )        |  |   | (6,523   | ) |  |       |       |   |       |   |       |   |  |   |     |   |  |   | (6,523  | )
|Other comprehensive income  foreign currency
    translation adjustments |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              |   | 2,973   |          |  |   |         |   |  |       |       |   |       |   | 2,973  |   |  |   |     |   |  |   | 2,973   |  
|                                                                          |  |           |   |              |         |   |     |         |  |   |               |            |      |             |         |               |              |   |         |          |  |   |          |   |  |       |        |   |       |  
|Comprehensive loss                                                        |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              | $ | (3,550  | )        |  |   |         |   |  |       |       |   |       |   |       |   |  |   |     |   |  |   |        |  
|                                                                          |  |           |   |              |         |   |     |         |  |   |               |            |      |             |         |               |              |   |         |          |  |   |          |   |  |       |        |   |       |  
|Balances at December 31, 2003                                             |  |           |  |              |         |   | 195 |         |  |   | 46            |            |      |             | 106,262 |               |              |   |         |          |  |   | (36,602  | ) |  |       | (1,557 | ) |       |   | 1,424  |   |  |   |     |   |  |   | 69,768  |  
|Exercise/issuance of stock options                                        |  |           |  |              |         |   | 5   |         |  |   |              |            |      |             | 1,410   |               |              |   |         |          |  |   |         |   |  |       |       |   |       |   |       |   |  |   |     |   |  |   | 1,415   |  
|Issuance of common stock                                                  |  |           |  |              |         |   | 2   |         |  |   | (2            | )          |      |             | 101     |               |              |   |         |          |  |   |         |   |  |       |       |   |       |   |       |   |  |   |     |   |  |   | 101     |  
|Discharge of shareholder note                                             |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              |   |         |          |  |   |         |   |  |       | 1,557  |   |       |   |       |   |  |   |     |   |  |   | 1,557   |  
|Net loss                                                                  |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              |   | (6,311  | )        |  |   | (6,311   | ) |  |       |       |   |       |   |       |   |  |   |     |   |  |   | (6,311  | )
|Other comprehensive income  foreign currency
    translation adjustments |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              |   | 2,057   |          |  |   |         |   |  |       |       |   |       |   | 2,057  |   |  |   |      |   |  |   | 2,057   |  
|Treasury stock                                                            |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              |   |         |          |  |   |         |   |  |       |       |   |       |   |       |   |  |   | (882 | ) |  |   | (882    | )
|Comprehensive loss                                                        |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              | $ | (4,254  | )        |  |   |         |   |  |       |       |   |       |   |       |   |  |   |     |   |  |   |        |  
|                                                                          |  |           |   |              |         |   |     |         |  |   |               |            |      |             |         |               |              |   |         |          |  |   |          |   |  |       |        |   |       |  
|Balances at December 31, 2004                                             |  |           |  |              |         |   | 202 |         |  |   | 44            |            |      |             | 107,773 |               |              |   |         |          |  |   | (42,913  | ) |  |       |       |   |       |   | 3,481  |   |  |   | (882 | ) |  |   | 67,705  |  
|Exercise/issuance of stock options                                        |  |           |  |              |         |   | 3   |         |  |   |              |            |      |             | 561     |               |              |   |         |          |  |   |         |   |  |       |       |   |       |   |       |   |  |   |     |   |  |   | 564     |  
|Issuance of common stock                                                  |  |           |  |              |         |   |    |         |  |   |              |            |      |             | 113     |               |              |   |         |          |  |   |         |   |  |       |       |   |       |   |       |   |  |   |     |   |  |   | 113     |  
|Issuance of restricted stock                                              |  |           |  |              |         |   |    |         |  |   |              |            |      |             | 455     |               |              |   |         |          |  |   |         |   |  |       |       |   |       |   |       |   |  |   |     |   |  |   | 455     |  
|Net loss                                                                  |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              |   | (12,527 | )        |  |   | (12,527  | ) |  |       |       |   |       |   |       |   |  |   |     |   |  |   | (12,527 | )
|Other comprehensive income  foreign currency
    translation adjustments |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              |   | (2,559  | )        |  |   |         |   |  |       |       |   |       |   | (2,559 | ) |  |   |     |   |  |   | (2,559  | )
|Comprehensive loss                                                        |  |           |  |              |         |   |    |         |  |   |              |            |      |             |        |               |              | $ | (15,086 | )        |  |   |         |   |  |       |       |   |       |   |       |   |  |   |     |   |  |   |        |  
|                                                                          |  |           |   |              |         |   |     |         |  |   |               |            |      |             |         |               |              |   |         |          |  |   |          |   |  |       |        |   |       |  
|Balances at December 31, 2005                                             |  |           |   |              |         | $ | 205 |         |  | $ | 44            |            |      | $           | 108,902 |               |              |   |         |          |  | $ | (55,440  | ) |  | $     |       |   |       | $ | 922    |   |  | $ | (882 | ) |  | $ | 53,751  |  
|                                                                          |  |           |   |              |         |   |     |         |  |   |               |            |      |             |         |               |              |   |         |          |  |   |          |   |  |       |        |   |       |  

48



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


Years ended December 31, 2003, 2004, and 2005


(In thousands)


|                                                                                |                                                     |                                          |         |         |         |   |        |         |        |   |         |        |         |  
|------------------------------------------------------------------------------- | --------------------------------------------------- | ---------------------------------------- | ------- | ------- | ------- | - | ------ | ------- | ------ | - | ------- | ------ | ------- | -
|                                                                                |                                                     | 2003                                     |         |         | 2004    |   |        | 2005    |       
|                                                                                |                                                     |                                          |         |         |         |   |        |         |       
|Cash flows from operating activities:                                           |                                                     |                                          |         |         |         |   |        |         |        |   |         |       
|Net loss                                                                        |                                                     | $                                        | (6,523  | )       |         | $ | (6,311 | )       |        | $ | (12,527 | )     
|                                                                                |                                                     |                                          |         |         |         |   |        |         |       
|Adjustments to reconcile net loss to net cash used in operating
    activities: |                                                     |                                          |         |         |         |   |        |         |        |   |         |       
|                                                                                | Depreciation and amortization                       |                                          |         | 4,115   |         |   |        | 2,702   |        |   |         | 2,921  |        
|                                                                                | Provision (recovery) for doubtful accounts (note 3) |                                          |         | (2,447  | )       |   |        | 147     |        |   |         | 744    |        
|                                                                                | Non-cash compensation                               |                                          |         |        |         |   |        | 675     |        |   |         | 455    |        
|                                                                                | Loss from investments in joint ventures, net        |                                          |         | 126     |         |   |        | 446     |        |   |         | 15     |        
|                                                                                | Restructuring charge (reversal)                     |                                          |         | 18      |         |   |        | (1,198  | )      |   |         | 598    |        
|                                                                                | Changes in operating assets and liabilities:        |                                          |         |         |         |   |        |         |        |   |         |        |        
|                                                                                |                                                     | Trade, unbilled, and other receivables   |         |         | (34,460 | ) |        |         | (9,852 | ) |         |        | (10,506 | )
|                                                                                |                                                     | Accounts payable and accrued expenses    |         |         | 12,032  |   |        |         | 6,233  |   |         |        | 11,195  |  
|                                                                                |                                                     | Other current assets and liabilities     |         |         | 8,409   |   |        |         | 1,365  |   |         |        | 1,406   |  
|                                                                                |                                                     | Other non current assets and liabilities |         |         | (1,325  | ) |        |         | 1,097  |   |         |        | (2,380  | )
|                                                                                |                                                     |                                          |         |         |         |   |        |         |       
|Net cash used in operating activities                                           |                                                     |                                          | (20,055 | )       |         |   | (4,696 | )       |        |   | (8,079  | )     
|                                                                                |                                                     |                                          |         |         |         |   |        |         |       
|Cash flows from investing activities:                                           |                                                     |                                          |         |         |         |   |        |         |        |   |         |       
|                                                                                | Purchases of property and equipment                 |                                          |         | (1,756  | )       |   |        | (3,017  | )      |   |         | (2,398 | )      
|                                                                                | Proceeds from sale of property and equipment        |                                          |         | 68      |         |   |        | 30      |        |   |         | 61     |        
|                                                                                | Business acquisitions and investments               |                                          |         | (1,027  | )       |   |        | (360    | )      |   |         | (125   | )      
|                                                                                |                                                     |                                          |         |         |         |   |        |         |       
|Net cash used in investing activities                                           |                                                     |                                          | (2,715  | )       |         |   | (3,347 | )       |        |   | (2,462  | )     
|                                                                                |                                                     |                                          |         |         |         |   |        |         |       
|Cash flows from financing activities:                                           |                                                     |                                          |         |         |         |   |        |         |        |   |         |       
|                                                                                | Proceeds from issuance of common stock, net         |                                          |         | 11,572  |         |   |        | 100     |        |   |         | 113    |        
|                                                                                | Purchases of short-term investments                 |                                          |         | (20     | )       |   |        | 520     |        |   |         |       |        
|                                                                                | Proceeds from exercise of options                   |                                          |         | 590     |         |   |        | 1,416   |        |   |         | 564    |        
|                                                                                | Decrease (increase) in restricted cash              |                                          |         | (258    | )       |   |        | 543     |        |   |         | (112   | )      
|                                                                                | Proceeds from line of credit                        |                                          |         | 31,124  |         |   |        | 21,003  |        |   |         | 5,439  |        
|                                                                                | Payments on line of credit                          |                                          |         | (29,234 | )       |   |        | (22,859 | )      |   |         | (2,583 | )      
|                                                                                | Repayment of loan to shareholder                    |                                          |         | 68      |         |   |        |        |        |   |         |       |        
|                                                                                |                                                     |                                          |         |         |         |   |        |         |       
|Net cash provided by financing activities                                       |                                                     |                                          | 13,842  |         |         |   | 723    |         |        |   | 3,421   |       
|                                                                                |                                                     |                                          |         |         |         |   |        |         |       
|Effect of exchange rate changes on cash and equivalents                         |                                                     |                                          | 364     |         |         |   | 307    |         |        |   | (614    | )     
|Net decrease in cash and cash equivalents                                       |                                                     |                                          | (8,564  | )       |         |   | (7,013 | )       |        |   | (7,734  | )     
|Cash and cash equivalents at beginning of period                                |                                                     |                                          | 37,507  |         |         |   | 28,943 |         |        |   | 21,930  |       
|                                                                                |                                                     |                                          |         |         |         |   |        |         |       
|Cash and cash equivalents at end of period                                      |                                                     | $                                        | 28,943  |         |         | $ | 21,930 |         |        | $ | 14,196  |       
|                                                                                |                                                     |                                          |         |         |         |   |        |         |       
|Supplemental disclosures of cash flow information:                              |                                                     |                                          |         |         |         |   |        |         |        |   |         |       
|                                                                                | Cash paid during the year for:                      |                                          |         |         |         |   |        |         |        |   |         |        |        
|                                                                                |                                                     | Interest                                 |         | $       | 47      |   |        | $       | 40     |   |         | $      | 296     |  
|                                                                                |                                                     | Income taxes                             |         | $       | 288     |   |        | $       | 266    |   |         | $      | 1,900   |  

49



---



##### 







| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In May 2003, in satisfaction of the purchase agreement between
    Westminster Capital, B.V. (Westminster) and our
    company, we paid Westminster approximately $0.3 million in
    cash and assigned an intercompany note receivable due from
    Detron to Westminster in the amount of approximately
    $0.2 million. As a result of the note assignment, goodwill
    and other intangible assets increased, offset by an increase in
    due to related parties, which is included in accounts payable on
    the consolidated balance sheet.
|
| | In December 2004, we purchased 159,209 shares of our
    Class A common stock from our Chief Executive Officer for a
    per share price of $5.54 recording treasury stock of
    approximately $0.9 million. We concurrently applied the
    same amount in satisfaction of approximately $0.9 million
    of his note outstanding to us. The remaining balance on the note
    of approximately $0.7 million was deemed discharged, and is
    recorded above as non-cash compensation.                                                              

50



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Year ended December 31, 2003, 2004 and 2005




|    |                          
|--- | -------------------------
|(1) | Description of Operations



end-to




|    |                                           
|--- | ------------------------------------------
|(2) | Summary of Significant Accounting Policies



| |                            
| | ---------------------------
| | Principles of Consolidation





| |                 
| | ----------------
| | Cash Equivalents





| |                             
| | ----------------------------
| | Concentration of Credit Risk



|                   |  |                |        |  |      |   |        | 
|------------------ |  | -------------- | ------ |  | ---- | - | ------ | 
|                   |  | 2004           |        |  | 2005 |  
|                   |  |                |        |  |      |  
|                   |  | (In thousands) |       
|Europe             |  | $              | 12,497 |  |      | $ | 10,702 | 
|Middle East/Africa |  | $              | 13,257 |  |      | $ | 10,197 | 
|Asia-Pacific       |  | $              | 797    |  |      | $ | 1,122  | 

start-up


51



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments





| |                       
| | ----------------------
| | Property and Equipment





|                               |  |                                                          
|------------------------------ |  | ---------------------------------------------------------
|Computer equipment             |  | 3 years                                                  
|Software                       |  | 3 years                                                  
|Furniture and office equipment |  | 3 to 7 years                                             
|Leasehold improvements         |  | Shorter of the term of the lease or estimated useful life
|Vehicles                       |  | 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


52



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                          
| | -------------------------
| | Investments in Affiliates





| |                    
| | -------------------
| | Revenue Recognition

percentage-of percentage-of




| |             
| | ------------
| | Income Taxes

Accounting for Income
Taxes.


non-U.S.




| |                             
| | ----------------------------
| | Foreign Currency Translation





| |                 
| | ----------------
| | Use of Estimates



53



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Stock-Based Compensation

Accounting for
Stock Issued to Employees, Accounting for Stock-Based Compensation.




|                                                                                                    |                    |                                       |        |        |       |   |        |        |       |   |         |         |       |  
|--------------------------------------------------------------------------------------------------- | ------------------ | ------------------------------------- | ------ | ------ | ----- | - | ------ | ------ | ----- | - | ------- | ------- | ----- | -
|                                                                                                    |                    | 2003                                  |        |        | 2004  |   |        | 2005   |      
|                                                                                                    |                    |                                       |        |        |       |   |        |        |      
|                                                                                                    |                    | (In thousands, except per share data) |       
|Net loss as reported                                                                                |                    | $                                     | (6,523 | )      |       | $ | (6,311 | )      |       | $ | (12,527 | )      
|Deduct total stock-based employee compensation expense
    determined under fair value based method |                    |                                       | (2,399 | )      |       |   | (2,236 | )      |       |   | (1,331  | )      
|                                                                                                    |                    |                                       |        |        |       |   |        |        |      
|                                                                                                    | Pro forma net loss |                                       | $      | (8,922 | )     |   | $      | (8,547 | )     |   | $       | (13,858 | )    
|                                                                                                    |                    |                                       |        |        |       |   |        |        |      
|Net loss share                                                                                      |                    |                                       |        |        |       |   |        |        |       |   |         |        
|                                                                                                    | As reported:       |                                       |        |        |       |   |        |        |       |   |         |         |      
|                                                                                                    |                    | Basic                                 |        | $      | (0.31 | ) |        | $      | (0.26 | ) |         | $       | (0.51 | )
|                                                                                                    |                    | Diluted                               |        | $      | (0.31 | ) |        | $      | (0.26 | ) |         | $       | (0.51 | )
|                                                                                                    | Pro forma:         |                                       |        |        |       |   |        |        |       |   |         |         |      
|                                                                                                    |                    | Basic                                 |        | $      | (0.42 | ) |        | $      | (0.35 | ) |         | $       | (0.57 | )
|                                                                                                    |                    | Diluted                               |        | $      | (0.42 | ) |        | $      | (0.35 | ) |         | $       | (0.57 | )



| |                                  
| | ---------------------------------
| | Other Comprehensive Income (Loss)



|                                         |  |        |       |  |         |   |        |      |  |        |       |  |         |   |        |  |  |        |   |  |         |   |        |  |  |   |        |   |  |   |   |  |  |   |        |  
|---------------------------------------- |  | ------ | ----- |  | ------- | - | ------ | ---- |  | ------ | ----- |  | ------- | - | ------ |  |  | ------ | - |  | ------- | - | ------ |  |  | - | ------ | - |  | - | - |  |  | - | ------ | -
|                                         |  | 2003   |       |  | 2004    |   |        | 2005 | 
|                                         |  |        |       |  |         |   |        |      | 
|                                         |  | Pretax |       |  | Tax     |   | Net    |      |  | Pretax |       |  | Tax     |   | Net    |  |  | Pretax |   |  | Tax     |   | Net    | 
|                                         |  | Amount |       |  | Expense |   | Amount |      |  | Amount |       |  | Expense |   | Amount |  |  | Amount |   |  | Expense |   | Amount | 
|                                         |  |        |       |  |         |   |        |      |  |        |       |  |         |   |        |  |  |        |   |  |         |   |        | 
|Foreign currency translation adjustments |  | $      | 2,973 |  |         | $ |       |      |  | $      | 2,973 |  |         | $ | 2,057  |  |  | $      |  |  |         | $ | 2,057  |  |  | $ | (2,559 | ) |  | $ |  |  |  | $ | (2,559 | )
|                                         |  |        |       |  |         |   |        |      |  |        |       |  |         |   |        |  |  |        |   |  |         |   |        |  |  |   |       



| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements

Share-Based
Payment Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees.


54



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Accounting Changes and Error Corrections Accounting
Changes Reporting
Accounting Changes in Interim Financial Statements-An Amendment
of APB Opinion No. 28




|    |                    
|--- | -------------------
|(3) | Accounts Receivable







|    |                       
|--- | ----------------------
|(4) | Property and Equipment



|                                               |  |                |         |   |      |   |         |  
|---------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | -
|                                               |  | 2004           |         |   | 2005 |  
|                                               |  |                |         |   |      |  
|                                               |  | (In thousands) |        
|Computer equipment                             |  | $              | 15,910  |   |      | $ | 16,252  |  
|Software                                       |  |                | 4,816   |   |      |   | 4,813   |  
|Furniture and office equipment                 |  |                | 10,964  |   |      |   | 11,984  |  
|Leasehold improvements                         |  |                | 1,645   |   |      |   | 1,613   |  
|Vehicles                                       |  |                | 199     |   |      |   | 139     |  
|                                               |  |                |         |   |      |  
|                                               |  |                | 33,534  |   |      |   | 34,801  |  
|Less accumulated depreciation and amortization |  |                | (29,316 | ) |      |   | (31,159 | )
|                                               |  |                |         |   |      |  
|                                               |  | $              | 4,218   |   |      | $ | 3,642   |  
|                                               |  |                |         |   |      |  

55



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                     
|--- | --------------------
|(5) | Restructuring Charge









56



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                   |                                                          |                |       |      |            |   |        |        |   |   |        |        |  
|-------------------------------------------------- | -------------------------------------------------------- | -------------- | ----- | ---- | ---------- | - | ------ | ------ | - | - | ------ | ------ | -
|                                                   |                                                          | Severance      |       |      | Facilities |   |        | Total  |  
|                                                   |                                                          |                |       |      |            |   |        |        |  
|                                                   |                                                          | (in thousands) |      
|Restructuring charge                               |                                                          | $              | 1,030 |      |            | $ | 12,492 |        |   | $ | 13,522 |       
|Reclassification of deferred rent                  |                                                          |                |      |      |            |   | 639    |        |   |   | 639    |       
|                                                   |                                                          |                |       |      |            |   |        |        |  
|                                                   |                                                          |                | 1,030 |      |            |   | 13,131 |        |   |   | 14,161 |       
|Charges 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     |   |   |        | 53     |  
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Restructuring payable as of December 31, 2002      |                                                          | $              | 152   |      |            | $ | 9,571  |        |   | $ | 9,723  |       
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Reversal of excess severance                       |                                                          |                | (152  | )    |            |   |       |        |   |   | (152   | )     
|Reversal for reoccupied space                      |                                                          |                |      |      |            |   | (385   | )      |   |   | (385   | )     
|Additional charge for reduction of sublease income |                                                          |                |      |      |            |   | 535    |        |   |   | 535    |       
|                                                   |                                                          |                |       |      |            |   |        |        |  
|                                                   | Restructuring charge (recovery)                          |                |       | (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    |   |   |        | 149    |  
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Restructuring payable as of December 31, 2003      |                                                          | $              |      |      |            | $ | 6,335  |        |   | $ | 6,335  |       
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Reversal 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     |   |   |        | 77     |  
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Restructuring payable as of December 31, 2004      |                                                          | $              |      |      |            | $ | 2,901  |        |   | $ | 2,901  |       
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Restructuring charge                               |                                                          |                | 752   |      |            |   | 176    |        |   |   | 928    |       
|Reversal for reoccupied space                      |                                                          |                |      |      |            |   | (330   | )      |   |   | (330   | )     
|                                                   |                                                          |                |       |      |            |   |        |        |  
|                                                   | Restructuring charge (recovery)                          |                |       | 752  |            |   |        | (154   | ) |   |        | 598    |  
|Charges against the provision:                     |                                                          |                |       |      |            |   |        |        |   |   |        |       
|                                                   | Payments for excess office space, net of sublease income |                |       |     |            |   |        | (960   | ) |   |        | (960   | )
|                                                   | Severance and associated costs paid                      |                |       | (730 | )          |   |        |       |   |   |        | (730   | )
|                                                   | Leasehold improvements and other assets written-off      |                |       |     |            |   |        | (37    | ) |   |        | (37    | )
|                                                   | Other                                                    |                |       |     |            |   |        | (208   | ) |   |        | (208   | )
|                                                   |                                                          |                |       |      |            |   |        |        |  
|Restructuring payable as of December 31, 2005      |                                                          | $              | 22    |      |            | $ | 1,542  |        |   | $ | 1,564  |       
|                                                   |                                                          |                |       |      |            |   |        |        |  

57



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                  |  |             |       |  |             |   |       | 
|--------------------------------- |  | ----------- | ----- |  | ----------- | - | ----- | 
|                                  |  | December 31 |       |  | December 31 |  
|                                  |  | 2004        |       |  | 2005        |  
|                                  |  |             |       |  |             |  
|Accrued restructuring current     |  | $           | 1,562 |  |             | $ | 1,072 | 
|Accrued restructuring non-current |  |             | 1,339 |  |             |   | 492   | 
|                                  |  |             |       |  |             |  
|Accrued restructuring total       |  | $           | 2,901 |  |             | $ | 1,564 | 
|                                  |  |             |       |  |             |  



|    |            
|--- | -----------
|(6) | Investments











58



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                      
|--- | ---------------------
|(7) | Business Combinations









|     |  |                      |     | 
|---- |  | -------------------- | --- | 
|     |  | Amortization Expense |    
|     |  |                      |    
|2006 |  | $                    | 261 | 
|2007 |  | $                    | 51  | 
|     |  |                      |    
|     |  | $                    | 312 | 
|     |  |                      |    



|                   |                          |                   |        |       |      |  |        |      |     | 
|------------------ | ------------------------ | ----------------- | ------ | ----- | ---- |  | ------ | ---- | --- | 
|                   |                          | 2004              |        |       | 2005 | 
|                   |                          |                   |        |       |      | 
|Goodwill           |                          | $                 | 12,246 |       |      |  | 11,014 |     
|                   |                          |                   |        |       |      | 
|Other intangibles: |                          |                   |        |       |      |  |        |     
|                   | Customer relationships   |                   | $      | 1,092 |      |  | $      | 974  |    
|                   | Trade names              |                   |        | 213   |      |  |        | 186  |    
|                   | Organizational cost      |                   |        | 21    |      |  |        | 29   |    
|                   | Accumulated amortization |                   |        | (724  | )    |  |        | (877 | )  
|                   |                          |                   |        |       |      | 
|                   |                          | Other intangibles |        | $     | 602  |  |        | $    | 312 | 
|                   |                          |                   |        |       |      | 



|    |               
|--- | --------------
|(8) | Line of Credit



59



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












60



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |             
|--- | ------------
|(9) | Income Taxes



|          |                 |                |      |      |        |   |       |       |       |  |       |       |       | 
|--------- | --------------- | -------------- | ---- | ---- | ------ | - | ----- | ----- | ----- |  | ----- | ----- | ----- | 
|          |                 | 2003           |      |      | 2004   |   |       | 2005  |      
|          |                 |                |      |      |        |   |       |       |      
|          |                 | (in thousands) |     
|Current:  |                 |                |      |      |        |   |       |       |       |  |       |      
|          | Federal         |                | $    | (633 | )      |   | $     |      |       |  | $     | (631  | )    
|          | State and local |                |      |     |        |   |       | 215   |       |  |       | 160   |      
|          | Foreign         |                |      | (332 | )      |   |       | 936   |       |  |       | 3,188 |      
|          |                 |                |      |      |        |   |       |       |      
|          |                 |                | (965 | )    |        |   | 1,151 |       |       |  | 2,717 |      
|          |                 |                |      |      |        |   |       |       |      
|Deferred: |                 |                |      |      |        |   |       |       |       |  |       |      
|          | Federal         |                |      | (442 | )      |   |       | 3,216 |       |  |       |      |      
|          | State and local |                |      | (76  | )      |   |       | 590   |       |  |       |      |      
|          |                 |                |      |      |        |   |       |       |      
|          |                 |                | (518 | )    |        |   | 3,806 |       |       |  |      |      
|          |                 |                |      |      |        |   |       |       |      
|          |                 | Total          |      | $    | (1,483 | ) |       | $     | 4,957 |  |       | $     | 2,717 | 
|          |                 |                |      |      |        |   |       |       |      





|         |       |                |        |        |      |   |      |        |   |   |         |        |  
|-------- | ----- | -------------- | ------ | ------ | ---- | - | ---- | ------ | - | - | ------- | ------ | -
|         |       | 2003           |        |        | 2004 |   |      | 2005   |  
|         |       |                |        |        |      |   |      |        |  
|         |       | (in thousands) |       
|Domestic |       | $              | (5,509 | )      |      | $ | (466 | )      |   | $ | (16,215 | )     
|Foreign  |       |                | (2,497 | )      |      |   | (888 | )      |   |   | 6,405   |       
|         |       |                |        |        |      |   |      |        |  
|         | Total |                | $      | (8,006 | )    |   | $    | (1,354 | ) |   | $       | (9,810 | )
|         |       |                |        |        |      |   |      |        |  

61



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                   |                                                          |                |        |       |      |   |       |        |   |   |        |       |  
|-------------------------------------------------- | -------------------------------------------------------- | -------------- | ------ | ----- | ---- | - | ----- | ------ | - | - | ------ | ----- | -
|                                                   |                                                          | 2003           |        |       | 2004 |   |       | 2005   |  
|                                                   |                                                          |                |        |       |      |   |       |        |  
|                                                   |                                                          | (in thousands) |       
|Tax provision at statutory federal income tax rate |                                                          | $              | (2,802 | )     |      | $ | (474  | )      |   | $ | (3,434 | )    
|Effect of:                                         |                                                          |                |        |       |      |   |       |        |   |   |        |      
|                                                   | State and local income taxes, net of federal tax benefit |                |        | (114  | )    |   |       | 523    |   |   |        | (388  | )
|                                                   | Foreign tax and tax credits                              |                |        | (753  | )    |   |       | (1,112 | ) |   |        | 300   |  
|                                                   | Non deductible expenses and permanent items              |                |        | 174   |      |   |       | 905    |   |   |        | 162   |  
|                                                   | Federal refund                                           |                |        |      |      |   |       |       |   |   |        | (512  | )
|                                                   | Change in valuation allowance                            |                |        | 2,108 |      |   |       | 5,877  |   |   |        | 3,214 |  
|                                                   | Expiration of foreign tax credits                        |                |        |      |      |   |       |       |   |   |        | 2,568 |  
|                                                   | Other                                                    |                |        | (96   | )    |   |       | (762   | ) |   |        | 807   |  
|                                                   |                                                          |                |        |       |      |   |       |        |  
|Effective income tax provision (benefit)           |                                                          | $              | (1,483 | )     |      | $ | 4,957 |        |   | $ | 2,717  |      
|                                                   |                                                          |                |        |       |      |   |       |        |  



|                                               |                                         |                                  |         |        |        |   |         |        |        |  
|---------------------------------------------- | --------------------------------------- | -------------------------------- | ------- | ------ | ------ | - | ------- | ------ | ------ | -
|                                               |                                         | 2004                             |         |        | 2005   |  
|                                               |                                         |                                  |         |        |        |  
|                                               |                                         | (in thousands)                   |        
|Deferred tax assets:                           |                                         |                                  |         |        |        |   |         |       
|                                               | Accrued compensation                    |                                  | $       | 767    |        |   | $       | 665    |       
|                                               | Accrued expenses                        |                                  |         | 2,344  |        |   |         | 625    |       
|                                               | Foreign tax credit carry-forward        |                                  |         | 3,049  |        |   |         | 481    |       
|                                               | Research tax credit carryover           |                                  |         | 340    |        |   |         | 340    |       
|                                               | Alternative minimum tax credit          |                                  |         | 519    |        |   |         | 276    |       
|                                               | Net operating loss carry-forward        |                                  |         | 10,234 |        |   |         | 17,317 |       
|                                               | Unrealized foreign exchange gain (loss) |                                  |         |       |        |   |         | 246    |       
|                                               | Other                                   |                                  |         | 87     |        |   |         | 86     |       
|                                               |                                         |                                  |         |        |        |  
|                                               |                                         | Total gross deferred tax assets  |         |        | 17,340 |   |         |        | 20,036 |  
|Less valuation allowance                       |                                         |                                  | (14,691 | )      |        |   | (18,014 | )     
|                                               |                                         |                                  |         |        |        |  
|Deferred tax assets net of valuation allowance |                                         |                                  | 2,649   |        |        |   | 2,022   |       
|                                               |                                         |                                  |         |        |        |  
|Deferred tax liabilities:                      |                                         |                                  |         |        |        |   |         |       
|                                               | Property and equipment                  |                                  |         | (812   | )      |   |         | (730   | )     
|                                               | Deferred revenue                        |                                  |         | (144   | )      |   |         | (144   | )     
|                                               | Other                                   |                                  |         | (545   | )      |   |         |       |       
|                                               |                                         |                                  |         |        |        |  
|                                               |                                         | Total gross deferred liabilities |         |        | (1,501 | ) |         |        | (874   | )
|                                               |                                         |                                  |         |        |        |  
|Net deferred tax assets                        |                                         | $                                | 1,148   |        |        | $ | 1,148   |       
|                                               |                                         |                                  |         |        |        |  



|                              |  |      |       |  |      |   |       |  
|----------------------------- |  | ---- | ----- |  | ---- | - | ----- | -
|                              |  | 2004 |       |  | 2005 |  
|                              |  |      |       |  |      |  
|Current asset (liability)     |  | $    | 290   |  |      | $ | (23   | )
|Non-current asset (liability) |  |      | 858   |  |      |   | 1,171 |  
|                              |  |      |       |  |      |  
|                              |  | $    | 1,148 |  |      | $ | 1,148 |  
|                              |  |      |       |  |      |  

62



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














|     |                            
|---- | ---------------------------
|(10) | Health and Retirement Plans







63



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|     |                
|---- | ---------------
|(11) | Incentive Plans





|                        |  |  |            |  |  |  |            |  |  |  |            | 
|----------------------- |  |  | ---------- |  |  |  | ---------- |  |  |  | ---------- | 
|Expected dividend yield |  |  | 0%         |  |  |  | 0%         |  |  |  | 0%         | 
|Risk-free interest rate |  |  | 3.25-4.05% |  |  |  | 4.00-4.40% |  |  |  | 4.25-4.40% | 
|Expected life           |  |  | 3-7 years  |  |  |  | 3-7 years  |  |  |  | 3-7 years  | 
|Volatility              |  |  | 40-85%     |  |  |  | 38-98%     |  |  |  | 40-60%     | 



64



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LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                        |  |      |            |  |      |  |            |      |  |  |          | 
|----------------------- |  | ---- | ---------- |  | ---- |  | ---------- | ---- |  |  | -------- | 
|                        |  | 2003 |            |  | 2004 |  |            | 2005 | 
|                        |  |      |            |  |      |  |            |      | 
|Expected dividend yield |  |      | 0%         |  |      |  | 0%         |      |  |  | 0%       | 
|Risk-free interest rate |  |      | 0.95-1.00% |  |      |  | 0.90-2.10% |      |  |  | 2.6-4.0% | 
|Expected life           |  |      | 1 month    |  |      |  | 1 month    |      |  |  | 1 month  | 
|Volatility              |  |      | 40-80%     |  |      |  | 38-93%     |      |  |  | 40-100%  | 









65



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                             |  |                |        |           |                |   |                |           |           |  |                |                |  |           |      |  |                |  |       |   |  |   |      | 
|---------------------------- |  | -------------- | ------ | --------- | -------------- | - | -------------- | --------- | --------- |  | -------------- | -------------- |  | --------- | ---- |  | -------------- |  | ----- | - |  | - | ---- | 
|                             |  | 2003           |        |           | 2004           |   |                | 2005      |          
|                             |  |                |        |           |                |   |                |           |          
|                             |  |                |        | Weighted- |                |   |                |           | Weighted- |  |                |                |  | Weighted- |     
|                             |  | Number of      |        |           | Average        |   |                | Number of |           |  | Average        |                |  | Number of |      |  | Average        | 
|                             |  | Shares         |        |           | Exercise Price |   |                | Shares    |           |  | Exercise Price |                |  | Shares    |      |  | Exercise Price | 
|                             |  |                |        |           |                |   |                |           |           |  |                |                |  |           |      |  |                | 
|                             |  | (in thousands) |        |           |                |   | (in thousands) |           |           |  |                | (in thousands) |  |           |     
|Balance at beginning of year |  |                | 4,376  |           |                | $ | 7.18           |           |           |  | 4,421          |                |  | $         | 6.03 |  |                |  | 3,750 |   |  | $ | 5.17 | 
|Granted                      |  |                | 1,269  |           |                |   | 2.56           |           |           |  | 1,199          |                |  |           | 5.89 |  |                |  | 168   |   |  |   | 3.90 | 
|Exercised                    |  |                | (155   | )         |                |   | 3.14           |           |           |  | (423           | )              |  |           | 2.86 |  |                |  | (236  | ) |  |   | 2.34 | 
|Cancelled                    |  |                | (1,069 | )         |                |   | 7.03           |           |           |  | (1,447         | )              |  |           | 9.05 |  |                |  | (716  | ) |  |   | 6.47 | 
|                             |  |                |        |           |                |   |                |           |           |  |                |                |  |           |      |  |                | 
|Balance at end of year       |  |                | 4,421  |           |                |   | 6.03           |           |           |  | 3,750          |                |  |           | 5.17 |  |                |  | 2,966 |   |  |   | 5.11 | 
|                             |  |                |        |           |                |   |                |           |           |  |                |                |  |           |      |  |                | 
|Exercisable at end of year   |  |                | 2,474  |           |                |   | 8.03           |           |           |  | 2,128          |                |  |           | 5.94 |  |                |  | 2,042 |   |  |   | 5.31 | 
|                             |  |                |        |           |                |   |                |           |           |  |                |                |  |           |      |  |                | 



|                |  |                     |       |               |                     |  |          |               |  |                |                   |  |  |                |       |  |  |   |       | 
|--------------- |  | ------------------- | ----- | ------------- | ------------------- |  | -------- | ------------- |  | -------------- | ----------------- |  |  | -------------- | ----- |  |  | - | ----- | 
|                |  | Options Outstanding |       |               | Options Exercisable | 
|                |  |                     |       |               |                     | 
|                |  |                     |       | Weighted Avg. |                     |  | Weighted |               |  |               
|Range of        |  | Number at           |       |               | Remaining           |  |          | Avg. Exercise |  |                | Number at         |  |  | Weighted Avg.  |      
|Exercise Prices |  | December 31, 2005   |       |               | Contractual Life    |  |          | Price         |  |                | December 31, 2005 |  |  | Exercise Price |      
|                |  |                     |       |               |                     |  |          |               |  |                |                   |  |  |                |      
|                |  | (in thousands)      |       |               | (in years)          |  |          |               |  | (in thousands) |                   |  | 
|$1.70 -  2.38   |  |                     | 733   |               |                     |  | 6.88     |               |  | $              | 2.28              |  |  |                | 530   |  |  | $ | 2.25  | 
|$2.45 -  4.35   |  |                     | 596   |               |                     |  | 6.41     |               |  |                | 3.60              |  |  |                | 410   |  |  |   | 3.58  | 
|$4.54 -  5.76   |  |                     | 609   |               |                     |  | 3.68     |               |  |                | 5.31              |  |  |                | 567   |  |  |   | 5.31  | 
|$5.84 -  5.84   |  |                     | 648   |               |                     |  | 8.23     |               |  |                | 5.84              |  |  |                | 216   |  |  |   | 5.84  | 
|$6.21 - 19.81   |  |                     | 380   |               |                     |  | 5.35     |               |  |                | 11.28             |  |  |                | 319   |  |  |   | 12.22 | 
|                |  |                     |       |               |                     |  |          |               |  |                |                   |  |  |                |      
|                |  |                     | 2,966 |               |                     |  | 6.25     |               |  |                | 5.11              |  |  |                | 2,042 |  |  |   | 5.31  | 
|                |  |                     |       |               |                     |  |          |               |  |                |                   |  |  |                |      



66



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                             |  |                |       |           |                |   |               |                  |  |  |      | 
|---------------------------- |  | -------------- | ----- | --------- | -------------- | - | ------------- | ---------------- |  |  | ---- | 
|                             |  |                |       | Weighted- |                |   | Weighted Avg. |                 
|                             |  | Number of      |       |           | Average        |   |               | Remaining        | 
|                             |  | Shares         |       |           | Exercise Price |   |               | Contractual Life | 
|                             |  |                |       |           |                |   |               |                  | 
|                             |  | (in thousands) |       |           |                |   | (in years)    |                 
|Balance at beginning of year |  |                |      |           |                | $ |              |                  |  |  |     | 
|Granted                      |  |                | 1,000 |           |                |   | 2.49          |                  |  |  | 9.76 | 
|Exercised                    |  |                |      |           |                |   |              |                  |  |  |     | 
|Cancelled                    |  |                |      |           |                |   |              |                  |  |  |     | 
|                             |  |                |       |           |                |   |               |                  | 
|Balance at end of year       |  |                | 1,000 |           |                | $ | 2.49          |                  |  |  | 9.76 | 





|                             |  |                |       |  
|---------------------------- |  | -------------- | ----- | -
|                             |  | Number of      |      
|                             |  | Shares         |      
|                             |  |                |      
|                             |  | (in thousands) |      
|Balance at beginning of year |  |                |      |  
|Granted                      |  |                | 1,103 |  
|Cancelled                    |  |                | (35   | )
|                             |  |                |      
|Balance at end of year       |  |                | 1,068 |  



|     |                  
|---- | -----------------
|(12) | Lease Commitments





67



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LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|           |  |                |        |             |           |   |       | 
|---------- |  | -------------- | ------ | ----------- | --------- | - | ----- | 
|           |  |                |        | Rental      |          
|           |  |                |        | Receivables |          
|           |  | Rental         |        |             | Under     |  
|           |  | Payable        |        |             | Subleases |  
|           |  |                |        |             |           |  
|           |  | (in thousands) |       
|2006       |  |                | 8,100  |             |           |   | 1,709 | 
|2007       |  |                | 4,064  |             |           |   | 1,142 | 
|2008       |  |                | 1,706  |             |           |   | 237   | 
|2009       |  |                | 1,174  |             |           |   | 319   | 
|2010       |  |                | 866    |             |           |   | 319   | 
|2011       |  |                | 849    |             |           |   | 319   | 
|Thereafter |  |                | 1,770  |             |           |   | 956   | 
|           |  |                |        |             |           |  
|           |  | $              | 18,529 |             |           | $ | 5,001 | 
|           |  |                |        |             |           |  





|     |                              
|---- | -----------------------------
|(13) | Commitments and Contingencies





|     |                        
|---- | -----------------------
|(14) | Income (Loss) Per Share

Earnings per Share


|                                                                  |  |                                       |        |           |        |  |        |        |  |   |       |           |  |        |        |   |           |  |        |          |  |   |        |   |  |        |         |   |  |  |        |  |  |   |       |  
|----------------------------------------------------------------- |  | ------------------------------------- | ------ | --------- | ------ |  | ------ | ------ |  | - | ----- | --------- |  | ------ | ------ | - | --------- |  | ------ | -------- |  | - | ------ | - |  | ------ | ------- | - |  |  | ------ |  |  | - | ----- | -
|                                                                  |  | 2003                                  |        |           | 2004   |  |        | 2005   | 
|                                                                  |  |                                       |        |           |        |  |        |        | 
|                                                                  |  |                                       |        | Per Share |        |  | Net    |        |  |   |       | Per Share |  |        |        |   | Per Share | 
|                                                                  |  | Net Loss                              |        |           | Shares |  |        | Amount |  |   | Loss  |           |  | Shares |        |   | Amount    |  |        | Net Loss |  |   | Shares |   |  | Amount |        
|                                                                  |  |                                       |        |           |        |  |        |        |  |   |       |           |  |        |        |   |           |  |        |          |  |   |        |   |  |        |        
|                                                                  |  | (In thousands, except per share data) |       
|Basic EPS                                                         |  |                                       |        |           |        |  |        |        |  |   |       |           |  |        |        |   |           |  |        |          |  |   |        |   |  |        |         |   |  |  |        |  |  |   |       |  
|Net loss available to common shareholders                         |  | $                                     | (6,523 | )         |        |  | 21,292 |        |  | $ | (0.31 | )         |  | $      | (6,311 | ) |           |  | 24,381 |          |  | $ | (0.26  | ) |  | $      | (12,527 | ) |  |  | 24,524 |  |  | $ | (0.51 | )
|                                                                  |  |                                       |        |           |        |  |        |        |  |   |       |           |  |        |        |   |           |  |        |          |  |   |        |   |  |        |        
|Effect of Dilutive Securities                                     |  |                                       |        |           |        |  |        |        |  |   |       |           |  |        |        |   |           |  |        |          |  |   |        |   |  |        |         |   |  |  |        |  |  |   |       |  
|Incentive plans                                                   |  |                                       |        |           |        |  |       |        |  |   |       |           |  |        |        |   |           |  |       |          |  |   |        |   |  |        |         |   |  |  |       |  |  |   |       |  
|                                                                  |  |                                       |        |           |        |  |        |        |  |   |       |           |  |        |        |   |           |  |        |          |  |   |        |   |  |        |        
|Dilutive EPS                                                      |  |                                       |        |           |        |  |        |        |  |   |       |           |  |        |        |   |           |  |        |          |  |   |        |   |  |        |         |   |  |  |        |  |  |   |       |  
|Net loss available to common shareholders and assumed conversions |  | $                                     | (6,523 | )         |        |  | 21,292 |        |  | $ | (0.31 | )         |  | $      | (6,311 | ) |           |  | 24,381 |          |  | $ | (0.26  | ) |  | $      | (12,527 | ) |  |  | 24,524 |  |  | $ | (0.51 | )
|                                                                  |  |                                       |        |           |        |  |        |        |  |   |       |           |  |        |        |   |           |  |        |          |  |   |        |   |  |        |        

68



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|     |                  
|---- | -----------------
|(15) | Segment Reporting

Disclosures about Segments of an
Enterprise and Related Information






69



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Operating Segments:


(In thousands)


|     |                                     |                |   |         |         |  |   |         |         |  |   |         |         | 
|---- | ----------------------------------- | -------------- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|     |                                     | Americas       |   |         | EMEA    |  |   | Total   |        
|     |                                     |                |   |         |         |  |   |         |        
|2003 |                                     |                |   |         |         |  |   |         |         |  |   |        
|     | Net revenue from external customers |                | $ | 53,086  |         |  | $ | 53,296  |         |  | $ | 106,382 |        
|     | Intersegment revenues               |                |   |        |         |  |   |        |         |  |   |        |        
|     |                                     |                |   |         |         |  |   |         |        
|     |                                     | Total revenues |   | $       | 53,086  |  |   | $       | 53,296  |  |   | $       | 106,382 | 
|     |                                     |                |   |         |         |  |   |         |        
|     | Depreciation and amortization       |                | $ | 401     |         |  | $ | 2,873   |         |  | $ | 3,274   |        
|     | Interest income                     |                |   | 22      |         |  |   | 144     |         |  |   | 166     |        
|     | Interest expense                    |                |   | 6       |         |  |   | 116     |         |  |   | 122     |        
|     | Income before taxes                 |                |   | 1,821   |         |  |   | 573     |         |  |   | 2,394   |        
|     | Segment assets                      |                |   | 33,043  |         |  |   | 51,368  |         |  |   | 84,411  |        
|     | Expenditures for property           |                |   | 707     |         |  |   | 1,040   |         |  |   | 1,747   |        
|2004 |                                     |                |   |         |         |  |   |         |         |  |   |        
|     | Net revenue from external customers |                | $ | 110,007 |         |  | $ | 78,172  |         |  | $ | 188,179 |        
|     | Intersegment revenues               |                |   |        |         |  |   |        |         |  |   |        |        
|     |                                     |                |   |         |         |  |   |         |        
|     |                                     | Total revenues |   | $       | 110,007 |  |   | $       | 78,172  |  |   | $       | 188,179 | 
|     |                                     |                |   |         |         |  |   |         |        
|     | Depreciation and amortization       |                | $ | 492     |         |  | $ | 1,818   |         |  | $ | 2,310   |        
|     | Interest income                     |                |   | 27      |         |  |   | 29      |         |  |   | 56      |        
|     | Interest expense                    |                |   | 6       |         |  |   | 243     |         |  |   | 249     |        
|     | Income before taxes                 |                |   | 9,258   |         |  |   | 851     |         |  |   | 10,109  |        
|     | Segment assets                      |                |   | 36,370  |         |  |   | 62,676  |         |  |   | 99,046  |        
|     | Expenditures for property           |                |   | 817     |         |  |   | 1836    |         |  |   | 2,653   |        
|2005 |                                     |                |   |         |         |  |   |         |         |  |   |        
|     | Net revenue from external customers |                | $ | 84,809  |         |  | $ | 107,844 |         |  | $ | 192,653 |        
|     | Intersegment revenues               |                |   |        |         |  |   |        |         |  |   |        |        
|     |                                     |                |   |         |         |  |   |         |        
|     |                                     | Total revenues |   | $       | 84,809  |  |   | $       | 107,844 |  |   | $       | 192,653 | 
|     |                                     |                |   |         |         |  |   |         |        
|     | Depreciation and amortization       |                | $ | 635     |         |  | $ | 2,016   |         |  | $ | 2,651   |        
|     | Interest income                     |                |   | 52      |         |  |   | 16      |         |  |   | 68      |        
|     | Interest expense                    |                |   | 4       |         |  |   | 16      |         |  |   | 20      |        
|     | Income before taxes                 |                |   | 431     |         |  |   | 7,507   |         |  |   | 7,938   |        
|     | Segment assets                      |                |   | 34,640  |         |  |   | 73,345  |         |  |   | 107,985 |        
|     | Expenditures for property           |                |   | 873     |         |  |   | 1445    |         |  |   | 2,318   |        

70



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LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                          |                                                 |                                 |         |         |        |   |         |         |        |   |         |         |       | 
|------------------------- | ----------------------------------------------- | ------------------------------- | ------- | ------- | ------ | - | ------- | ------- | ------ | - | ------- | ------- | ----- | 
|                          |                                                 | 2003                            |         |         | 2004   |   |         | 2005    |       
|                          |                                                 |                                 |         |         |        |   |         |         |       
|Revenues                  |                                                 |                                 |         |         |        |   |         |         |        |   |         |        
|                          | Revenues for reportable segments                |                                 | $       | 106,382 |        |   | $       | 188,179 |        |   | $       | 192,653 |      
|                          | Revenues for non-reportable segments            |                                 |         | 2,057   |        |   |         | 4,979   |        |   |         | 1,320   |      
|                          | Eliminations                                    |                                 |         |        |        |   |         |        |        |   |         |        |      
|                          |                                                 |                                 |         |         |        |   |         |         |       
|                          | Total consolidated revenues                     |                                 | $       | 108,439 |        |   | $       | 193,158 |        |   | $       | 193,973 |      
|                          |                                                 |                                 |         |         |        |   |         |         |       
|Assets                    |                                                 |                                 |         |         |        |   |         |         |        |   |         |        
|                          | Total assets for reportable segments            |                                 | $       | 84,411  |        |   | $       | 99,046  |        |   | $       | 107,985 |      
|                          | Assets not attributable to reportable segments: |                                 |         |         |        |   |         |         |        |   |         |         |      
|                          |                                                 | Cash and cash equivalents       |         |         | 25,225 |   |         |         | 15,984 |   |         |         | 7,245 | 
|                          |                                                 | Restricted cash                 |         |         |       |   |         |         | 232    |   |         |         | 37    | 
|                          |                                                 | Short-term investments          |         |         | 520    |   |         |         |       |   |         |         |      | 
|                          |                                                 | Deferred and prepaid tax assets |         |         | 5,616  |   |         |         | 1,832  |   |         |         | 2,365 | 
|                          |                                                 | Property and equipment          |         |         | 1,048  |   |         |         | 834    |   |         |         | 459   | 
|                          |                                                 | Receivables                     |         |         | 333    |   |         |         | 1,946  |   |         |         | 635   | 
|                          |                                                 | Prepaids                        |         |         | 550    |   |         |         | 230    |   |         |         | 219   | 
|                          |                                                 | Investments                     |         |         | 764    |   |         |         | 662    |   |         |         | 0     | 
|                          |                                                 | Related parties                 |         |         | 45     |   |         |         | 41     |   |         |         | 8     | 
|                          |                                                 | Other                           |         |         | 79     |   |         |         |       |   |         |         |      | 
|                          |                                                 |                                 |         |         |        |   |         |         |       
|Total consolidated assets |                                                 | $                               | 118,591 |         |        | $ | 120,807 |         |        | $ | 118,953 |        
|                          |                                                 |                                 |         |         |        |   |         |         |       

|                                                          |                                                         |      |        |         |      |   |        |         |   |   |        |         |  
|--------------------------------------------------------- | ------------------------------------------------------- | ---- | ------ | ------- | ---- | - | ------ | ------- | - | - | ------ | ------- | -
|                                                          |                                                         | 2003 |        |         | 2004 |   |        | 2005    |  
|                                                          |                                                         |      |        |         |      |   |        |         |  
|Income (loss) before income taxes for reportable segments |                                                         | $    | 2,394  |         |      | $ | 10,109 |         |   | $ | 7,938  |        
|                                                          | Gain on sale of tower portfolio and administration, net |      |        |        |      |   |        |        |   |   |        |        |  
|                                                          | Restructuring charge                                    |      |        | 2       |      |   |        | 1,166   |   |   |        | (598    | )
|                                                          | Impairment of investments                               |      |        |        |      |   |        |        |   |   |        |        |  
|                                                          | Bankruptcy recoveries                                   |      |        |        |      |   |        |        |   |   |        |        |  
|                                                          | General corporate expenses                              |      |        | (10,402 | )    |   |        | (12,629 | ) |   |        | (17,150 | )
|                                                          |                                                         |      |        |         |      |   |        |         |  
|Loss from operations before income taxes                  |                                                         | $    | (8,006 | )       |      | $ | (1,354 | )       |   | $ | (9,810 | )      
|                                                          |                                                         |      |        |         |      |   |        |         |  

71



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                        |                               |         |   |       |               |  |   |              |  |              |   |   |  |  |   |       | 
|----------------------- | ----------------------------- | ------- | - | ----- | ------------- |  | - | ------------ |  | ------------ | - | - |  |  | - | ----- | 
|                        |                               | Segment |   |       | Nonreportable |  |   |              |  | Consolidated |  
|Other Significant Items |                               | Total   |   |       | Segments      |  |   | Eliminations |  | Total        |  
|                        |                               |         |   |       |               |  |   |              |  |              |  
|2003                    |                               |         |   |       |               |  |   |              |  |              |   |   |  |  |   |      
|                        | Depreciation and amortization |         | $ | 3,274 |               |  | $ | 586          |  |              | $ |  |  |  | $ | 3,860 | 
|                        | Interest income               |         |   | 166   |               |  |   | 281          |  |              |   |  |  |  |   | 447   | 
|                        | Interest expense              |         |   | 122   |               |  |   |             |  |              |   |  |  |  |   | 122   | 
|                        | Expenditures for property     |         |   | 1,747 |               |  |   | 65           |  |              |   |  |  |  |   | 1,812 | 
|2004                    |                               |         |   |       |               |  |   |              |  |              |   |   |  |  |   |      
|                        | Depreciation and amortization |         | $ | 2,310 |               |  | $ | 405          |  |              | $ |  |  |  | $ | 2,715 | 
|                        | Interest income               |         |   | 56    |               |  |   | 118          |  |              |   |  |  |  |   | 174   | 
|                        | Interest expense              |         |   | 249   |               |  |   | 4            |  |              |   |  |  |  |   | 253   | 
|                        | Expenditures for property     |         |   | 2,653 |               |  |   | 186          |  |              |   |  |  |  |   | 2,839 | 
|2005                    |                               |         |   |       |               |  |   |              |  |              |   |   |  |  |   |      
|                        | Depreciation and amortization |         |   | 2,651 |               |  |   | 345          |  |              | $ |  |  |  | $ | 2,996 | 
|                        | Interest income               |         |   | 68    |               |  |   | 98           |  |              |   |  |  |  |   | 166   | 
|                        | Interest expense              |         |   | 20    |               |  |   | 298          |  |              |   |  |  |  |   | 318   | 
|                        | Expenditures for property     |         |   | 2,318 |               |  |   | 28           |  |              |   |  |  |  |   | 2,346 | 



|                           |  |      |         |  |      |   |         |      |  |   |         | 
|-------------------------- |  | ---- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                           |  | 2003 |         |  | 2004 |   |         | 2005 | 
|                           |  |      |         |  |      |   |         |      | 
|Design                     |  | $    | 32,584  |  |      | $ | 55,703  |      |  | $ | 79,295  | 
|Deployment                 |  |      | 64,212  |  |      |   | 116,005 |      |  |   | 102,979 | 
|Operations and maintenance |  |      | 3,135   |  |      |   | 4,892   |      |  |   | 7,781   | 
|Consulting                 |  |      | 8,508   |  |      |   | 16,558  |      |  |   | 3,918   | 
|                           |  |      |         |  |      |   |         |      | 
|Total revenues             |  | $    | 108,439 |  |      | $ | 193,158 |      |  | $ | 193,973 | 
|                           |  |      |         |  |      |   |         |      | 

72



---



##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                |                          |                                      |         |        |          |   |       |          |       |   |          |         |         |          |       |       |          |   |         |        |         |   |       |       |       | 
|------------------------------- | ------------------------ | ------------------------------------ | ------- | ------ | -------- | - | ----- | -------- | ----- | - | -------- | ------- | ------- | -------- | ----- | ----- | -------- | - | ------- | ------ | ------- | - | ----- | ----- | ----- | 
|                                |                          | 2003                                 |         |        | 2004     |   |       | 2005     |      
|                                |                          |                                      |         |        |          |   |       |          |      
|                                |                          |                                      |         | Net    |          |   |       |          | Net   |   |          |         |         | Net      |      
|                                |                          | Revenues                             |         |        | Property |   |       | Revenues |       |   | Property |         |         | Revenues |       |       | Property |  
|                                |                          |                                      |         |        |          |   |       |          |       |   |          |         |         |          |       |       |          |  
|Americas:                       |                          |                                      |         |        |          |   |       |          |       |   |          |         |         |          |       |       |          |   |         |        |         |   |       |      
|                                | United States of America |                                      | $       | 53,137 |          |   | $     | 1,706    |       |   | $        | 111,184 |         |          | $     | 1,605 |          |   | $       | 81,131 |         |   | $     | 1,277 |      
|                                | Other                    |                                      |         | 1,017  |          |   |       | 81       |       |   |          | 2,910   |         |          |       | 82    |          |   |         | 4,545  |         |   |       | 67    |      
|                                |                          |                                      |         |        |          |   |       |          |       |   |          |         |         |          |       |       |          |  
|                                |                          | Total Americas                       |         |        | 54,154   |   |       |          | 1,787 |   |          |         | 114,094 |          |       |       | 1,687    |   |         |        | 85,676  |   |       |       | 1,344 | 
|                                |                          |                                      |         |        |          |   |       |          |       |   |          |         |         |          |       |       |          |  
|Europe, Middle East and Africa: |                          |                                      |         |        |          |   |       |          |       |   |          |         |         |          |       |       |          |   |         |        |         |   |       |      
|                                | United Kingdom           |                                      |         | 14,594 |          |   |       | 603      |       |   |          | 17,157  |         |          |       | 279   |          |   |         | 13,331 |         |   |       | 319   |      
|                                | Netherlands              |                                      |         | 12,977 |          |   |       | 317      |       |   |          | 18,892  |         |          |       | 352   |          |   |         | 21,206 |         |   |       | 268   |      
|                                | Italy                    |                                      |         | 12,484 |          |   |       | 1,023    |       |   |          | 8,993   |         |          |       | 617   |          |   |         | 6,010  |         |   |       | 968   |      
|                                | Algeria                  |                                      |         | 12,467 |          |   |       | 87       |       |   |          | 14,293  |         |          |       | 37    |          |   |         | 31,105 |         |   |       |      |      
|                                | Saudi Arabia             |                                      |         |       |          |   |       |         |       |   |          | 15,662  |         |          |       |      |          |   |         | 31,218 |         |   |       | 73    |      
|                                | Other                    |                                      |         | 822    |          |   |       |         |       |   |          | 3,175   |         |          |       | 1,107 |          |   |         | 4,974  |         |   |       | 613   |      
|                                |                          |                                      |         |        |          |   |       |          |       |   |          |         |         |          |       |       |          |  
|                                |                          | Total Europe, Middle East and Africa |         |        | 53,344   |   |       |          | 2,030 |   |          |         | 78,172  |          |       |       | 2,392    |   |         |        | 107,844 |   |       |       | 2,241 | 
|                                |                          |                                      |         |        |          |   |       |          |       |   |          |         |         |          |       |       |          |  
|Asia-Pacific                    |                          |                                      | 941     |        |          |   | 1     |          |       |   | 892      |         |         |          | 139   |       |          |   | 453     |        |         |   | 57    |      
|                                |                          |                                      |         |        |          |   |       |          |       |   |          |         |         |          |       |       |          |  
|Total revenues                  |                          | $                                    | 108,439 |        |          | $ | 3,818 |          |       | $ | 193,158  |         |         | $        | 4,218 |       |          | $ | 193,973 |        |         | $ | 3,642 |      
|                                |                          |                                      |         |        |          |   |       |          |       |   |          |         |         |          |       |       |          |  



|     |                           
|---- | --------------------------
|(16) | Related Party Transactions

ten-to






73



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|     |                           
|---- | --------------------------
|(17) | Quarterly Data (Unaudited)

|                                  |         |                                          |        |       |         |   |        |         |  |   |         |      |  |   |        |       |  
|--------------------------------- | ------- | ---------------------------------------- | ------ | ----- | ------- | - | ------ | ------- |  | - | ------- | ---- |  | - | ------ | ----- | -
|                                  |         | 2004                                     |       
|                                  |         |                                          |       
|                                  |         | 1st                                      |        |       | 2nd     |   |        | 3rd     |  |   | 4th     |     
|                                  |         | Quarter                                  |        |       | Quarter |   |        | Quarter |  |   | Quarter |     
|                                  |         |                                          |        |       |         |   |        |         |  |   |         |     
|                                  |         | (In thousands, except per share amounts) |       
|Revenues                          |         | $                                        | 45,049 |       |         | $ | 52,618 |         |  | $ | 50,006  |      |  | $ | 45,485 |      
|Operating 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 | )
|                                  |         |                                          |        |       |         |   |        |         |  |   |         |     

74



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                  |         |                                          |        |       |         |   |        |         |   |   |         |      |  |   |        |       |  
|--------------------------------- | ------- | ---------------------------------------- | ------ | ----- | ------- | - | ------ | ------- | - | - | ------- | ---- |  | - | ------ | ----- | -
|                                  |         | 2005                                     |       
|                                  |         |                                          |       
|                                  |         | 1st                                      |        |       | 2nd     |   |        | 3rd     |   |   | 4th     |     
|                                  |         | Quarter                                  |        |       | Quarter |   |        | Quarter |   |   | Quarter |     
|                                  |         |                                          |        |       |         |   |        |         |   |   |         |     
|                                  |         | (In thousands, except per share amounts) |       
|Revenues                          |         | $                                        | 45,409 |       |         | $ | 42,697 |         |   | $ | 49,516  |      |  | $ | 56,351 |      
|Operating income (loss)           |         |                                          | (2,331 | )     |         |   | (7,322 | )       |   |   | 2,443   |      |  |   | (1,558 | )    
|Income (loss) before income taxes |         |                                          | (2,841 | )     |         |   | (7,344 | )       |   |   | 2,275   |      |  |   | (1,900 | )    
|Net income (loss)                 |         |                                          | (3,722 | )     |         |   | (8,140 | )       |   |   | 1,226   |      |  |   | (1,891 | )    
|Net income (loss) per share:      |         |                                          |        |       |         |   |        |         |   |   |         |      |  |   |        |      
|                                  | Basic   |                                          | $      | (0.15 | )       |   | $      | (0.33   | ) |   | $       | 0.05 |  |   | $      | (0.08 | )
|                                  |         |                                          |        |       |         |   |        |         |   |   |         |     
|                                  | Diluted |                                          | $      | (0.15 | )       |   | $      | (0.33   | ) |   | $       | 0.05 |  |   | $      | (0.08 | )
|                                  |         |                                          |        |       |         |   |        |         |   |   |         |     













inception-to




inception-to




75



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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure





|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

(a) Internal Control Over Financial Reporting. 13a-15(f) 15d-15(f) 10-K


(b) Evaluation of Disclosure Controls and
Procedures. 13a-15(e) 15d-15(e)


(c) Changes in Internal Control Over Financial
Reporting.


percentage-of


percentage-of








10-K,


76



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##### 









|         |                  
|-------- | -----------------
|Item 9B. | Other information



77



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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



















78



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##### 



10-K


|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                      
|------- | -- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 3  | .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).                                                                 

79



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##### 



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | -- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 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).                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10 | .16         |  | 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 | .17         |  | 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 | .18         |  | 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 | .19         |  | 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 | .20         |  | 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 | .21         |  | 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 | .22         |  | 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 | .23         |  | 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 | .24         |  | 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 | .25         |  | 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 | .26         |  | 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).                                                                                                                                                                                                                                                                                                                                                   

80



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##### 



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 10 | .27         |  | 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 | .28         |  | 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 | .29         |  | 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 | .30         |  | 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 | .31         |  | 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 | .32         |  | 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).
|        | 10 | .33         |  | Consulting Agreement, dated as of April 25, 2005, between
    the Company and C. Thomas Faulders, III (incorporated by
    reference to Exhibit 10.1 to the Companys Quarterly
    Report on Form 10-Q filed with the SEC on May 10,
    2005).                                                                                                                                                                                                                                                                                                                                                                                              
|        | 10 | .34         |  | Interim Executive Services Agreement, dated as of April 25,
    2005, between the Company and Tatum CFO Partners, LLP
    (incorporated by reference to Exhibit 10.2 to the
    Companys Quarterly Report on Form 10-Q filed with the
    SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                              
|        | 10 | .35         |  | Consulting Agreement, dated as of March 30, 2005, between
    the Company and Michael S. McNelly (incorporated by reference to
    Exhibit 10.3 to the Companys Quarterly Report on
    Form 10-Q filed with the SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10 | .36         |  | Employee Agreement and General Release, dated as of
    March 30, 2005, between the Company and Michael S. McNelly
    (incorporated by reference to Exhibit 10.4 to the
    Companys Quarterly Report on Form 10-Q filed with the
    SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                 
|        | 10 | .37         |  | Employee Agreement and General Release, dated as of
    April 29, 2005, between the Company and Vincent Gwiazdowski
    (incorporated by reference to Exhibit 10.5 to the
    Companys Quarterly Report on Form 10-Q filed with the
    SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                
|        | 10 | .38         |  | Letter Agreement, dated as of March 29, 2005, between the
    Company and Graham Perkins (incorporated by reference to
    Exhibit 10.6 to the Companys Quarterly Report on
    Form 10-Q filed with the SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10 | .39         |  | Letter Agreement, dated as of March 31, 2005, between the
    Company and James W. Greenwell (incorporated by reference to
    Exhibit 10.7 to the Companys Quarterly Report on
    Form 10-Q filed with the SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10 | .40         |  | Stock Unit Agreement of LCC International, Inc. (incorporated by
    reference to Exhibit 10.1 to the Companys Current
    Report on Form 8-K filed with the SEC on June 21,
    2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10 | .41         |  | Change in Control Severance Plan of LCC International, Inc.
    (incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on Form 8-K filed with the
    SEC on June 21, 2005)                                                                                                                                                                                                                                                                                                                                                                                                                                           

81



---



##### 



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | -- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 10 | .42         |  | Letter Agreement, dated September 14, 2005, between LCC
    International, Inc. and Richard J. Lombardi (incorporated by
    reference to Exhibit 10.1 to the Companys Current
    Report on Form 8-K filed with the SEC on September 15,
    2005).                                                                                                                                                                               
|        | 10 | .43         |  | Employment Agreement, dated as of October 4, 2005, between
    LCC International, Inc. and Dean J. Douglas (incorporated by
    reference to Exhibit 10.1 to the Companys Current
    Report on Form 8-K filed with the SEC on October 4,
    2005).                                                                                                                                                                               
|        | 10 | .44         |  | Agreement, dated as of October 4, 2005, between LCC
    International, Inc. and Dean J. Douglas with respect to the
    grant of certain restricted stock units with respect to
    500,000 shares of Class A common stock pursuant to the
    Amended and Restated Equity Incentive Plan (incorporated by
    reference to Exhibit 10.2 to the Companys Current
    Report on Form 8-K filed with the SEC on October 4,
    2005).
|        | 10 | .45         |  | Agreement, dated as of October 4, 2005, between LCC
    International, Inc. and Dean J. Douglas with respect to the
    grant of options to purchase 500,000 shares of
    Class A common stock pursuant to the Amended and Restated
    Equity Incentive Plan (incorporated by reference to
    Exhibit 10.3 to the Companys Current Report on
    Form 8-K filed with the SEC on October 4, 2005).                               
|        | 10 | .46         |  | Agreement, dated as of October 4, 2005, between LCC
    International, Inc. and Dean J. Douglas with respect to the
    grant of options to purchase 500,000 shares of
    Class A common stock (incorporated by reference to
    Exhibit 10.4 to the Companys Current Report on
    Form 8-K filed with the SEC on October 4, 2005).                                                                                              
|        | 10 | .47         |  | Amended Executive Services Agreement, dated as of
    October 4, 2005, between LCC International, Inc. and Tatum
    CFO Partners, LLP (incorporated by reference to
    Exhibit 10.5 to the Companys Current Report on
    Form 8-K filed with the SEC on October 4, 2005).                                                                                                                                                       
|        | 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 | .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.                                                                                                                                                                                                                                                                          
|        | 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.                                                                                                                                                                                                                                                                          

10-K




82



---



##### 



SIGNATURES






| |                        
| | -----------------------
| | LCC INTERNATIONAL, INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ Dean J. Douglas

| |                                      
| | -------------------------------------
| |                                      
| | Dean J. Douglas                      
| | President and Chief Executive Officer
| | (Duly Authorized Officer)            





|                                           |  |                                                                                                                                     |  | 
|------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------- |  | 
|Signatures                                 |  | Title                                                                                                                              
|                                           |  |                                                                                                                                    
|                                          
|/s/ Dean J. DouglasDean J. Douglas         |  | President and Chief Executive Officer
    (Principal Executive Officer)                                                            
|                                          
|/s/ Charles R. WaldronCharles R. Waldron   |  | Senior Vice President, Chief Financial Officer and Treasurer
    (Principal Financial Officer and
    Principal Accounting Officer)
|                                          
|/s/ Julie A. DobsonJulie A. Dobson         |  | Director, Chairman of the Board of Directors                                                                                       
|                                          
|/s/ Mark D. EinMark D. Ein                 |  | Director                                                                                                                           
|                                          
|/s/ Richard J. LombardiRichard J. Lombardi |  | Director                                                                                                                           
|                                          
|/s/ Susan NessSusan Ness                   |  | Director                                                                                                                           
|                                          
|/s/ Neera SinghNeera Singh                 |  | Director                                                                                                                           
|                                          
|/s/ Rajendra SinghRajendra Singh           |  | Director                                                                                                                           

83



---



##### 



SCHEDULE II


VALUATION AND QUALIFYING ACCOUNTS


|                             |                                        |                |  |          |            |  |  |            |   |  |             |      |            |        |  |      |   |  |  |        | 
|---------------------------- | -------------------------------------- | -------------- |  | -------- | ---------- |  |  | ---------- | - |  | ----------- | ---- | ---------- | ------ |  | ---- | - |  |  | ------ | 
|                             |                                        |                |  | Column C |            |  |  |            |  
|                             |                                        |                |  |          |            |  |  |            |  
|Column A                     |                                        | Column B       |  |          | Additions  |  |  | Column D   |   |  | Column E    |     
|                             |                                        |                |  |          |            |  |  |            |   |  |             |     
|                             |                                        | Balance at     |  |          | Charged to |  |  | Charges to |   |  |             |      | Balance at |       
|                             |                                        | Beginning      |  |          | Costs and  |  |  | Other      |   |  | Deductions  |      |            | End of | 
|Description                  |                                        | of Period      |  |          | Expenses   |  |  | Accounts   |   |  | and Other   |      |            | Period | 
|                             |                                        |                |  |          |            |  |  |            |   |  | Adjustments |      |            |        | 
|                             |                                        | (in thousands) | 
|Year ended December 31, 2003 |                                        |                |  |          |            |  |  |            |   |  |             |      |            |        |  |      |   |  |  |       
|                             | Allowance for doubtful accounts        |                |  | 3,122    |            |  |  | (2,419     | ) |  |             | 253  |            |        |  | (490 | ) |  |  | 466    | 
|                             | Valuation allowance for deferred taxes |                |  | 6,213    |            |  |  | 2,152      |   |  |             |     |            |        |  | (44  | ) |  |  | 8,321  | 
|Year ended December 31, 2004 |                                        |                |  |          |            |  |  |            |   |  |             |      |            |        |  |      |   |  |  |       
|                             | Allowance for doubtful accounts        |                |  | 466      |            |  |  | 146        |   |  |             | 87   |            |        |  | (79  | ) |  |  | 620    | 
|                             | Valuation allowance for deferred taxes |                |  | 8,321    |            |  |  | 6,971      |   |  |             |     |            |        |  | (601 | ) |  |  | 14,691 | 
|Year ended December 31, 2005 |                                        |                |  |          |            |  |  |            |   |  |             |      |            |        |  |      |   |  |  |       
|                             | Allowance for doubtful accounts        |                |  | 620      |            |  |  | 728        |   |  |             | (113 | )          |        |  | (918 | ) |  |  | 317    | 
|                             | Valuation allowance for deferred taxes |                |  | 14,691   |            |  |  | 4,063      |   |  |             |     |            |        |  | (740 | ) |  |  | 18,014 | 

84



---



##### 



EXHIBIT INDEX


|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                      
|------- | -- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 3  | .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).                                                                 

85



---



##### 



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | -- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 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).                                                                                                                                                                                                                                                                                                                                                                                                                           
|       
|        | 10 | .16         |  | 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 | .17         |  | 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 | .18         |  | 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 | .19         |  | 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 | .20         |  | 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 | .21         |  | 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 | .22         |  | 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 | .23         |  | 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 | .24         |  | 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 | .25         |  | 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 | .26         |  | 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).                                                                                                                                                                                                                                                                                                                                                   

86



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##### 



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 10 | .27         |  | 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 | .28         |  | 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 | .29         |  | 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 | .30         |  | 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 | .31         |  | 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 | .32         |  | 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).
|       
|        | 10 | .33         |  | Consulting Agreement, dated as of April 25, 2005, between
    the Company and C. Thomas Faulders, III (incorporated by
    reference to Exhibit 10.1 to the Companys Quarterly
    Report on Form 10-Q filed with the SEC on May 10,
    2005).                                                                                                                                                                                                                                                                                                                                                                                              
|       
|        | 10 | .34         |  | Interim Executive Services Agreement, dated as of April 25,
    2005, between the Company and Tatum CFO Partners, LLP
    (incorporated by reference to Exhibit 10.2 to the
    Companys Quarterly Report on Form 10-Q filed with the
    SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                              
|       
|        | 10 | .35         |  | Consulting Agreement, dated as of March 30, 2005, between
    the Company and Michael S. McNelly (incorporated by reference to
    Exhibit 10.3 to the Companys Quarterly Report on
    Form 10-Q filed with the SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                                       
|       
|        | 10 | .36         |  | Employee Agreement and General Release, dated as of
    March 30, 2005, between the Company and Michael S. McNelly
    (incorporated by reference to Exhibit 10.4 to the
    Companys Quarterly Report on Form 10-Q filed with the
    SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                 
|       
|        | 10 | .37         |  | Employee Agreement and General Release, dated as of
    April 29, 2005, between the Company and Vincent Gwiazdowski
    (incorporated by reference to Exhibit 10.5 to the
    Companys Quarterly Report on Form 10-Q filed with the
    SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                
|       
|        | 10 | .38         |  | Letter Agreement, dated as of March 29, 2005, between the
    Company and Graham Perkins (incorporated by reference to
    Exhibit 10.6 to the Companys Quarterly Report on
    Form 10-Q filed with the SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                                               
|       
|        | 10 | .39         |  | Letter Agreement, dated as of March 31, 2005, between the
    Company and James W. Greenwell (incorporated by reference to
    Exhibit 10.7 to the Companys Quarterly Report on
    Form 10-Q filed with the SEC on May 10, 2005).                                                                                                                                                                                                                                                                                                                                                                                                           
|       
|        | 10 | .40         |  | Stock Unit Agreement of LCC International, Inc. (incorporated by
    reference to Exhibit 10.1 to the Companys Current
    Report on Form 8-K filed with the SEC on June 21,
    2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       
|        | 10 | .41         |  | Change in Control Severance Plan of LCC International, Inc.
    (incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on Form 8-K filed with the
    SEC on June 21, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                          

87



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##### 



|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | -- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 10 | .42         |  | Letter Agreement, dated September 14, 2005, between LCC
    International, Inc. and Richard J. Lombardi (incorporated by
    reference to Exhibit 10.1 to the Companys Current
    Report on Form 8-K filed with the SEC on September 15,
    2005).                                                                                                                                                                               
|       
|        | 10 | .43         |  | Employment Agreement, dated as of October 4, 2005, between
    LCC International, Inc. and Dean J. Douglas (incorporated by
    reference to Exhibit 10.1 to the Companys Current
    Report on Form 8-K filed with the SEC on October 4,
    2005).                                                                                                                                                                               
|       
|        | 10 | .44         |  | Agreement, dated as of October 4, 2005, between LCC
    International, Inc. and Dean J. Douglas with respect to the
    grant of certain restricted stock units with respect to
    500,000 shares of Class A common stock pursuant to the
    Amended and Restated Equity Incentive Plan (incorporated by
    reference to Exhibit 10.2 to the Companys Current
    Report on Form 8-K filed with the SEC on October 4,
    2005).
|       
|        | 10 | .45         |  | Agreement, dated as of October 4, 2005, between LCC
    International, Inc. and Dean J. Douglas with respect to the
    grant of options to purchase 500,000 shares of
    Class A common stock pursuant to the Amended and Restated
    Equity Incentive Plan (incorporated by reference to
    Exhibit 10.3 to the Companys Current Report on
    Form 8-K filed with the SEC on October 4, 2005).                               
|       
|        | 10 | .46         |  | Agreement, dated as of October 4, 2005, between LCC
    International, Inc. and Dean J. Douglas with respect to the
    grant of options to purchase 500,000 shares of
    Class A common stock (incorporated by reference to
    Exhibit 10.4 to the Companys Current Report on
    Form 8-K filed with the SEC on October 4, 2005).                                                                                              
|       
|        | 10 | .47         |  | Amended Executive Services Agreement, dated as of
    October 4, 2005, between LCC International, Inc. and Tatum
    CFO Partners, LLP (incorporated by reference to
    Exhibit 10.5 to the Companys Current Report on
    Form 8-K filed with the SEC on October 4, 2005).                                                                                                                                                       
|       
|        | 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 | .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.                                                                                                                                                                                                                                                                          
|       
|        | 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.                                                                                                                                                                                                                                                                          

88