UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 Form 10-Q
 (Mark One)
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2008
 Or
 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.
  Delaware
    
    54-1807038(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification Number)Incorporation or Organization)7900 Westpark Drive, McLean, VA
    
    22102(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (703) 873-2000
 þ o
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED March 31, 2008
INDEX
 PageNumberPART I: FINANCIAL INFORMATIONITEM 1: FINANCIAL STATEMENTSCondensed consolidated statements of operations for the three months ended March 31, 2008
and 2007 (unaudited)
    
    
    3Condensed consolidated balance sheets as of March 31, 2008 (unaudited) and December 31, 2007
    
    
    4Condensed consolidated statements of cash flows for the three months ended March 31, 2008
and 2007 (unaudited)
    
    
    5Notes to condensed consolidated financial statements (unaudited)
    
    
    6ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    19ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    29ITEM 4: CONTROLS AND PROCEDURES
    
    
    30PART II: OTHER INFORMATIONITEM 1: Legal Proceedings
    
    
    31ITEM 1A: Risk Factors
    
    
    31ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31ITEM 3: Defaults upon Senior Securities
    
    
    31ITEM 4: Submission of Matters to a Vote of Security Holders
    
    
    31ITEM 5: Other Information
    
    
    31ITEM 6: Exhibits
    
    
    31SIGNATURE
    
    
    32
 2




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##### 



PART I: FINANCIAL INFORMATION  Item 1: Financial Statements
 LCC INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007REVENUES
    
    $
    41,934
    
    
    $
    24,640COST OF REVENUES (exclusive of depreciation shown separately below)
    
    
    31,981
    
    
    
    20,939GROSS PROFIT
    
    
    9,953
    
    
    
    3,701OPERATING EXPENSE:Sales and marketing
    
    
    3,919
    
    
    
    2,907General and administrative
    
    
    7,228
    
    
    
    6,340Restructuring charge
    
    
    426
    
    
    
    Depreciation and amortization
    
    
    1,242
    
    
    
    62312,815
    
    
    
    9,870OPERATING LOSS
    
    
    (2,862
    )
    
    
    (6,169
    )OTHER INCOME (EXPENSE):Interest income
    
    
    4
    
    
    
    55Interest expense
    
    
    (1,427
    )
    
    
    (208
    )Other
    
    
    (1,438
    )
    
    
    (265
    )(2,861
    )
    
    
    (418
    )LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
    
    (5,723
    )
    
    
    (6,587
    )PROVISION FOR INCOME TAXES
    
    
    139
    
    
    
    647LOSS FROM CONTINUING OPERATIONS
    
    
    (5,862
    )
    
    
    (7,234
    )DISCONTINUED OPERATIONS:Loss from discontinued operations (net of applicable taxes of zero)
    
    
    (327
    )
    
    
    (502
    )Loss from disposal of discontinued operations (net of applicable taxes of zero)
    
    
    
    
    
    
    (1,550
    )LOSS FROM DISCONTINUED OPERATIONS
    
    
    (327
    )
    
    
    (2,052
    )NET LOSS
    
    $
    (6,189
    )
    
    $
    (9,286
    )NET LOSS PER SHARE:Continuing operationsBasic and diluted
    
    $
    (0.22
    )
    
    $
    (0.28
    )Discontinued operationsBasic and diluted
    
    $
    (0.01
    )
    
    $
    (0.08
    )Net loss per shareBasic and diluted
    
    $
    (0.23
    )
    
    $
    (0.36
    )WEIGHTED AVERAGE SHARES USED IN CALCULATION OF NET LOSS PER SHARE:Basic and diluted
    
    
    26,813
    
    
    
    25,679
  3




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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    5,662
    
    
    $
    9,630Restricted cash
    
    
    437
    
    
    
    220Receivables, net of allowance for doubtful accounts of $387 and $279 at March 31,
2008 and December 31, 2007, respectivelyTrade accounts receivable
    
    
    38,346
    
    
    
    43,943Unbilled receivables
    
    
    24,125
    
    
    
    21,979Due from related parties and affiliates
    
    
    54
    
    
    
    32Due from disposal of business
    
    
    
    
    
    
    1,800Prepaid expenses and other current assets
    
    
    4,335
    
    
    
    4,100Prepaid tax receivable and prepaid taxes
    
    
    68
    
    
    
    13Assets held for sale
    
    
    429
    
    
    
    269Total current assets
    
    
    73,456
    
    
    
    81,986Property and equipment, net
    
    
    5,276
    
    
    
    5,949Deferred income taxes, net
    
    
    2,482
    
    
    
    1,952Goodwill
    
    
    44,512
    
    
    
    44,080Other
intangible assets net
    
    
    15,535
    
    
    
    15,875Other assets
    
    
    1,498
    
    
    
    1,608Total assets
    
    $
    142,759
    
    
    $
    151,450LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Lines of credit
    
    $
    24,590
    
    
    $
    2,561Note payable
    
    
    4,438
    
    
    
    5,788Accounts payable
    
    
    18,257
    
    
    
    14,287Accrued expenses
    
    
    12,105
    
    
    
    19,706Accrued employee compensation and benefits
    
    
    6,838
    
    
    
    7,171Deferred revenue
    
    
    699
    
    
    
    1,767Income taxes payable
    
    
    1,934
    
    
    
    1,921Accrued restructuring
    
    
    393
    
    
    
    261Other current liabilities
    
    
    6,347
    
    
    
    6,087Liabilities held for sale
    
    
    666
    
    
    
    411Total current liabilities
    
    
    76,267
    
    
    
    59,960Lines of credit
    
    
    79
    
    
    
    22,025Note payable
    
    
    23,965
    
    
    
    23,965Accrued restructuring non-current
    
    
    282
    
    
    
    78Other liabilities
    
    
    793
    
    
    
    735Total liabilities
    
    
    101,386
    
    
    
    106,763Commitments and contingenciesShareholders equity:Preferred stock:10,000 shares authorized; 5,738 convertible shares issued and outstanding
    
    
    57
    
    
    
    57Class A common stock; $.01 par value:70,000 shares authorized; 26,433 shares issued and 26,273 shares outstanding
and 26,234 shares issued and 26,074 shares outstanding at March 31, 2008 and
December 31, 2007, respectively
    
    
    265
    
    
    
    262Class B common stock; $.01 par value:20,000 shares authorized; -0- shares issued and outstanding
    
    
    
    
    
    
    Paid-in capital
    
    
    133,339
    
    
    
    133,089Accumulated deficit
    
    
    (102,441
    )
    
    
    (96,252
    )Subtotal
    
    
    31,220
    
    
    
    37,156Accumulated other comprehensive income  foreign currency translation adjustments
    
    
    11,035
    
    
    
    8,413Treasury stock (159 shares)
    
    
    (882
    )
    
    
    (882
    )Total shareholders equity
    
    
    41,373
    
    
    
    44,687Total liabilities and shareholders equity
    
    $
    142,759
    
    
    $
    151,450
  4




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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months EndedMarch 31,2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (6,189
    )
    
    $
    (9,286
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    881
    
    
    
    593Provision (recovery) for doubtful accounts
    
    
    129
    
    
    
    (11
    )Loss on disposal of Network Deployment business
    
    
    
    
    
    
    1,550Non-cash share-based compensation
    
    
    360
    
    
    
    742Restructuring charge
    
    
    426
    
    
    
    Loss on disposal of fixed assets
    
    
    5
    
    
    
    Changes in operating assets and liabilities:Trade, unbilled, and other receivables
    
    
    7,241
    
    
    
    2,273Accounts payable and accrued expenses
    
    
    (6,346
    )
    
    
    (3,769
    )Other current assets and liabilities
    
    
    1,576
    
    
    
    3,860Other non current assets and liabilities
    
    
    10
    
    
    
    1,129Net cash used in operating activities
    
    
    (1,907
    )
    
    
    (2,919
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (727
    )
    
    
    (1,324
    )Business acquisitions and investments
    
    
    
    
    
    
    (4,094
    )Increase in restricted cash
    
    
    (211
    )
    
    
    Net cash used in investing activities
    
    
    (938
    )
    
    
    (5,418
    )Cash flows from financing activities:Repurchase
of common stock  restricted stock plan
    
    
    (115
    )
    
    
    (263
    )Proceeds from exercise of options
    
    
    
    
    
    
    110Borrowings on lines of credit and notes payable
    
    
    109
    
    
    
    8,133Payments on lines of credit and notes payable
    
    
    (1,405
    )
    
    
    (2,370
    )Net cash provided by (used in) financing activities
    
    
    (1,411
    )
    
    
    5,610Effect of exchange rate changes on cash and equivalents
    
    
    288
    
    
    
    29Net decrease in cash and cash equivalents
    
    
    (3,968
    )
    
    
    (2,698
    )Cash and cash equivalents at beginning of period
    
    
    9,630
    
    
    
    6,445Cash and cash equivalents at end of period
    
    $
    5,662
    
    
    $
    3,747Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    381
    
    
    $
    181Income taxes
    
    $
    821
    
    
    $
    777Supplemental disclosure of non-cash investing and financing activities:Reduction in due from disposal of business and related note payable
    
    $
    
    
    
    $
    2,611
  5




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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
 NOTE 1. DESCRIPTION OF OPERATIONS AND BASIS OF PRESENTATION
         NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   6




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##### 



Significant accounting policies are as follows:
 Cash Equivalents and Restricted Cash.
 Concentration of Credit Risk
 March 31,
    
    December 31,2008
    
    2007(in thousands)Europe
    
    $
    16,563
    
    
    $
    14,934Middle East/Africa
    
    $
    13,954
    
    
    $
    16,085Asia-Pacific
    
    $
    110
    
    
    $
    110
   Fair Value of Financial Instruments
 Inventory
 Property and Equipment
  Computer equipment
    
    3 yearsSoftware
    
    3 yearsFurniture and office equipment
    
    3 to 7 yearsLeasehold improvements
    
    Shorter of the term of the lease or estimated useful lifeVehicles
    
    5 years
 Impairment of Long-Lived Assets Accounting for Impairment or Disposal of
Long-Lived Assets,
 Business Combinations.
  Goodwill and Other Intangible Assets Goodwill and
Other Intangible Assets
 Allowance for Doubtful Accounts .
 7




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##### 



Revenue Recognition
  Income Taxes Accounting for
Income Taxes.
  Accounting for Uncertainty in Income Taxes An Interpretation of FASB Statement
No. 109"
 Foreign Currency Translation
 Foreign Currency Translation
  Use of Estimates
 Share -Based Compensation Share-Based Payment Accounting For Stock Issued to Employees.
  8




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##### 



Other Comprehensive Income (Loss)
 Earnings (Loss) Per Common Share .
 NOTE 3. NEW ACCOUNTING STANDARDS
 Fair Value Measurements, Accounting for Leases
 The Fair Value Option for Financial Assets and
Financial Liabilities,
 Business Combinations Non-controlling Interests in Consolidated Financial Statements Consolidated Financial Statements
  NOTE 4. BUSINESS COMBINATIONS
 WFI EMEA
 Borrowings
    9




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##### 



WFI U.S.
 Borrowings. Borrowings.
    Three Months EndedMarch 31, 2007Revenue
    
    $
    38,009Operating loss
    
    $
    (6,485
    )Loss from continuing operations
    
    $
    (8,253
    )Loss per share (basic and diluted)
    
    $
    (0.32
    )
 NOTE 5. DISCONTINUED OPERATIONS
 Accounting for the Impairment or Disposal of Long-Lived Assets
  Three Months Ended March 31,2008
    
    
    2007(in thousands)Revenue
    
    $
    431
    
    
    $
    501Gross margin
    
    $
    39
    
    
    $
    47Loss from discontinued operations (net of applicable taxes of zero)
    
    $
    (327
    )
    
    $
    (502
    )Loss on disposal of discontinued operations (net of applicable taxes of zero)
    
    
    
    
    
    
    (1,550
    )Total loss from discontinued operations
    
    $
    (327
    )
    
    $
    (2,052
    )
  10




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##### 



Sale of U.S. Network Deployment Business
   Borrowings
   Three Months Ended March 31,2008
    
    
    2007(in thousands)Revenues
    
    $
    
    
    
    $
    61Gross margin (loss)
    
    $
    
    
    
    $
    61Income (loss) from discontinued operations (net of applicable taxes of zero)
    
    $
    (4
    )
    
    $
    49Loss from disposal of discontinued operations (net of applicable taxes of zero)
    
    
    
    
    
    
    (1,550
    )Total loss from discontinued operations
    
    $
    (4
    )
    
    $
    (1,501
    )
  Sale of Brazilian Subsidiary
   11




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##### 



Three Months EndedMarch 31,2008
    
    
    2007(in thousands)Revenues
    
    $
    431
    
    
    $
    440Gross margin (loss)
    
    $
    39
    
    
    $
    (14
    )Loss from discontinued operations (net of applicable taxes of zero)
    
    $
    (323
    )
    
    $
    (551
    )
  March 31,
    
    
    December 31,2008
    
    
    2007(in thousands)Other receivables
    
    
    218
    
    
    
    117Other current assets
    
    
    76
    
    
    
    62Fixed assets
    
    
    145
    
    
    
    138Assets held for sale
    
    $
    439
    
    
    $
    317Accounts payable
    
    
    366
    
    
    $
    179Accrued employee compensation and benefits
    
    
    235
    
    
    
    205Other accrued expenses
    
    
    75
    
    
    
    75Liabilities held for sale
    
    $
    676
    
    
    $
    459
 NOTE 6. ACCOUNTS RECEIVABLE
   NOTE 7. PROPERTY AND EQUIPMENT
  March 31,
    
    
    December 31,2008
    
    
    2007(in thousands)Computer equipment
    
    $
    3,458
    
    
    $
    4,613Software
    
    
    9,154
    
    
    
    9,448Furniture and office equipment
    
    
    14,186
    
    
    
    15,744Leasehold improvements
    
    
    1,890
    
    
    
    1,836Vehicles
    
    
    133
    
    
    
    163Property and equipment
    
    
    28,821
    
    
    
    31,804Less accumulated depreciation and amortization
    
    
    (23,545
    )
    
    
    (25,855
    )Property and equipment, net
    
    $
    5,276
    
    
    $
    5,949
  12




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##### 



NOTE
8. GOODWILL AND OTHER INTANGIBLE ASSETS
  March 31,
    
    
    December 31,2008
    
    
    2007(in thousands)Goodwill
    
    $
    44,512
    
    
    $
    44,080Other
intangible assets:Customer relationships
    
    $
    17,546
    
    
    $
    17,531Trade names
    
    
    247
    
    
    
    230Patents
    
    
    43
    
    
    
    43Other
    
    
    265
    
    
    
    265Other Intangibles
    
    
    18,101
    
    
    
    18,068Less: Accumulated amortization
    
    
    (2,566
    )
    
    
    (2,194
    )Other
intangibles, Net
    
    $
    15,535
    
    
    $
    15,875
   NOTE 9. BORROWINGS
 Discontinued Operations
    13




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##### 



Business Combinations
        2008
    
    $
    7,0772009
    
    
    22,0302010
    
    
    23,9652011
    
    
    2012
    
    
    $
    53,072
 NOTE 10. RESTRUCTURING CHARGE
  14




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##### 



Facilities andOther Non-HeadcountSeverance
    
    Related Items
    
    Total(in thousands)Accrued restructuring as of January 1, 2007
    
    $
    3
    
    
    $
    1,033
    
    
    $
    1,036Restructuring charge
    
    
    991
    
    
    
    609
    
    
    
    1,600Reversal of excess severance
    
    
    
    
    
    
    (493
    )
    
    
    (493
    )Restructuring charge on acquisition
    
    
    545
    
    
    
    
    
    
    
    545Charges against the provision:Payments for excess office space, net of sublease income
    
    
    
    
    
    
    (824
    )
    
    
    (824
    )Payments for severance
    
    
    (1,548
    )
    
    
    
    
    
    
    (1,548
    )Other
    
    
    12
    
    
    
    11
    
    
    
    23Accrued restructuring as of December 31, 2007
    
    
    3
    
    
    
    336
    
    
    
    339Restructuring charge
    
    
    20
    
    
    
    406
    
    
    
    426Charges against the restructuring liability:Payments for excess office space, net of sublease income
    
    
    (20
    )
    
    
    (70
    )
    
    
    (90
    )Accrued restructuring as of March 31, 2008
    
    $
    3
    
    
    $
    672
    
    
    $
    675
  March 31,
    
    
    December 31,2008
    
    
    2007(in thousands)Accrued restructuring current
    
    $
    393
    
    
    $
    261Accrued restructuring non-current
    
    
    282
    
    
    
    78Accrued restructuring total
    
    $
    675
    
    
    $
    339
 NOTE 11. INCOME TAXES  ADOPTION OF FIN 48
    15




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##### 



NOTE 12. OTHER CURRENT LIABILITIES
  March 31,
    
    
    December 31,2008
    
    
    2007(in thousands)Due to WFI
    
    $
    1,837
    
    
    $
    1,837Interest payable
    
    
    2,449
    
    
    
    1,685Deferred rent
    
    
    933
    
    
    
    862Other
    
    
    1,128
    
    
    
    1,703Other current liabilities
    
    $
    6,347
    
    
    $
    6,087
 NOTE 13. SHARE-BASED COMPENSATION
  Americas
    
    EMEA
    
    Non Reportable Segments
    
    Total2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007(in thousands)Three Months ended March 31,Cost of revenues
    
    $
    20
    
    
    $
    9
    
    
    $
    24
    
    
    $
    25
    
    
    $
    
    
    
    $
    
    
    
    $
    44
    
    
    $
    34Sales and marketing
    
    
    7
    
    
    
    16
    
    
    
    25
    
    
    
    23
    
    
    
    11
    
    
    
    58
    
    
    
    43
    
    
    
    97General and administrative
    
    
    8
    
    
    
    11
    
    
    
    60
    
    
    
    69
    
    
    
    200
    
    
    
    523
    
    
    
    268
    
    
    
    603$
    35
    
    
    $
    36
    
    
    $
    109
    
    
    $
    117
    
    
    $
    211
    
    
    $
    581
    
    
    $
    355
    
    
    $
    734
 NOTE 14. OTHER COMPREHENSIVE INCOME (LOSS)
  Three months endedMarch 31,2008
    
    
    2007(in thousands)Net loss
    
    $
    (6,189
    )
    
    $
    (9,286
    )Other comprehensive loss, net of tax:Change in foreign currency translation gains
    
    
    2,622
    
    
    
    436Other comprehensive loss
    
    $
    (3,567
    )
    
    $
    (8,850
    )
 NOTE 15. RELATED PARTY TRANSACTIONS
   16




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##### 



NOTE 16. COMMITMENTS AND CONTINGENCIES
   NOTE 17. SEGMENT REPORTING
 Disclosures about Segments of an Enterprise and Related Information
    OperatingAmericas
    
    
    EMEA
    
    
    Segment Total2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Three Months Ended
March 31,Revenues:From external customers
    
    $
    12,123
    
    
    $
    4,173
    
    
    $
    29,811
    
    
    $
    20,467
    
    
    $
    41,934
    
    
    $
    24,640Inter-segment revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    $
    12,123
    
    
    $
    4,173
    
    
    $
    29,811
    
    
    $
    20,467
    
    
    $
    41,934
    
    
    $
    24,640Income (loss) before taxes
    
    $
    26
    
    
    $
    (1,869
    )
    
    $
    (1,155
    )
    
    $
    (1,267
    )
    
    $
    (1,129
    )
    
    $
    (3,136
    )Total assets
    
    $
    56,971
    
    
    $
    9,418
    
    
    $
    81,543
    
    
    $
    82,622
    
    
    $
    138,514
    
    
    $
    92,040
  Three Months EndedMarch 31,2008
    
    2007(in thousands)Revenues:Revenues for reportable segments
    
    $
    41,934
    
    
    $
    24,640Revenues for non-reportable segments
    
    
    
    
    
    
    Total consolidated revenues
    
    $
    41,934
    
    
    $
    24,640Income (loss) before income taxes:For reportable segments
    
    $
    (1,129
    )
    
    $
    (3,136
    )For non-reportable segments
    
    
    (4,594
    )
    
    
    (3,451
    )Total (loss) before taxes
    
    $
    (5,723
    )
    
    $
    (6,587
    )
 17




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##### 



Three Months ended March 31,2008
    
    2007(in thousands)Assets:Assets for reportable segments
    
    $
    138,674
    
    
    $
    92,040Assets not attributable to reportable segments:Cash and cash equivalents
    
    
    217
    
    
    
    466Restricted cash
    
    
    
    
    
    
    9Deferred and prepaid tax assets
    
    
    2,351
    
    
    
    1,135Property and equipment
    
    
    450
    
    
    
    669Receivables
    
    
    110
    
    
    
    253Prepaids and other
    
    
    957
    
    
    
    563Total consolidated assets
    
    $
    142,759
    
    
    $
    95,135
 NOTE 18. MANAGEMENTS PLANS, LIQUIDITY AND BUSINESS RISKS
    NOTE 19. SUBSEQUENT EVENTS
       18




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##### 



ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   OVERVIEW
   Americas:
 EMEA:
 Nonreportable segments:
      19




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##### 



RECENT DEVELOPMENTS
      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;
    
    spending levels by wireless service providers in the areas of network design, deployment and optimization;
    
    migration of networks to accommodate enhanced data offerings;
    
    consolidation in the carrier and OEM community;
    
    increased percentage of revenues derived from our international operations; and
    
    recent auctions of spectrum by governments in the U.S. and certain countries in Europe.
 20




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##### 



RESULTS OF OPERATIONS
  Revenues, Cost of Revenues and Gross Margins
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2008
    
    
    March 31, 2007(in thousands)Revenues:Americas
    
    $
    12,123
    
    
    
    
    
    
    $
    4,173EMEA
    
    
    29,811
    
    
    
    
    
    
    
    20,467Nonreportable segments
    
    
    
    
    
    
    
    
    
    
    41,934
    
    
    
    
    
    
    
    24,640Cost of revenues:
    
    
    
    
    
    (% of revenue)
    
    
    
    
    
    (% of revenue)Americas
    
    
    8,623
    
    
    
    71.1
    %
    
    
    4,513
    
    
    
    108.1
    %EMEA
    
    
    23,332
    
    
    
    78.3
    %
    
    
    16,446
    
    
    
    80.4
    %Nonreportable segments
    
    
    (26
    )
    
    
    
    
    
    
    (20
    )
    
    
    31,981
    
    
    
    76.3
    %
    
    
    20,939
    
    
    
    85.0
    %Gross margins:Americas
    
    
    3,500
    
    
    
    28.9
    %
    
    
    (340
    )
    
    
    (8.1
    )%EMEA
    
    
    6,479
    
    
    
    21.7
    %
    
    
    4,021
    
    
    
    19.6
    %Nonreportable segments
    
    
    (26
    )
    
    
    
    
    
    
    20
    
    
    
    $
    9,953
    
    
    
    23.7
    %
    
    $
    3,701
    
    
    
    15.0
    %
 Americas
  21




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##### 



EMEA
  Nonreportable segments
  Operating Expenses
 Three Months Ended March 31,2008
    
    
    2007(in thousands)Sales and marketing:Americas
    
    $
    715
    
    
    $
    633EMEA
    
    
    2,417
    
    
    
    1,432Nonreportable segments
    
    
    787
    
    
    
    8423,919
    
    
    
    2,907General and administrative:Americas
    
    
    1,043
    
    
    
    857EMEA
    
    
    2,598
    
    
    
    2,865Nonreportable segments
    
    
    3,587
    
    
    
    2,6187,228
    
    
    
    6,340Restructuring charge:Americas
    
    
    374
    
    
    
    EMEA
    
    
    52
    
    
    
    Nonreportable segments
    
    
    
    
    
    
    426
    
    
    
    Depreciation and amortization:Americas
    
    
    577
    
    
    
    75EMEA
    
    
    601
    
    
    
    477Nonreportable segments
    
    
    64
    
    
    
    711,242
    
    
    
    623Total:Americas
    
    
    2,709
    
    
    
    1,565EMEA
    
    
    5,668
    
    
    
    4,774Nonreportable segments
    
    
    4,438
    
    
    
    3,531Total
    
    $
    12,815
    
    
    $
    9,870
     22




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##### 



Other Income and Expense
 Three Months Ended March 31,2008
    
    
    2007Interest income:Americas
    
    $
    
    
    
    $
    EMEA
    
    
    4
    
    
    
    12Nonreportable segments
    
    
    
    
    
    
    434
    
    
    
    55Interest expense:Americas
    
    
    (772
    )
    
    
    EMEA
    
    
    (51
    )
    
    
    (5
    )Nonreportable segments
    
    
    (604
    )
    
    
    (203
    )(1,427
    )
    
    
    (208
    )Other:Americas
    
    
    6
    
    
    
    36EMEA
    
    
    (1,918
    )
    
    
    (524
    )Nonreportable segments
    
    
    474
    
    
    
    223(1,438
    )
    
    
    (265
    )Total:Americas
    
    
    (766
    )
    
    
    36EMEA
    
    
    (1,965
    )
    
    
    (517
    )Nonreportable segments
    
    
    (130
    )
    
    
    63Total
    
    $
    (2,861
    )
    
    $
    (418
    )
   Tax Expense
  23




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##### 



Liquidity and Capital Resources
  Sources and Uses of Cash
 Three Months Ended March 31,2008
    
    
    2007(in thousands)Net cash used in operating activities
    
    $
    (1,907
    )
    
    $
    (2,919
    )Net cash used in investing activities
    
    
    (938
    )
    
    
    (5,418
    )Net cash provided by (used in) financing activities
    
    
    (1,411
    )
    
    
    5,610Effect of exchange rates on cash and equivalents
    
    
    288
    
    
    
    29Net decrease in cash and cash equivalents
    
    $
    (3,968
    )
    
    $
    (2,698
    )
         24




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##### 



Cash Requirements
 March 31,
    
    
    December 31,2008
    
    
    2007(in thousands)Cash and cash equivalents (excluding restricted cash)
    
    $
    5,662
    
    
    $
    9,630Borrowing facilities and notes payable
    
    $
    53,072
    
    
    $
    54,339Working
capital deficit
    
    $
    2,811
    
    
    $
    22,026
   25




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##### 



CRITICAL ACCOUNTING POLICIES
  
    
    revenue recognition;
    
    allowance for doubtful accounts;
    
    accounting for income taxes;
    
    restructuring charge; and
    
    goodwill and purchased and other intangibles.
 Revenue recognition
  26




---



##### 



Allowance for doubtful accounts
  Accounting for income taxes
    Restructuring charge
   27




---



##### 



Goodwill and Other Intangibles
    RELATED PARTY TRANSACTIONS
   28




---



##### 



ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      29




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##### 



ITEM 4. CONTROLS AND PROCEDURES
 (a) Evaluation of Disclosure Controls and Procedures
  (b) Internal Control over Financial Reporting
 Managements Report on Internal Control over Financial Reporting
  
    
    Pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the Company;
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Companys assets that could have a material effect on the
financial statements.
  Internal Control-Integrated Framework
     (c) Changes in Internal Control over Financial Reporting
  (d) Remediation Efforts
    30




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##### 



PART II: OTHER INFORMATION
 Item 1: Legal Proceedings
  Item 1A: Risk Factors
  Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
  Item 3: Defaults Upon Senior Securities
  Item 4: Submission of Matters to a Vote of Security Holders
  Item 5: Other Information
  Item 6: Exhibits
 31.1
    
    
    
    Certification of Chief Executive Officer pursuant to
Exchange Act Rules 13a-14(a)/15d -14(a), as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    Certification of Chief Financial Officer pursuant to
Exchange Act Rules 13a-14(a)/15d -14(a), as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 31




---



##### 



SIGNATURE
  /s/ Louis Salamone, Jr.Louis Salamone, Jr.Executive Vice President, Chief Financial Officer and Treasurer  32