##### 



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, 2007
 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
 o þ
   Large
    accelerated
    filer  o
    Accelerated
    filer  þ
    Non-accelerated
    filer  o
    Smaller
    reporting
    company  o(Do not check if a smaller reporting company) o þ




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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED March 31, 2007
 INDEX
 PageNumberPART I: FINANCIAL INFORMATIONITEM 1: FINANCIAL STATEMENTSCondensed consolidated statements of operations for the
three months ended March 31, 2007 and 2006 (unaudited)
    
    
    3Condensed
consolidated balance sheets as of March 31, 2007 (unaudited)
and December 31, 2006
    
    
    4Condensed consolidated statements of cash flows for the
three months ended March 31, 2007 and 2006 (unaudited)
    
    
    5Notes to
condensed consolidated financial statements (unaudited)
    
    
    6ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    20ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    32ITEM 4: CONTROLS AND PROCEDURES
    
    
    32PART II: OTHER INFORMATIONITEM 1: Legal Proceedings
    
    
    34ITEM 1A: Risk Factors
    
    
    34ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34ITEM 3: Defaults upon Senior Securities
    
    
    34ITEM 4: Submission of Matters to a Vote of Security Holders
    
    
    34ITEM 5: Other Information
    
    
    34ITEM 6: Exhibits
    
    
    34
 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 31,2007
    
    
    2006REVENUES
    
    $
    24,640
    
    
    $
    35,743COST OF REVENUES (exclusive of depreciation shown separately below)
    
    
    20,939
    
    
    
    27,103GROSS PROFIT
    
    
    3,701
    
    
    
    8,640OPERATING EXPENSE:Sales and marketing
    
    
    2,907
    
    
    
    2,025General and administrative
    
    
    6,340
    
    
    
    6,182Depreciation and amortization
    
    
    623
    
    
    
    6559,870
    
    
    
    8,862OPERATING LOSS
    
    
    (6,169
    )
    
    
    (222
    )OTHER INCOME (EXPENSE):Interest income
    
    
    55
    
    
    
    15Interest expense
    
    
    (208
    )
    
    
    (186
    )Other
    
    
    (265
    )
    
    
    (55
    )(418
    )
    
    
    (226
    )LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
    
    (6,587
    )
    
    
    (448
    )PROVISION FOR INCOME TAXES
    
    
    647
    
    
    
    980LOSS FROM CONTINUING OPERATIONS
    
    
    (7,234
    )
    
    
    (1,428
    )DISCONTINUED
OPERATIONS:Loss from
discontinued operations (net of applicable taxes of zero)
    
    
    (502
    )
    
    
    (732
    )Loss from
disposal of discontinued operations (net of applicable taxes of zero)
    
    
    (1,550
    )
    
    
    LOSS FROM DISCONTINUED OPERATIONS
    
    
    (2,052
    )
    
    
    (732
    )NET LOSS
    
    $
    (9,286
    )
    
    $
    (2,160
    )NET LOSS PER SHARE:Continuing operationsBasic and diluted
    
    $
    (0.28
    )
    
    $
    (0.06
    )Discontinued operationsBasic and diluted
    
    $
    (0.08
    )
    
    $
    (0.03
    )Net loss per shareBasic and diluted
    
    $
    (0.36
    )
    
    $
    (0.09
    )WEIGHTED AVERAGE SHARES USED IN CALCULATION OF NET
LOSS PER SHARE:Basic and diluted
    
    
    25,679
    
    
    
    24,712
  3




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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 March 31,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETS:Current assets:Cash and cash equivalents
    
    $
    3,747
    
    
    $
    6,445Restricted cash
    
    
    933
    
    
    
    883Receivables, net of allowance for doubtful accounts of $595 and $200 at March 31, 2007
and December 31, 2006, respectivelyTrade accounts receivable
    
    
    35,542
    
    
    
    34,755Unbilled receivables
    
    
    23,481
    
    
    
    24,807Due from related parties and affiliates
    
    
    40
    
    
    
    3Due from disposal of business
    
    
    3,449
    
    
    
    7,610Deferred income taxes, net
    
    
    65
    
    
    
    118Prepaid expenses and other current assets
    
    
    3,438
    
    
    
    3,798Prepaid tax receivable and prepaid taxes
    
    
    164
    
    
    
    356Assets held for sale
    
    
    451
    
    
    
    587Total current assets
    
    
    71,310
    
    
    
    79,362Property and equipment, net
    
    
    4,200
    
    
    
    2,779Deferred income taxes, net
    
    
    1,031
    
    
    
    1,453Goodwill
    
    
    17,681
    
    
    
    13,989Other
intangibles, net
    
    
    211
    
    
    
    293Other assets
    
    
    702
    
    
    
    547$
    95,135
    
    
    $
    98,423LIABILITIES AND SHAREHOLDERS EQUITY:Current liabilities:Lines of credit
    
    $
    6,556
    
    
    $
    1,038Note payable
    
    
    577
    
    
    
    3,188Accounts payable
    
    
    15,717
    
    
    
    17,224Accrued expenses
    
    
    17,113
    
    
    
    13,867Accrued employee compensation and benefits
    
    
    6,603
    
    
    
    6,545Deferred revenue
    
    
    367
    
    
    
    119Income taxes payable
    
    
    1,828
    
    
    
    2,082Accrued restructuring current
    
    
    755
    
    
    
    949Other current liabilities
    
    
    1,312
    
    
    
    597Liabilities held for sale
    
    
    346
    
    
    
    263Total current liabilities
    
    
    51,174
    
    
    
    45,872Accrued restructuring noncurrent
    
    
    87
    
    
    
    87Lines of credit
    
    
    267
    
    
    
    Other liabilities
    
    
    625
    
    
    
    368Total liabilities
    
    
    52,153
    
    
    
    46,327Commitments and contingenciesShareholders equity:Preferred stock:10,000 shares authorized; -0- shares issued and outstanding
    
    
    
    
    
    
    Class A common stock; $.01 par value:70,000 shares authorized; 25,965 shares
issued and 25,806 shares outstanding and 25,803
shares issued and 25,644 shares outstanding at March 31, 2007 and December 31, 2006, respectively
    
    
    260
    
    
    
    258Class B common stock; $.01 par value:20,000 shares authorized; 0 shares issued and outstanding
    
    
    
    
    
    
    Paid-in capital
    
    
    113,349
    
    
    
    112,762Accumulated deficit
    
    
    (74,782
    )
    
    
    (63,470
    )Subtotal
    
    
    38,827
    
    
    
    49,550Accumulated other comprehensive income  foreign currency translation adjustments
    
    
    5,037
    
    
    
    3,428Treasury stock (159 shares)
    
    
    (882
    )
    
    
    (882
    )Total shareholders equity
    
    
    42,982
    
    
    
    52,096$
    95,135
    
    
    $
    98,423
  4




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##### 



LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Three Months EndedMarch 31,2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (9,286
    )
    
    $
    (2,160
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    593
    
    
    
    750Provision (recovery) for doubtful accounts
    
    
    (11
    )
    
    
    7Loss on disposal of Network Deployment business
    
    
    1,550
    
    
    
    Non-cash share-based compensation
    
    
    742
    
    
    
    490Changes in operating assets and liabilities:Trade, unbilled, and other receivables
    
    
    2,273
    
    
    
    4,968Accounts payable and accrued expenses
    
    
    (3,769
    )
    
    
    (9,617
    )Other current assets and liabilities
    
    
    3,860
    
    
    
    436Other non current assets and liabilities
    
    
    1,129
    
    
    
    61Net cash used in operating activities
    
    
    (2,919
    )
    
    
    (5,065
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (1,324
    )
    
    
    (254
    )Business acquisitions and investments
    
    
    (4,094
    )
    
    
    Net cash used in investing activities
    
    
    (5,418
    )
    
    
    (254
    )Cash flows from financing activities:Proceeds from issuance of common stock, net
    
    
    (263
    )
    
    
    Proceeds from exercise of options
    
    
    110
    
    
    
    370Borrowings on line of credit
    
    
    8,133
    
    
    
    8,532Payments on line of credit
    
    
    (2,370
    )
    
    
    (7,244
    )Net cash provided by financing activities
    
    
    5,610
    
    
    
    1,658Effect of exchange rate changes on cash and equivalents
    
    
    29
    
    
    
    55Net decrease in cash and cash equivalents
    
    
    (2,698
    )
    
    
    (3,606
    )Cash and cash equivalents at beginning of period
    
    
    6,445
    
    
    
    14,196Cash and cash equivalents at end of period
    
    $
    3,747
    
    
    $
    10,590Supplemental disclosures of cash flow information:Cash paid
during the period for:Interest
    
    $
    181
    
    
    $
    185Income taxes
    
    $
    777
    
    
    $
    82Supplemental
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
(UNAUDITED)
 NOTE 1. DESCRIPTION OF OPERATIONS AND BASIS OF PRESENTATION
     NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Significant accounting policies are as follows:
 Cash Equivalents and Restricted Cash
 6




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##### 



Concentration of Credit Risk
 March 31,
    
    December 31,2007
    
    2006(in thousands)Europe
    
    $
    10,989
    
    
    $
    10,206Middle East/Africa
    
    $
    22,146
    
    
    $
    19,990Asia-Pacific
    
    $
    252
    
    
    $
    288
   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,
 Goodwill and Other Intangible Assets Goodwill and
Other Intangible Assets
 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)
 Reclassifications
 NOTE 3. NEW ACCOUNTING STANDARDS
   Fair Value Measurements
 NOTE 4. BUSINESS COMBINATIONS
 Lines of Credit and Notes Payable
 9




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##### 



(in thousands)Fair value
of tangible net assets acquired:Cash and cash equivalents
    

 $
    250Trade accounts receivable (net)
    
    
    1,681Unbilled receivables
    
    
    1,637Fixed assets
    
    
    854Other assets
    
    
    487Liabilities assumed
    
    
    (4,161
    )Excess cost of acquiring WFI EMEA over fair value of identified
net assets acquired (goodwill)
    
    
    3,597$
    4,345
   NOTE 5. DISCONTINUED OPERATIONS
 Accounting for the Impairment or Disposal of Long-Lived Assets
  Three Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006(in thousands)Revenue
    
    $
    501
    
    
    $
    5,451Gross margin (loss)
    
    $
    47
    
    
    $
    (207
    )Loss from discontinued operations (net of applicable taxes of zero)
    
    $
    (502
    )
    
    $
    (732
    )Loss on
disposal of discontinued operations (net of applicable taxes of zero)
    
    
    (1,550
    )
    
    
    Total loss
from discontinued operations
    
    $
    (2,052
    )
    
    $
    (732
    )
  Sale of U.S. Network Deployment Business
  10




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##### 



Lines of Credit
and Notes Payable
   Three Months EndedMarch 31,
    
    
    March 31,2007
    
    
    2006(in thousands)Revenue
    
    $
    61
    
    
    $
    4,862Gross margin (loss)
    
    $
    61
    
    
    $
    (247
    )Income (loss) from discontinued operations (net of applicable taxes of zero)
    
    $
    49
    
    
    $
    (577
    )Loss on
disposal of discontinued operations (net of applicable taxes of zero)
    
    
    (1,550
    )
    
    
    Total loss
from discontinued operations
    
    $
    (1,501
    )
    
    $
    (577
    )
  March 31,
    
    December 31,2007
    
    2006(in thousands)Billed accounts receivable
    
    $
    183
    
    
    $
    183Accounts payable
    
    
    1,016
    
    
    
    1,087Accrued expenses
    
    
    593
    
    

    623
 Sale of Brazilian Subsidiary
   11




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##### 



Subsequent Events.
  Three Months EndedMarch 31,2007
    
    
    2006(in thousands)Revenue
    
    $
    440
    
    
    $
    589Gross margin (loss)
    
    $
    (14
    )
    
    $
    40Loss from discontinued operations (net of applicable taxes of zero)
    
    $
    (551
    )
    
    $
    (155
    )
  March 31,
    
    
    December 31,2007
    
    
    2006(in thousands)Cash and cash equivalents
    

$
    41
    
    
    $
    50Other receivables
    
    
    287
    
    
    
    418Other current assets
    
    
    64
    
    
    
    65Fixed assets
    
    
    59
    
    
    
    54Assets held for sale
    
    $
    451
    
    
    $
    587Accounts payable
    
    
    137
    
    
    $
    84Accrued employee compensation and benefits
    
    
    155
    
    
    
    113Other accrued expenses
    
    
    54
    
    
    
    66Liabilities held for sale
    
    $
    346
    
    
    $
    263
 NOTE 6. GOODWILL AND INTANGIBLES
  March 31,
    
    
    December 31,2007
    
    
    2006(in thousands)Goodwill
    
    $
    17,681
    
    
    $
    13,989Other intangibles:Customer relationships
    
    $
    1,103
    
    
    $
    1,098Trade names
    
    
    208
    
    
    
    205Patents
    
    
    28
    
    
    
    28Other
    
    
    162
    
    
    
    223Accumulated amortization
    
    
    (1,290
    )
    
    
    (1,261
    )Other intangibles
    
    $
    211
    
    
    $
    293
 12




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##### 



Business Combinations
 NOTE 7. OTHER COMPREHENSIVE INCOME (LOSS)
  Three months endedMarch 31,2007
    
    
    2006(in thousands)Net loss
    
    $
    (9,286
    )
    
    $
    (2,160
    )Other comprehensive loss, net of tax:Change in foreign currency translation gains
    
    
    436
    
    
    
    429Other comprehensive loss
    
    $
    (8,850
    )
    
    $
    (1,731
    )
 NOTE 8. RESTRUCTURING CHARGE
    13




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##### 



Severance
    
    Facilities
    
    Total(in thousands)Accrued restructuring
as of December 31, 2005
    
    $
    22
    
    
    $
    1,542
    
    
    $
    1,564Restructuring charge
    
    
    
    
    
    
    108
    
    
    
    108Reversal of excess severance
    
    
    (19
    )
    
    
    
    
    
    
    (19
    )Charges against the restructuring liability:Payments for excess office space, net of sublease income
    
    
    
    
    
    
    (645
    )
    
    
    (645
    )Other
    
    
    
    
    
    
    28
    
    
    
    28Accrued restructuring as of December 31, 2006
    
    
    3
    
    
    
    1,033
    
    
    
    1,036Restructuring charge
    
    
    
    
    
    
    
    
    
    
    Reversal of excess severance
    
    
    
    
    
    
    
    
    
    
    Charges against the restructuring liability:Payments for excess office space, net of sublease income
    
    
    
    
    
    
    (194
    )
    
    
    (194
    )Accrued restructuring as of March 31, 2007
    
    $
    3
    
    
    $
    839
    
    
    $
    842
  March 31,
    
    
    December 31,2007
    
    
    2006(in thousands)Accrued restructuring current
    
    $
    755
    
    
    $
    949Accrued restructuring non-current
    
    
    87
    
    
    
    87Accrued restructuring total
    
    $
    842
    
    
    $
    1,036
 NOTE 9. LINES OF CREDIT AND NOTES PAYABLE
 Discontinued Operations
   14




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##### 



Subsequent Events
 NOTE 10. SHARE-BASED COMPENSATION
  Americas
    
    EMEA
    
    Non Reportable Segments
    
    Total2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006(in thousands)Three Months ended March 31,Cost of revenues
    
    $
    9
    
    
    $
    33
    
    
    $
    25
    
    
    $
    12
    
    
    $
    
    
    
    $
    
    
    
    $
    34
    
    
    $
    45Sales and marketing
    
    
    16
    
    
    
    13
    
    
    
    23
    
    
    
    14
    
    
    
    58
    
    
    
    
    
    
    
    97
    
    
    
    27General and administrative
    
    
    11
    
    
    
    26
    
    
    
    69
    
    
    
    81
    
    
    
    523
    
    
    
    124
    
    
    
    603
    
    
    
    231$
    36
    
    
    $
    72
    
    
    $
    117
    
    
    $
    107
    
    
    $
    581
    
    
    $
    124
    
    
    $
    734
    
    
    $
    303
 NOTE 11. INCOME TAXES  ADOPTION OF FIN 48
    NOTE 12. SEGMENT REPORTING
 Disclosures about Segments of an Enterprise and Related Information
 15




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##### 



OperatingAmericas
    
    
    EMEA
    
    
    Segment Total2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands)Three Months ended March 31,Revenues:From external customers
    
    $
    4,173
    
    
    $
    8,684
    
    
    $
    20,467
    
    
    $
    27,059
    
    
    $
    24,640
    
    
    $
    35,743Inter-segment revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    $
    4,173
    
    
    $
    8,684
    
    
    $
    20,467
    
    
    $
    27,059
    
    
    $
    24,640
    
    
    $
    35,743Income (loss) before taxes
    
    $
    (1,869
    )
    
    $
    273
    
    
    $
    (1,267
    )
    
    $
    2,187
    
    
    $
    (3,136
    )
    
    $
    2,460Total assets
    
    $
    9,418
    
    
    $
    28,814
    
    
    $
    82,622
    
    
    $
    72,901
    
    
    $
    92,040
    
    
    $
    101,715
  Three Months EndedMarch 31,2007
    
    2006(in thousands)Revenues:Revenues for reportable segments
    
    $
    24,640
    
    
    $
    35,743Revenues for non-reportable segments
    
    
    
    
    
    
    Total consolidated revenues
    
    $
    24,640
    
    
    $
    35,743Income (loss) before income taxes:For reportable segments
    
    $
    (3,136
    )
    
    $
    2,460For non-reportable segments
    
    
    (3,451
    )
    
    
    (2,908
    )Total (loss) before taxes
    
    $
    (6,587
    )
    
    $
    (448
    )Assets:Assets for reportable segments
    
    $
    92,040
    
    
    $
    101,715Assets not attributable to reportable
segments:Cash and cash equivalents
    
    
    466
    
    
    
    4,873Restricted cash
    
    
    9
    
    
    
    37Deferred and prepaid tax assets
    
    
    1,135
    
    
    
    2,365Property and equipment
    
    
    669
    
    
    
    416Receivables
    
    
    253
    
    
    
    581Prepaids and other
    
    
    563
    
    
    
    512Total consolidated assets
    
    $
    95,135
    
    
    $
    110,499
 16




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##### 



NOTE 13. RELATED PARTY TRANSACTIONS
   NOTE 14. COMMITMENTS AND CONTINGENCIES
  NOTE
15. MANAGEMENTS PLANS, LIQUIDITY AND BUSINESS RISKS
  subsequent
events
  NOTE 16. SUBSEQUENT EVENTS
   17




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##### 



18




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##### 



19




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##### 



ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   OVERVIEW
   Americas:
 EMEA:
 Nonreportable segments:
    20




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##### 



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;
    
    increased spending 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; and
    
    increased percentage of revenues derived from our international operations.
   21




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##### 



RECENT
DEVELOPMENTS
 Business Combination
  SEC
Filing Deliquencies and NASDAQ Compliance
    22




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##### 



23




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##### 



RESULTS OF OPERATIONS
  Revenues, Cost of Revenues and Gross Margins
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2007
    
    
    March 31, 2006(in thousands)Revenues:Americas
    
    $
    4,173
    
    
    
    
    
    
    $
    8,684EMEA
    
    
    20,467
    
    
    
    
    
    
    
    27,059Nonreportable segments
    
    
    
    
    
    
    
    
    
    
    24,640
    
    
    
    
    
    
    
    35,743Cost of revenues:
    
    
    
    
    
    (% of revenue)
    
    
    
    
    
    (% of revenue)Americas
    
    
    4,513
    
    
    
    108.1
    %
    
    
    6,789
    
    
    
    78.2
    %EMEA
    
    
    16,446
    
    
    
    80.4
    %
    
    
    20,314
    
    
    
    75.1
    %Nonreportable segments
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    0.0
    %20,939
    
    
    
    85.0
    %
    
    
    27,103
    
    
    
    75.8
    %Gross margins:Americas
    
    
    (340
    )
    
    
    (8.1
    )%
    
    
    1,895
    
    
    
    21.8
    %EMEA
    
    
    4,021
    
    
    
    19.6
    %
    
    
    6,745
    
    
    
    24.9
    %Nonreportable segments
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    100.0
    %$
    3,701
    
    
    
    15.0
    %
    
    $
    8,640
    
    
    
    24.2
    %
 Americas
  EMEA
  Nonreportable
segments
  24




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##### 



Operating Expense
 Three Months EndedMarch 31, 2007
    
    
    March 31, 2006(in thousands)Sales and
marketing:Americas
    
    $
    633
    
    
    $
    555EMEA
    
    
    1,432
    
    
    
    1,466Nonreportable segments
    
    
    842
    
    
    
    42,907
    
    
    
    2,025Bad debt
expense (recovery):Americas
    
    
    
    
    
    
    22EMEA
    
    
    
    
    
    
    (41
    )Nonreportable segments
    
    
    
    
    
    
    
    
    
    
    (19
    )General and
administrative:Americas
    
    
    857
    
    
    
    781EMEA
    
    
    2,865
    
    
    
    2,415Nonreportable segments
    
    
    2,618
    
    
    
    3,0056,340
    
    
    
    6,201Depreciation
and amortization:Americas
    
    
    75
    
    
    
    135EMEA
    
    
    477
    
    
    
    435Nonreportable segments
    
    
    71
    
    
    
    85623
    
    
    
    655Total:Americas
    
    
    1,565
    
    
    
    1,493EMEA
    
    
    4,774
    
    
    
    4,275Nonreportable segments
    
    
    3,531
    
    
    
    3,094Total
    
    $
    9,870
    
    
    $
    8,862
   25




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##### 



Other Income and Expense
 Three Months EndedMarch 31, 2007
    
    
    March 31, 2006Interest income:Americas
    
    $
    
    
    
    $
    EMEA
    
    
    12
    
    
    
    6Nonreportable segment
    
    
    43
    
    
    
    955
    
    
    
    15Interest expense:Americas
    
    
    
    
    
    
    EMEA
    
    
    (5
    )
    
    
    Nonreportable segment
    
    
    (203
    )
    
    
    (186
    )(208
    )
    
    
    (186
    )Other:Americas
    
    
    36
    
    
    
    (132
    )EMEA
    
    
    (524
    )
    
    
    (290
    )Nonreportable segment
    
    
    223
    
    
    
    367(265
    )
    
    
    (55
    )Total:Americas
    
    
    36
    
    
    
    (132
    )EMEA
    
    
    (517
    )
    
    
    (284
    )Nonreportable segment
    
    
    63
    
    
    
    190Total
    
    $
    (418
    )
    
    $
    (226
    )
   Tax Expense
  26




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##### 



Liquidity and Capital Resources
  Sources and Uses of Cash
 Three Months EndedMarch 31, 2007
    
    
    March 31, 2006(in thousands)Net cash used in operating activities
    
    $
    (2,919
    )
    
    $
    (5,065
    )Net cash used in investing activities
    
    
    (5,418
    )
    
    
    (254
    )Net cash provided by financing activities
    
    
    5,610
    
    
    
    1,658Effect of exchange rates on cash and equivalents
    
    
    29
    
    
    
    55Net decrease in cash and cash equivalents
    
    $
    (2,698
    )
    
    $
    (3,606
    )
    Lines of Credit and Notes
Payable
     27




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##### 



Cash Requirements
 March 31, 2007
    
    
    December 31, 2006(in thousands)Cash and
cash equivalents (excluding restricted cash)
    
    $
    3,747
    
    
    $
    6,445Lines of credit  short term
    
    $
    6,556
    
    
    $
    1,038Lines of credit  long term
    
    $
    267
    
    
    $
    Note payable
    
    $
    577
    
    
    $
    3,188Working capital
    
    $
    20,136
    
    
    $
    33,490
     28




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##### 



CRITICAL ACCOUNTING POLICIES
  
    
    revenue recognition;
    
    allowance for doubtful accounts;
    
    accounting for income taxes;
    
    restructuring charge;
    
    share-based compensation; and
    
    goodwill and intangibles.
 Revenue recognition
  29




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##### 



Allowance for doubtful accounts
  Accounting for income taxes
  Accounting for Uncertainty in Income Taxes An Interpretation of FASB Statement No. 109
 Restructuring charge
  Share-Based Compensation
   30




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##### 



Goodwill and Intangibles
 Goodwill and Other Intangible Assets
    RELATED PARTY TRANSACTIONS
   31




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##### 



ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      ITEM 4. CONTROLS AND PROCEDURES
    Material
Weaknesses in Internal Controls over Financial Reporting
    32




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##### 



nd
  
    
    Provided management training of operations and financial personnel as to the
identification of all of the cost elements that should be included in the accrual of
costs related to its deployment activities.
    
    Required a monthly review by the SVP of EMEA of all elements of the entity level
financial statements including all accrual based entries.
    
    
    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.
   33




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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
 10.1
    
    
    
    Agreement, dated as of
March 9, 2007, by and between LCC Wireless Engineering Services,
Inc. and Wireless Facilities, Inc. (incorporated by reference to
Exhibit 10.1 to the Companys Report on Form 8-K filed
with the SEC on March 9, 2007)10.2
    
    
    
    Purchase Agreement, dated as of
April 19, 2007, by and among LCC International, Inc. and the
Investors set forth on the signature pages affixed thereto
(incorporated by reference to Exhibit 10.40 to the
Companys Annual Report on Form 10-K for the year ended
December 31, 2006)10.3
    
    
    
    Registration Rights Agreement,
dated as of April 19, 2007, by and among LLC International, Inc.
and the Investors executing the Agreement and named in the Purchase
Agreement (incorporated by reference to Exhibit 10.41 to the
Companys Annual Report on Form 10-K for the year ended
December 31, 2006)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.
 34




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##### 



SIGNATURE
  /s/ Louis Salamone, Jr.Louis Salamone, Jr.Executive Vice President, Chief Financial Officer and Treasurer  35