##### 









United States Securities and Exchange
Commission

Washington, DC 20549




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Form 10-Q

(Mark One)

|     |  |                                                                                                                                                                     
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[X]  |  | Quarterly report pursuant to Section 13
    or 15(d) of the Securities
    Exchange Act of 1934
    For the quarterly period ended June 30, 2004                    
|     |  | or                                                                                                                                                                  
|[  ] |  | 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)




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|                                                                   |  |                                        
|------------------------------------------------------------------ |  | ---------------------------------------
|Delaware                                                           |  | 54-1807038                             
|(State or Other Jurisdiction of
    Incorporation or Organization) |  | (I.R.S. Employer Identification Number)
|                                                                  
|7925 Jones Branch Drive, McLean, VA                                |  | 22102                                  
|(Address of Principal Executive Offices)                           |  | (Zip Code)                             

Registrants telephone number, including
area code: (703) 873-2000

Not Applicable




(Former name, former address and former fiscal
year, if changed, since last report.)

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days. Yes X    No

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Exchange
Act). Yes           No X

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:


Indicate by check mark whether the registrant has
filed all documents and reports required to be filed by
Sections 12, 13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan
confirmed by a
court. Yes           No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each
of the issuers classes of common stock, as of the latest
practicable date.

As of August 2, 2004 the registrant had
outstanding 19,861,194 shares of Class A Common Stock, par value
$0.01 per share (the Class A Common Stock) and
4,537,577 shares of Class B Common Stock, par value $0.01
per share (the Class B Common Stock).



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##### 



LCC International, Inc. and
Subsidiaries

Quarterly Report on Form 10-Q

For the quarter ended June 30,
2004


INDEX

|         |  |                                                                                                                          |  |        |    | 
|-------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ------ | -- | 
|         |  |                                                                                                                          |  | Page  
|         |  |                                                                                                                          |  | Number
|         |  |                                                                                                                          |  |       
|PART I:  |  | FINANCIAL INFORMATION                                                                                                    |  |        |    | 
|ITEM 1:  |  | FINANCIAL STATEMENTS                                                                                                     |  |        |    | 
|         |  | Condensed consolidated statements of operations
    for the three months and
    six months ended June 30, 2003 and 2004 |  |        | 3  | 
|         |  | Condensed consolidated balance sheets as of
    December 31, 2003 and
    June 30, 2004                                  |  |        | 4  | 
|         |  | Condensed consolidated statements of cash flows
    for the six months ended
    June 30, 2003 and 2004                  |  |        | 5  | 
|         |  | Notes to condensed consolidated financial
    statements                                                                 |  |        | 6  | 
|ITEM 2:  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                |  |        | 13 | 
|ITEM 3:  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK                                                           |  |        | 22 | 
|ITEM 4:  |  | CONTROLS AND PROCEDURES                                                                                                  |  |        | 23 | 
|        
|PART II: |  | OTHER INFORMATION                                                                                                        |  |        |    | 
|ITEM 1:  |  | Legal proceedings                                                                                                        |  |        | 24 | 
|ITEM 2:  |  | Changes in securities, Use of Proceeds, and
    Issuer Purchases of Equity Securities                                    |  |        | 24 | 
|ITEM 3:  |  | Defaults upon senior securities                                                                                          |  |        | 24 | 
|ITEM 4:  |  | Submission of matters to a vote of security
    holders                                                                  |  |        | 24 | 
|ITEM 5:  |  | Other information                                                                                                        |  |        | 25 | 
|ITEM 6:  |  | Exhibits and reports on Form 8-K                                                                                         |  |        | 25 | 

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 Ended |        | Six Months Ended
|                                                                                |                                 | June 30,           |        | June 30,        
|                                                                                |                                 |                    |        |                 
|                                                                                |                                 | 2003               |        | 2004             |   | 2003 |        | 2004  
|                                                                                |                                 |                    |        |                  |   |      |        |       
|REVENUES                                                                        |                                 | $                  | 18,187 |                  |   | $    | 52,618 |        |   | $ | 35,327 |        |   | $ | 97,667 |       
|COST OF REVENUES                                                                |                                 |                    | 14,860 |                  |   |      | 42,639 |        |   |   | 29,459 |        |   |   | 80,736 |       
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|GROSS PROFIT                                                                    |                                 |                    | 3,327  |                  |   |      | 9,979  |        |   |   | 5,868  |        |   |   | 16,931 |       
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|OPERATING (INCOME) EXPENSE:                                                     |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|                                                                                | Sales and marketing             |                    |        | 1,481            |   |      |        | 1,884  |   |   |        | 3,437  |   |   |        | 3,652  |  
|                                                                                | General and administrative      |                    |        | 4,731            |   |      |        | 6,600  |   |   |        | 9,469  |   |   |        | 12,833 |  
|                                                                                | Restructuring charge (recovery) |                    |        |                 |   |      |        | (924   | ) |   |        | (152   | ) |   |        | (924   | )
|                                                                                | Depreciation and amortization   |                    |        | 810              |   |      |        | 613    |   |   |        | 1,606  |   |   |        | 1,369  |  
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|                                                                                |                                 |                    | 7,022  |                  |   |      | 8,173  |        |   |   | 14,360 |        |   |   | 16,930 |       
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|OPERATING INCOME (LOSS)                                                         |                                 |                    | (3,695 | )                |   |      | 1,806  |        |   |   | (8,492 | )      |   |   | 1      |       
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|OTHER INCOME (EXPENSE):                                                         |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|                                                                                | Interest income                 |                    |        | 101              |   |      |        | 52     |   |   |        | 197    |   |   |        | 111    |  
|                                                                                | Interest expense                |                    |        | (41              | ) |      |        | (41    | ) |   |        | (49    | ) |   |        | (92    | )
|                                                                                | Other                           |                    |        | 120              |   |      |        | 369    |   |   |        | 1,369  |   |   |        | 521    |  
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|                                                                                |                                 |                    | 180    |                  |   |      | 380    |        |   |   | 1,517  |        |   |   | 540    |       
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES                               |                                 |                    | (3,515 | )                |   |      | 2,186  |        |   |   | (6,975 | )      |   |   | 541    |       
|PROVISION (BENEFIT) FOR INCOME TAXES                                            |                                 |                    | 460    |                  |   |      | 872    |        |   |   | (838   | )      |   |   | 781    |       
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|NET INCOME (LOSS)                                                               |                                 | $                  | (3,975 | )                |   | $    | 1,314  |        |   | $ | (6,137 | )      |   | $ | (240   | )     
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|NET INCOME (LOSS) PER SHARE:                                                    |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|                                                                                | Basic                           |                    | $      | (0.19            | ) |      | $      | 0.05   |   |   | $      | (0.29  | ) |   | $      | (0.01  | )
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|                                                                                | Diluted                         |                    | $      | (0.19            | ) |      | $      | 0.05   |   |   | $      | (0.29  | ) |   | $      | (0.01  | )
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|WEIGHTED AVERAGE SHARES USED IN CALCULATION OF
    NET INCOME (LOSS) PER SHARE: |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|                                                                                | Basic                           |                    |        | 20,969           |   |      |        | 24,381 |   |   |        | 20,964 |   |   |        | 24,325 |  
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       
|                                                                                | Diluted                         |                    |        | 20,969           |   |      |        | 25,281 |   |   |        | 20,964 |   |   |        | 24,325 |  
|                                                                                |                                 |                    |        |                  |   |      |        |        |   |   |        |        |   |   |        |       

See accompanying notes to condensed consolidated
financial statements.

3



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##### 



LCC International, Inc. and
Subsidiaries

Condensed Consolidated Balance
Sheets

(In thousands, except per share
data)


(Unaudited)


|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |        |         | 
|------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ------- | -------- | ------ | - | ------- | ------ | ------- | 
|                                                                                      |                                                                                                                                        | December 31,                                |         | June 30,
|                                                                                      |                                                                                                                                        | 2003                                        |         | 2004    
|                                                                                      |                                                                                                                                        |                                             |         |         
|ASSETS:                                                                               |                                                                                                                                        |                                             |         |          |        |   |         |       
|Current assets:                                                                       |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      | Cash and cash equivalents                                                                                                              |                                             | $       | 28,943   |        |   | $       | 17,161 |        
|                                                                                      | Restricted cash                                                                                                                        |                                             |         | 1,568    |        |   |         | 1,540  |        
|                                                                                      | Short-term investments                                                                                                                 |                                             |         | 520      |        |   |         |       |        
|                                                                                      | Receivables, net of allowance for doubtful
    accounts of $466 and $593 at
    December 31, 2003 and June 30, 2004, respectively:     |                                             |         |          |        |   |         |        |        
|                                                                                      |                                                                                                                                        | Trade accounts receivable                   |         |          | 27,456 |   |         |        | 42,175  | 
|                                                                                      |                                                                                                                                        | Unbilled receivables                        |         |          | 35,007 |   |         |        | 40,617  | 
|                                                                                      |                                                                                                                                        | Due from related parties and
    affiliates |         |          | 180    |   |         |        | 149     | 
|                                                                                      | Deferred income taxes, net                                                                                                             |                                             |         | 3,547    |        |   |         | 3,530  |        
|                                                                                      | Prepaid expenses and other current assets                                                                                              |                                             |         | 1,726    |        |   |         | 1,903  |        
|                                                                                      | Prepaid tax receivable and prepaid taxes                                                                                               |                                             |         | 662      |        |   |         | 696    |        
|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      |                                                                                                                                        | Total current assets                        |         |          | 99,609 |   |         |        | 107,771 | 
|Property and equipment, net                                                           |                                                                                                                                        |                                             | 3,818   |          |        |   | 4,577   |       
|Investments in affiliates                                                             |                                                                                                                                        |                                             | 764     |          |        |   | 660     |       
|Deferred income taxes, net                                                            |                                                                                                                                        |                                             | 1,407   |          |        |   | 683     |       
|Goodwill                                                                              |                                                                                                                                        |                                             | 11,115  |          |        |   | 11,371  |       
|Other intangibles                                                                     |                                                                                                                                        |                                             | 843     |          |        |   | 677     |       
|Other assets                                                                          |                                                                                                                                        |                                             | 1,035   |          |        |   | 1,696   |       
|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      |                                                                                                                                        | $                                           | 118,591 |          |        | $ | 127,435 |       
|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       
|LIABILITIES AND SHAREHOLDERS
    EQUITY:                                             |                                                                                                                                        |                                             |         |          |        |   |         |       
|Current liabilities:                                                                  |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      | Line of credit                                                                                                                         |                                             | $       | 1,840    |        |   | $       | 1,265  |        
|                                                                                      | Accounts payable                                                                                                                       |                                             |         | 11,485   |        |   |         | 20,044 |        
|                                                                                      | Accrued expenses                                                                                                                       |                                             |         | 21,152   |        |   |         | 23,864 |        
|                                                                                      | Accrued employee compensation and benefits                                                                                             |                                             |         | 5,525    |        |   |         | 5,671  |        
|                                                                                      | Deferred revenue                                                                                                                       |                                             |         | 471      |        |   |         | 717    |        
|                                                                                      | Income taxes payable                                                                                                                   |                                             |         | 967      |        |   |         | 856    |        
|                                                                                      | Accrued restructuring current                                                                                                          |                                             |         | 2,903    |        |   |         | 1,692  |        
|                                                                                      | Other current liabilities                                                                                                              |                                             |         | 286      |        |   |         | 26     |        
|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      |                                                                                                                                        | Total current liabilities                   |         |          | 44,629 |   |         |        | 54,135  | 
|                                                                                      | Accrued restructuring non-current                                                                                                      |                                             |         | 3,432    |        |   |         | 2,527  |        
|                                                                                      | Other liabilities                                                                                                                      |                                             |         | 762      |        |   |         | 751    |        
|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      |                                                                                                                                        | Total liabilities                           |         |          | 48,823 |   |         |        | 57,413  | 
|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       
|Shareholders equity:                                                                 |                                                                                                                                        |                                             |         |          |        |   |         |       
|Preferred stock:                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      | 10,000 shares authorized; 0 shares issued and
    outstanding                                                                          |                                             |         |         |        |   |         |       |        
|Class A common stock, $0.01 par value:                                                |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      | 70,000 shares authorized; 19,549 and 19,855
    shares issued and outstanding at December 31, 2003 and June
    30, 2004, respectively |                                             |         | 195      |        |   |         | 199    |        
|Class B common stock, $0.01 par value:                                                |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      | 20,000 shares authorized; 4,638 and 4,538 shares
    issued and outstanding at December 31, 2003 and
    June 30, 2004, respectively   |                                             |         | 46       |        |   |         | 45     |        
|Paid-in capital                                                                       |                                                                                                                                        |                                             | 106,262 |          |        |   | 107,142 |       
|Accumulated deficit                                                                   |                                                                                                                                        |                                             | (36,602 | )        |        |   | (36,842 | )     
|Note receivable from shareholder                                                      |                                                                                                                                        |                                             | (1,557  | )        |        |   | (1,557  | )     
|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      | Subtotal                                                                                                                               |                                             |         | 68,344   |        |   |         | 68,987 |        
|Accumulated other comprehensive income 
    foreign currency translation adjustments |                                                                                                                                        |                                             | 1,424   |          |        |   | 1,035   |       
|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      |                                                                                                                                        | Total shareholders equity                  |         |          | 69,768 |   |         |        | 70,022  | 
|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       
|                                                                                      |                                                                                                                                        | $                                           | 118,591 |          |        | $ | 127,435 |       
|                                                                                      |                                                                                                                                        |                                             |         |          |        |   |         |       

See accompanying notes to condensed consolidated
financial statements.

4



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##### 



LCC International, Inc. and
Subsidiaries

Condensed Consolidated Statements of Cash
Flows

(In thousands)


(Unaudited)


|                                                   |                                                                                 |                                  |                                              |                                          |   |        |         |         |   |       |         |  
|-------------------------------------------------- | ------------------------------------------------------------------------------- | -------------------------------- | -------------------------------------------- | ---------------------------------------- | - | ------ | ------- | ------- | - | ----- | ------- | -
|                                                   |                                                                                 |                                 
|                                                   |                                                                                 | Six Months Ended                
|                                                   |                                                                                 | June 30,                        
|                                                   |                                                                                 |                                 
|                                                   |                                                                                 | 2003                             |                                              | 2004                                    
|                                                   |                                                                                 |                                  |                                              |                                         
|Cash flows from operating activities:              |                                                                                 |                                  |                                              |                                          |   |        |         |        
|                                                   | Net loss                                                                        |                                  | $                                            | (6,137                                   | ) |        | $       | (240    | )
|                                                   | Adjustments to reconcile net loss to net cash
    used in operating activities: |                                  |                                              |                                          |   |        |         |         |  
|                                                   |                                                                                 |                                  | Depreciation and amortization                |                                          |   | 1,606  |         |         |   | 1,369 |        
|                                                   |                                                                                 |                                  | Provision (recovery) for doubtful accounts   |                                          |   | (1,257 | )       |         |   | 100   |        
|                                                   |                                                                                 |                                  | Loss on equity method investment             |                                          |   |       |         |         |   | 464   |        
|                                                   |                                                                                 |                                  | Restructuring charge (recovery)              |                                          |   | (152   | )       |         |   | (924  | )      
|                                                   |                                                                                 |                                  | Changes in operating assets and liabilities: |                                          |   |        |         |         |   |       |        
|                                                   |                                                                                 |                                  |                                              | Trade, unbilled, and other receivables   |   |        | (3,057  | )       |   |       | (20,411 | )
|                                                   |                                                                                 |                                  |                                              | Accounts payable and accrued expenses    |   |        | (2,664  | )       |   |       | 11,418  |  
|                                                   |                                                                                 |                                  |                                              | Other current assets and liabilities     |   |        | (744    | )       |   |       | (1,213  | )
|                                                   |                                                                                 |                                  |                                              | Other non-current assets and liabilities |   |        | (294    | )       |   |       | (894    | )
|                                                   |                                                                                 |                                  |                                              |                                          |   |        |         |        
|Net cash used in operating activities              |                                                                                 |                                  | (12,699                                      | )                                        |   |        | (10,331 | )      
|                                                   |                                                                                 |                                  |                                              |                                          |   |        |         |        
|Cash flows from investing activities:              |                                                                                 |                                  |                                              |                                          |   |        |         |        
|                                                   | Purchases of property and equipment                                             |                                  |                                              | (477                                     | ) |        |         | (2,014  | )
|                                                   | Proceeds from disposals of property and equipment                               |                                  |                                              | 32                                       |   |        |         | 30      |  
|                                                   | Investments                                                                     |                                  |                                              | (273                                     | ) |        |         | (360    | )
|                                                   |                                                                                 |                                  |                                              |                                          |   |        |         |        
|Net cash used in investing activities              |                                                                                 |                                  | (718                                         | )                                        |   |        | (2,344  | )      
|                                                   |                                                                                 |                                  |                                              |                                          |   |        |         |        
|Cash flows from financing activities:              |                                                                                 |                                  |                                              |                                          |   |        |         |        
|                                                   | Borrowings on line of credit                                                    |                                  |                                              | 2,787                                    |   |        |         | 10,242  |  
|                                                   | Payments on line of credit                                                      |                                  |                                              | (794                                     | ) |        |         | (10,780 | )
|                                                   | Proceeds from issuance of common stock, net                                     |                                  |                                              | 37                                       |   |        |         | 47      |  
|                                                   | Proceeds from exercise of options                                               |                                  |                                              |                                         |   |        |         | 836     |  
|                                                   | Proceeds/purchases of short-term investments                                    |                                  |                                              | (17                                      | ) |        |         | 520     |  
|                                                   | Decrease (increase) in restricted cash                                          |                                  |                                              | (229                                     | ) |        |         | 28      |  
|                                                   |                                                                                 |                                  |                                              |                                          |   |        |         |        
|Net cash provided by financing activities          |                                                                                 |                                  | 1,784                                        |                                          |   |        | 893     |        
|                                                   |                                                                                 |                                  |                                              |                                          |   |        |         |        
|Net decrease in cash and cash equivalents          |                                                                                 |                                  | (11,633                                      | )                                        |   |        | (11,782 | )      
|Cash and cash equivalents at beginning of period   |                                                                                 |                                  | 37,507                                       |                                          |   |        | 28,943  |        
|                                                   |                                                                                 |                                  |                                              |                                          |   |        |         |        
|Cash and cash equivalents at end of period         |                                                                                 | $                                | 25,874                                       |                                          |   | $      | 17,161  |        
|                                                   |                                                                                 |                                  |                                              |                                          |   |        |         |        
|Supplemental disclosures of cash flow information: |                                                                                 |                                  |                                              |                                          |   |        |         |        
|                                                   |                                                                                 | Cash paid during the period for: |                                              |                                          |   |        |         |         |   |      
|                                                   |                                                                                 |                                  | Income taxes                                 |                                          | $ | 224    |         |         | $ | 182   |        
|                                                   |                                                                                 |                                  | Interest                                     |                                          |   | 30     |         |         |   |      |        

Supplemental disclosures of cash flow information:

In May 2003, in satisfaction of the purchase
agreement between the Company and Westminster Capital, B.V.
(Westminster), the Company paid Westminster
approximately $0.3 million in cash and assigned a note to
Westminster in the amount of approximately $0.2 million. As
a result of the note assignment, goodwill and other intangibles
assets increased, offset by an increase in due to related
parties, which is included in accounts payable on the condensed
consolidated balance sheet.

See accompanying notes to condensed consolidated
financial statements.

5



---



##### 



LCC International, Inc. and
Subsidiaries

Notes to Condensed Consolidated Financial
Statements

(Unaudited)


(1) Description of Operations

LCC International Inc. a Delaware Corporation
(LCCI), was formed in 1983. Unless the context
indicates otherwise, the terms the Company,
we, us, and our refer herein
to LCCI.

We provide integrated end-to-end solutions for
wireless voice and data communication networks with service
offerings to include high level technical consulting, to system
design and deployment, to ongoing operations and maintenance
services. We operate in a highly competitive environment subject
to rapid technological change and emergence of new technologies.
Historically, the key drivers of changes in our wireless
services business have been (1) the issuance of new or
additional licenses to wireless operators; (2) the
introduction of new services or technologies; (3) increases
in the number of subscribers served by wireless operators;
(4) the increasing complexity of wireless systems in
operation; and (5) changes in wireless infrastructure
spending and deployment. Although we believe that our services
are transferable to emerging technologies, rapid changes in
technology and deployment could have an adverse financial impact
on us.

(2) Basis of Presentation

We have prepared the condensed consolidated
financial statements included herein without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission and they reflect all adjustments that are, in the
opinion of management, necessary for a fair presentation of the
results for the interim periods.

Certain information and footnote disclosure
normally included in the consolidated financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or
omitted. The interim financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in our Annual Report on Form 10-K for the
year ended December 31, 2003. Operating results for the
interim periods are not necessarily indicative of results for an
entire year.

(3) Equity-Based Compensation

We account for equity-based compensation
arrangements in accordance with the provisions of Accounting
Principles Board (APB) No. 25,
Accounting for Stock Issued to Employees,and
related interpretations including FASB Interpretation
No. 44, and comply with the disclosure provisions of
SFAS No. 123, Accounting for Stock-Based
Compensation.All equity-based awards to non-employees
are accounted for at their fair value in accordance with FASB
SFAS No. 123. Under APB No. 25, compensation
expense is based upon the difference, if any, on the date of
grant between the fair value of our stock and the exercise price.

6



---



##### 



Our pro-forma net income (loss) would have been
the following had compensation cost for our stock
based-compensation plans and employee stock purchase plan been
determined on the fair value at the grant dates for awards under
those plans, consistent with FASB SFAS No. 123.

|                            |                                                                                                     |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |        |       |  
|--------------------------- | --------------------------------------------------------------------------------------------------- | -------------- | - | ---------------- | ----- | ---- | - | ----- | ---- |  | - | ------ | ----- | - | - | ------ | ----- | -
|                            |                                                                                                     |                |   |                 
|                            |                                                                                                     | Three Months   |   | Six Months Ended
|                            |                                                                                                     | Ended June 30, |   | June 30,        
|                            |                                                                                                     |                |   |                 
|                            |                                                                                                     | 2003           |   | 2004             |       | 2003 |   | 2004 
|                            |                                                                                                     |                |   |                  |       |      |   |      
|Net income (loss):          |                                                                                                     |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |       
|                            | Net income (loss) as reported                                                                       |                | $ | (3,975           | )     |      | $ | 1,314 |      |  | $ | (6,137 | )     |   | $ | (240   | )    
|                            | Deduct total stock-based employee compensation
    expense determined under fair value based method |                |   | (582             | )     |      |   | (459  | )    |  |   | (1,545 | )     |   |   | (2,171 | )    
|                            |                                                                                                     |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |       
|                            | Pro forma net income (loss)                                                                         |                | $ | (4,557           | )     |      | $ | 855   |      |  | $ | (7,682 | )     |   | $ | (2,411 | )    
|                            |                                                                                                     |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |       
|Net income (loss) per share |                                                                                                     |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |       
|                            | As reported:                                                                                        |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |        |      
|                            |                                                                                                     | Basic          |   | $                | (0.19 | )    |   | $     | 0.05 |  |   | $      | (0.29 | ) |   | $      | (0.01 | )
|                            |                                                                                                     |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |       
|                            |                                                                                                     | Diluted        |   | $                | (0.19 | )    |   | $     | 0.05 |  |   | $      | (0.29 | ) |   | $      | (0.01 | )
|                            |                                                                                                     |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |       
|                            | Pro forma:                                                                                          |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |        |      
|                            |                                                                                                     | Basic          |   | $                | (0.22 | )    |   | $     | 0.04 |  |   | $      | (0.37 | ) |   | $      | (0.10 | )
|                            |                                                                                                     |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |       
|                            |                                                                                                     | Diluted        |   | $                | (0.22 | )    |   | $     | 0.03 |  |   | $      | (0.37 | ) |   | $      | (0.10 | )
|                            |                                                                                                     |                |   |                  |       |      |   |       |      |  |   |        |       |   |   |       

(4) Other Comprehensive Income
(Loss)

Comprehensive income (loss) is defined as
net income (loss) plus the change in equity of a business
enterprise during a period from transactions and other events
and circumstances from non-owner sources. Other comprehensive
income (loss) refers to revenues, expenses, gains and
losses that under accounting principles generally accepted in
the United States of America are included in comprehensive
income (loss), but excluded from net income (loss). Accumulated
other comprehensive income (loss) consists solely of
foreign currency translation adjustments at June 30, 2003
and 2004. Comprehensive income (loss) for the three and six
months ended June 30 is as follows (in thousands).

|                                                                         |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |       |  
|------------------------------------------------------------------------ |  | ------------------ | ------ | ---------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ----- | -
|                                                                         |  |                    |        |                 
|                                                                         |  | Three Months Ended |        | Six Months Ended
|                                                                         |  | June 30,           |        | June 30,        
|                                                                         |  |                    |        |                 
|                                                                         |  | 2003               |        | 2004             |  | 2003 |       | 2004
|                                                                         |  |                    |        |                  |  |      |       |     
|Net income (loss)                                                        |  | $                  | (3,975 | )                |  | $    | 1,314 |      |  | $ | (6,137 | ) |  | $ | (240  | )
|                                                                         |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |       |  
|Other comprehensive income (loss), before tax                            |  |                    | 1,870  |                  |  |      | 940   |      |  |   | 1,251  |   |  |   | 875   |  
|Income tax provision related to items of
    comprehensive income (loss) |  |                    | 382    |                  |  |      | 1,268 |      |  |   | 150    |   |  |   | 1,264 |  
|                                                                         |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |       |  
|Other comprehensive income (loss), net of tax                            |  |                    | 1,488  |                  |  |      | (328  | )    |  |   | 1,101  |   |  |   | (389  | )
|                                                                         |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |       |  
|Comprehensive income (loss)                                              |  | $                  | (2,487 | )                |  | $    | 986   |      |  | $ | (5,036 | ) |  | $ | (629  | )
|                                                                         |  |                    |        |                  |  |      |       |      |  |   |        |   |  |   |       |  

(5) Related Party Transactions

RF Investors, a subsidiary of Telcom Ventures,
owns the Class B Common Stock shares outstanding, which
have ten-to-one voting rights over the Class A Common Stock
shares and therefore represent approximately 70% voting control.

Prior to our initial public offering, both our
employees and the employees of Telcom Ventures were eligible to
participate in our life, medical, dental and 401(k) plans. In
connection with our initial public offering in 1996, we agreed
pursuant to an Overhead and Administrative Services Agreement to
allow the employees of Telcom Ventures to continue to
participate in our employee benefit plans in exchange for full

7



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##### 



reimbursement of our cash costs and expenses. We
billed Telcom Ventures $71,000 during the year ended
December 31, 2003 and $39,000 for the first half of 2004
for payments made by us pursuant to this agreement. We received
reimbursements from Telcom Ventures of $65,000 during 2003 and
$29,000 for the first half of 2004. At December 31, 2003
and June 30, 2004, outstanding amounts associated with
payments made by us under this agreement were $6,000 and
$16,000, respectively, and are included as due from related
parties and affiliates within the condensed consolidated balance
sheets in the accompanying financial statements.


During the second quarter of 2004, we provided
services to two customers where Telcom Ventures has a minority
investment. Dr. Rajendra Singh, a director of Telcom
Ventures, is a member of our Board of Directors. Revenues earned
from these customers during the quarter were $90,000 and
receivables of $77,000 were outstanding at June 30, 2004,
and are included in trade accounts receivable in the
accompanying condensed consolidated balance sheet.

In December 1999, we issued approximately 108,000
shares of Class A Common Stock in exchange for a
$1.6 million note receivable from our President and Chief
Executive Officer. The note is payable on the earlier of
December 2004 or the date he is no longer our President and
Chief Executive Officer. Upon the event of a change in control
of our ownership, the note will be forgiven. Interest accrues at
the federal midterm rate on the date of the note and is payable
quarterly. The note is reflected as a reduction of
shareholders equity in the accompanying statement of
shareholders equity.

In July 2002, we acquired 51 percent of the
outstanding shares of Detron LCC Network Services B.V.
(Detron), a newly formed corporation in the
Netherlands. Our 49% partner, Detron Corporation B.V.
through various corporate affiliates has certain ongoing
transactions with Detron. Under a five-year lease agreement for
office space, Detron recorded approximately $50,000 of rent
expense for the six months ended June 30, 2003 and 2004.
During the six months ended June 30, 2003 and 2004,
respectively Detron seconded various idle employees to Detron
Telematics, an affiliate of Detron Corporation B.V. and
recorded revenue of approximately $284,000 and $46,000,
respectively.

(6) Restructuring Charge

In 2002, we adopted a restructuring plan and
recorded restructuring charges of $13.5 million. The cost
of the severance and associated expenses was approximately
$1.0 million and resulted in a work force reduction of
approximately 140 people. In addition, we had excess
facility costs relative to the space occupied by the employees
affected by the reduction in force, space previously occupied by
divested operations, and reduced business use of office space
resulting from a continued trend for clients to provide
professional staff office space for our employees while
performing their services. The charge for the excess office
space was approximately $12.5 million, which included
$1.5 million in written-off leasehold improvements and
other assets related to the excess space. The facility charge
equals the existing lease obligation less the anticipated rental
receipts to be received from existing and potential subleases.
This charge required significant judgments about the length of
time that space will remain vacant, anticipated cost escalators
and operating costs associated with the leases, market rate of
the subleased space, and broker fees or other costs necessary to
market the space. As of June 30, 2004, the restructuring
charge calculation assumes we will receive $11.9 million in
sublease income, of which $6.0 million is committed.

During the first quarter of 2003, we reversed
excess severance payable of approximately $0.2 million.
During the third quarter of 2003, we reoccupied a portion of our
office space in McLean, Virginia and reversed $0.4 million
of the payable and recorded an increase in the restructuring
payable of $0.5 million related to an estimated increase in
the time period expected to sublease space in our London office.
During the second quarter of 2004, we reversed $0.9 million
of the payable due to reoccupied office space in McLean,
Virginia and a decrease in the estimated time period expected to
sublease space in our McLean and London offices.

8



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##### 



A reconciliation of the restructuring activities
is as follows:

|                                                                |                                                              |                |      |            |   |       |       |        |   |   |       |        |  
|--------------------------------------------------------------- | ------------------------------------------------------------ | -------------- | ---- | ---------- | - | ----- | ----- | ------ | - | - | ----- | ------ | -
|                                                                |                                                              | Severance      |      | Facilities |   | Total
|                                                                |                                                              |                |      |            |   |      
|                                                                |                                                              |               
|                                                                |                                                              | (in thousands)
|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 expected
    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                                   |                                                              |                |      |            |   |       | (228  | )      |   |   | (228  | )     
|Increased in expected sublease income                           |                                                              |                |      |            |   |       | (684  | )      |   |   | (684  | )     
|Reduction of deferred rent for reoccupied space                 |                                                              |                |      |            |   |       | (12   | )      |   |   | (12   | )     
|                                                                |                                                              |                |      |            |   |       |       |        |   |   |       |       
|                                                                | Restructuring charge (recovery)                              |                |      |            |   |       |       | (924   | ) |   |       | (924   | )
|                                                                |                                                              |                |      |            |   |       |       |        |   |   |       |       
|Charges against the provision:                                  |                                                              |                |      |            |   |       |       |        |   |   |       |       
|                                                                | Payments for excess office space, net of sublease
    income |                |      |            |   |       |       | (1,245 | ) |   |       | (1,245 | )
|                                                                | Other                                                        |                |      |            |   |       |       | 53     |   |   |       | 53     |  
|                                                                |                                                              |                |      |            |   |       |       |        |   |   |       |       
|Restructuring payable as of June 30, 2004.                      |                                                              |                |      |            |   | $     | 4,219 |        |   | $ | 4,219 |       
|                                                                |                                                              |                |      |            |   |       |       |        |   |   |       |       

At December 31, 2003 and June 30, 2004,
the restructuring payable was classified as follows:

|                              |  |              |       |          |  |   |       | 
|----------------------------- |  | ------------ | ----- | -------- |  | - | ----- | 
|                              |  | December 31, |       | June 30,
|                              |  | 2003         |       | 2004    
|                              |  |              |       |         
|Accrued restructuring current |  | $            | 2,903 |          |  | $ | 1,692 | 
|Accrued restructuring         |  |              | 3,432 |          |  |   | 2,527 | 
|                              |  |              |       |          |  |   |       | 
|Accrued restructuring total   |  | $            | 6,335 |          |  | $ | 4,219 | 
|                              |  |              |       |          |  |   |       | 

(7) Investments

We held 1,666,666 shares of Class B Common
Stock of NextWave Telecom, Inc. (NextWave
Telecom) which is the parent corporation of NextWave
Personal Communications Inc. We acquired the shares of NextWave
Telecom in May 1996 for a purchase price of
$5.0 million in connection with a series of transactions
entered into between NextWave Telecom and us under an agreement
dated March 12, 1996 (the March Agreement). We
also acquired warrants to purchase an additional 123,356 shares
of Class B Common Stock of NextWave Telecom at
$3.00 per share. Under the March Agreement, NextWave
Telecom agreed to use us to provide not less than
(a) $14.0 million of radio frequency engineering
services and (b) $35.0 million of system deployment
services. These services were to be provided in increments of
twenty-percent (20%) each year during the five-year period
following the execution of the March Agreement. NextWave Telecom
filed for bankruptcy protection on December 23, 1998. The
March Agreement has not been assumed or rejected by NextWave
Telecom in the bankruptcy proceeding. We did not carry any
assets or liabilities on our books relating to our equity
investment in NextWave, any pre-petition debts due us, or the
March Agreement; these balances were written off in previous
years.

The total amount of pre-petition debt owed to us
by NextWave Telecom and certain of its subsidiaries
(collectively, NextWave) was approximately
$14.3 million, plus post-petition interest thereon. This
amount

9



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##### 



included our interest, amounting to approximately
$0.7 million plus post-petition interest thereon, in a
general unsecured claim against NextWave that was acquired by us
in connection with our acquisition of Koll Telecommunications
LLC in 1997 (the Koll Claim).


In September 2001, we sold all of our 1,666,666
shares of Class B common stock and pre-petition debt claims
(excluding a 92.5% interest in pre-petition interest that
May be payable with respect to the claims, the
Pre-Petition Interest Amount) against NextWave
Telecom resulting in a gain of $21.4 million, which equaled
the proceeds from the sale. The September 2001 sale of current
pre-petition debt excluded (a) the Koll Claim, (b) any
claims resulting from the assumption or rejection of the March
Agreement, and (c) the Pre-Petition Interest Amount. In
February 2003, we sold our interest in the Pre-Petition Interest
Amount for $1.0 million in cash, which was paid in
March 2003 and recorded in other income in the accompanying
condensed consolidated statement of operations. In
May 2004, we sold our interest in the Koll Claim for
approximately $0.8 million in cash, which was paid in
May 2004 and recorded in other income in the accompanying
condensed consolidated statement of operations.

On August 4, 2003 we, through our wholly
owned subsidiary LCC China Services, L.L.C., closed an
investment in a newly created entity based in China, Beijing LCC
Bright Oceans Communication Consulting Co. Ltd.
(LCC/BOCO). We contributed approximately
$1.1 million for a 49.0% share of LCC/BOCOs
registered capital. Bright Oceans Inter-Telecom Corporation, a
Chinese publicly traded network management and systems
integrator (BOCO), contributed approximately
$1.1 million to hold the remaining 51.0% of LCC/BOCOs
registered capital. Our capital contribution was paid in three
equal installments of approximately $357,000 each and the first
installment was made on the date of closing. The second
installment was made in October 2003 and the third installment
was made in January 2004. LCC/BOCO offers design, deployment and
maintenance services to wireless carriers in China. We account
for the investment in LCC/BOCO using the equity method of
accounting. We recorded an equity loss of $0.1 million to
reflect our proportionate share of LCC/BOCOs losses
through March 31, 2004, and an additional equity loss of
$0.3 million in the second quarter, both of which are
recorded in other expense. BOCO has advised us that it has made
a strategic decision to exit the wireless telecommunications
infrastructure services business and we have been in discussions
to dissolve the joint venture. We have undertaken to transfer
selected projects and joint venture employees to our
wholly-owned Chinese subsidiary, which continues to pursue
projects independently with customers in China. After
distribution of the assets and cash remaining in the joint
venture, we anticipate an additional loss of $0.2 million,
which we recorded in other expense in the accompanying condensed
consolidated statement of operations.

(8) Line of Credit

In 2003, Detron established a line of credit with
NMB-Heller N.V. (NMB). The line of credit provides
that NMB will provide credit to Detron in the form of advance
payments collateralized by Detrons outstanding
receivables. The agreement provides for NMB to advance up to 75%
of the receivable balance. There is no maximum on the amount of
receivables Detron can assign to NMB. Detron must repay the
advances from NMB within 90 days or upon customer payment
whichever occurs first. Interest on the advance payments will be
calculated at a rate equal to NMBs overdraft base rate
plus 2% subject to a minimum of 5.75% per year. The agreement
has an initial term of two years and can be extended. As of
December 31, 2003, Detron had $1.8 million outstanding
under the credit facility compared to $1.3 million as of
June 30, 2004.

(9) Commitments and
Contingencies

We are party to various non-material legal
proceedings and claims incidental to our business. Management
does not believe that these matters will have a material adverse
affect on our consolidated results of operations or financial
condition.

10



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##### 



(10) Segment reporting

SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Informationestablished
standards for reporting information about the operating segments
in interim and annual financial reports issued to stockholders.
Operating segments are defined as components of an enterprise
about which separate financial information is available that is
evaluated regularly by the chief operating decision maker, or
decision-making group, in deciding how to allocate resources and
assess performance. Our chief operating decision-making group is
the Operating Committee, which comprises the Chief Executive
Officer, our Senior Vice Presidents and our General Counsel.

Our operating segments are defined geographically
by region, namely the Americas region and the EMEA region. Both
regions provide design and deployment services, operations and
maintenance services and technical consulting services.

Segment detail is summarized as follows (in
thousands):

|                            |                         |                |        |       |       |               |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |  |         |        |        | 
|--------------------------- | ----------------------- | -------------- | ------ | ----- | ----- | ------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------ |  | ------ | ------ | ------ |  | ------ | ------ | ------ |  | ------- | ------ | ------ | 
|                            |                         |                |        |       |       |              
|                            |                         | Americas       |        | EMEA  |       | Segment Total
|                            |                         |                |        |       |       |              
|                            |                         | 2003           |        | 2004  |       | 2003          |        | 2004   |        | 2003 |        | 2004  
|                            |                         |                |        |       |       |               |        |        |        |      |        |       
|Three Months Ended June 30, |                         |                |        |       |       |               |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |  |         |       
|Revenues:                   |                         |                |        |       |       |               |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |  |         |       
|                            | From external customers |                | $      | 7,166 |       |               | $      | 32,748 |        |      | $      | 10,441 |        |  | $      | 17,828 |        |  | $      | 17,607 |        |  | $       | 50,576 |       
|                            | Inter-segment revenues  |                |        |      |       |               |        |       |        |      |        |       |        |  |        |       |        |  |        |       |        |  |         |       |       
|                            |                         |                |        |       |       |               |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |  |         |       
|                            |                         | Total revenues |        | $     | 7,166 |               |        | $      | 32,748 |      |        | $      | 10,441 |  |        | $      | 17,828 |  |        | $      | 17,607 |  |         | $      | 50,576 | 
|                            |                         |                |        |       |       |               |        |        |        |      |        |        |        |  |        |        |        |  |        |        |        |  |         |       
|Income (loss) before taxes  |                         |                | (1,245 | )     |       |               | 3,736  |        |        |      | (564   | )      |        |  | 153    |        |        |  | (1,809 | )      |        |  | 3,889   |       
|Total assets                |                         |                | 10,072 |       |       |               | 47,351 |        |        |      | 40,913 |        |        |  | 56,291 |        |        |  | 50,985 |        |        |  | 103,642 |       

|                           |                         |                |        |        |        |               |       |        |        |      |        |        |        |  |      |        |        |  |        |        |        |  |       |        |        | 
|-------------------------- | ----------------------- | -------------- | ------ | ------ | ------ | ------------- | ----- | ------ | ------ | ---- | ------ | ------ | ------ |  | ---- | ------ | ------ |  | ------ | ------ | ------ |  | ----- | ------ | ------ | 
|                           |                         |                |        |        |        |              
|                           |                         | Americas       |        | EMEA   |        | Segment Total
|                           |                         |                |        |        |        |              
|                           |                         | 2003           |        | 2004   |        | 2003          |       | 2004   |        | 2003 |        | 2004  
|                           |                         |                |        |        |        |               |       |        |        |      |        |       
|Six Months Ended June 30,  |                         |                |        |        |        |               |       |        |        |      |        |        |        |  |      |        |        |  |        |        |        |  |       |       
|Revenues:                  |                         |                |        |        |        |               |       |        |        |      |        |        |        |  |      |        |        |  |        |        |        |  |       |       
|                           | From external customers |                | $      | 13,532 |        |               | $     | 59,738 |        |      | $      | 20,765 |        |  | $    | 35,056 |        |  | $      | 34,297 |        |  | $     | 94,794 |       
|                           | Inter-segment revenues  |                |        |       |        |               |       |       |        |      |        |       |        |  |      |       |        |  |        |       |        |  |       |       |       
|                           |                         |                |        |        |        |               |       |        |        |      |        |        |        |  |      |        |        |  |        |        |        |  |       |       
|                           |                         | Total revenues |        | $      | 13,532 |               |       | $      | 59,738 |      |        | $      | 20,765 |  |      | $      | 35,056 |  |        | $      | 34,297 |  |       | $      | 94,794 | 
|                           |                         |                |        |        |        |               |       |        |        |      |        |        |        |  |      |        |        |  |        |        |        |  |       |       
|Income (loss) before taxes |                         |                | (1,975 | )      |        |               | 5,836 |        |        |      | (1,283 | )      |        |  | (731 | )      |        |  | (3,258 | )      |        |  | 5,105 |       

11



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A reconciliation of totals reported for the
operating segments to the applicable line items in the
consolidated financial statements is as follows (in thousands):

|                            |                                                 |                            |        |                  |  |      |        |        |  |   |        |        |        |   |         |         |        | 
|--------------------------- | ----------------------------------------------- | -------------------------- | ------ | ---------------- |  | ---- | ------ | ------ |  | - | ------ | ------ | ------ | - | ------- | ------- | ------ | 
|                            |                                                 |                            |        |                 
|                            |                                                 | Three Months Ended         |        | Six Months Ended
|                            |                                                 | June 30,                   |        | June 30,        
|                            |                                                 |                            |        |                 
|                            |                                                 | 2003                       |        | 2004             |  | 2003 |        | 2004  
|                            |                                                 |                            |        |                  |  |      |        |       
|Revenues:                   |                                                 |                            |        |                  |  |      |        |        |  |   |        |        |        |   |         |        
|                            | Revenues for reportable segments                |                            | $      | 17,607           |  |      | $      | 50,576 |  |   | $      | 34,297 |        |   | $       | 94,794  |       
|                            | Revenues for non-reportable segments            |                            |        | 580              |  |      |        | 2,042  |  |   |        | 1,030  |        |   |         | 2,873   |       
|                            |                                                 |                            |        |                  |  |      |        |        |  |   |        |        |        |   |         |        
|Total consolidated revenues |                                                 | $                          | 18,187 |                  |  | $    | 52,618 |        |  | $ | 35,327 |        |        | $ | 97,667  |        
|                            |                                                 |                            |        |                  |  |      |        |        |  |   |        |        |        |   |         |        
|Assets:                     |                                                 |                            |        |                  |  |      |        |        |  |   |        |        |        |   |         |        
|                            | Assets for reportable segments                  |                            |        |                  |  |      |        |        |  |   | $      | 50,985 |        |   | $       | 103,642 |       
|                            | Assets not attributable to reportable segments: |                            |        |                  |  |      |        |        |  |   |        |        |        |   |         |         |       
|                            |                                                 | Cash and cash equivalents  |        |                  |  |      |        |        |  |   |        |        | 22,905 |   |         |         | 13,739 | 
|                            |                                                 | Restricted cash            |        |                  |  |      |        |        |  |   |        |        |        |   |         |         | 222    | 
|                            |                                                 | Short-term investments     |        |                  |  |      |        |        |  |   |        |        | 532    |   |         |         |       | 
|                            |                                                 | Receivables                |        |                  |  |      |        |        |  |   |        |        | 900    |   |         |         | 2,686  | 
|                            |                                                 | Deferred and prepaid taxes |        |                  |  |      |        |        |  |   |        |        | 13,355 |   |         |         | 4,909  | 
|                            |                                                 | Property and equipment     |        |                  |  |      |        |        |  |   |        |        | 1,312  |   |         |         | 951    | 
|                            |                                                 | Investments                |        |                  |  |      |        |        |  |   |        |        | 136    |   |         |         | 644    | 
|                            |                                                 | Prepaid and other          |        |                  |  |      |        |        |  |   |        |        | 446    |   |         |         | 642    | 
|                            |                                                 |                            |        |                  |  |      |        |        |  |   |        |        |        |   |         |        
|                            |                                                 |                            |        |                  |  |      |        |        |  |   | 39,586 |        |        |   | 23,793  |        
|                            |                                                 |                            |        |                  |  |      |        |        |  |   |        |        |        |   |         |        
|Total consolidated assets   |                                                 |                            |        |                  |  |      |        |        |  | $ | 90,571 |        |        | $ | 127,435 |        
|                            |                                                 |                            |        |                  |  |      |        |        |  |   |        |        |        |   |         |        

|                                                                  |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                  |  |                    |        |                 
|                                                                  |  | Three Months Ended |        | Six Months Ended
|                                                                  |  | June 30,           |        | June 30,        
|                                                                  |  |                    |        |                 
|                                                                  |  | 2003               |        | 2004             |  | 2003 |        | 2004
|                                                                  |  |                    |        |                  |  |      |        |     
|Income (loss) before income taxes for
    reportable segments     |  | $                  | (1,809 | )                |  | $    | 3,889  |      |  | $ | (3,258 | ) |  | $ | 5,105  |  
|Restructuring charge                                              |  |                    |       |                  |  |      | 924    |      |  |   | 152    |   |  |   | 924    |  
|Income (loss) before income taxes for
    non-reportable segments |  |                    | (1,706 | )                |  |      | (2,627 | )    |  |   | (3,869 | ) |  |   | (5,488 | )
|                                                                  |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|Income (loss) from operations before income
    taxes             |  | $                  | (3,515 | )                |  | $    | 2,186  |      |  | $ | (6,975 | ) |  | $ | 541    |  
|                                                                  |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  

12



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2: | Managements Discussion and Analysis of
    Financial Condition and Results of Operations

This quarterly report on Form 10-Q contains
forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1934, which
are made under the safe harbor provisions of Section 21E of
the Securities Exchange Act of 1934. These statements involve
known and unknown risks, uncertainties, and other factors that
may cause our actual results, levels of activity, performance,
or achievements to be materially different from any future
results, levels of activity, performance or achievements
expressed pr implied by such forward-looking statements. In some
cases, these statements can be identified by forward-looking
words such as anticipate, believe,
could, estimate, expect,
intend, may, plan,
potential, should, will, and
would or similar words. The statements that contain
these words should be read carefully because they discuss our
future expectations, contain projections of our future results
of operations or of our financial position, or state other
forward-looking information. These statements include, among
others, our estimates of future revenues and our expectations
that those revenues will fluctuate significantly, our belief
that we have adequate cash, available borrowing capacity and
short-term investments which will satisfy cash requirements for
at least the next twelve months, and our ability to pursue and
secure new business opportunities.

The factors listed under Risk Factors
in our annual report on Form 10-K for the fiscal year ended
December 31, 2003, among others, could cause actual results
to differ materially from those contained in forward-looking
statements made in this report and presented elsewhere by
management from time to time. Such factors, among others, may
have a material adverse effect upon our business, financial
condition, and results of operations. We undertake no obligation
to update publicly or revise any forward-looking statements,
whether as a result of new information, future events, or
otherwise. Accordingly, you are cautioned not to place undue
reliance on forward-looking statements, which speak only as of
the date on which they are made.

Overview

We provide integrated end-to-end solutions for
wireless voice and data communications networks with offerings
ranging from high level technical consulting, to system design
and turnkey deployment, to ongoing management and optimization
services. We have been successful on occasion in using initial
opportunities to provide high level technical consulting
services to secure later-stage system design and deployment
contracts. Long-term engagements to provide design and
deployment services also enable us to secure ongoing management
and operations projects. Providing ongoing operations and
maintenance services also positions us well for additional
opportunities as new technologies continue to be developed and
wireless service providers must either upgrade their existing
networks or deploy new networks utilizing the latest available
technologies.

We provide these services through a regional
organization, which comprises two principal regions and several
smaller divisions. Our primary operating segments are Americas
and EMEA (Europe, Middle East and Africa).

| |  |               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | ------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Americas:     |  | Headquartered near Los Angeles, California, the
    Americas region provides the full range of service offerings to
    wireless operators and equipment vendors through a network of
    project offices in North America and South America. In the
    second quarter of 2004, Americas generated approximately 62% of
    our total revenue.                                                                                                                                                                                   
| |  | EMEA:         |  | Based in London, the Europe, Middle East and
    Africa region is responsible for operations in the U.K., Italy,
    Netherlands, Algeria, Germany, Spain, Greece and the Kingdom of
    Saudi Arabia. EMEA also undertakes projects throughout its
    region and we have recently established a marketing office in
    Dubai. In the second quarter of 2004, EMEA generated
    approximately 34% of our total revenue.                                                                                                        
| |  | Asia & other: |  | This includes our operations in Asia, the
    Wireless Institute and LCC Wireline. In the second quarter
    of 2004, these combined operations generated approximately 4% of
    our total revenues. Our operations in Asia comprise a marketing
    office in Sydney and representative offices in Beijing,
    Singapore and New Delhi, India. We provide training to our
    engineers and customers through our Wireless Institute, which
    covers the latest technologies developed and employed throughout
    the world.

13



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Our primary sources of revenues are from
engineering design and system deployment services. Revenues from
services are derived both from fixed price and time and
materials contracts. We recognize revenues from fixed price
service contracts using the percentage-of-completion method.
With fixed price contracts, we recognize revenues based on the
ratio of individual contract costs incurred to date on a project
compared with total estimated costs. Anticipated contract losses
are recognized as they become known and estimable. We recognize
revenues on time and materials contracts as the services are
performed.

Cost of revenues includes direct compensation and
benefits, living and travel expenses, payments to third-party
subcontractors and consultants, equipment rentals, expendable
computer software and equipment, and allocated, or directly
attributed, facility and overhead costs identifiable to projects.

General and administrative expenses consist of
compensation, benefits, office and occupancy, and other costs
required for the finance, human resources, information systems,
and executive office functions. Sales and marketing expenses
consist of salaries, benefits, sales commissions, travel and
other related expenses required to implement our marketing,
sales and customer support plans.

We generate cash from fixed price contracts by
billings associated with contract milestones, which are
typically agreed with our customers at the time the contracts
are negotiated. For our time and materials contracts, we usually
bill our customers on a monthly basis as services are performed.
On large network deployment contracts, which involve the design
and construction of complex wireless networks, it is
increasingly common for our customers to require fewer contract
milestones than in previous years. This results in extending the
periods during which we are obliged to fund our operating costs
until a milestone can be billed to the customer. This increases
the capital that we require to operate the business, and is
evidenced by increases in unbilled receivables on our balance
sheet. This is an integral part of our business and we are
constantly striving to manage our working capital requirements.
We expect to experience increasing demands for working capital
in the future as we grow our revenues.

Another critical statistic that we monitor is our
contract backlog, which at June 30, 2004, comprised firm
backlog of $104 million and implied backlog of $9 million.
We expect that our contract backlog will vary from time to time
as we deliver contract revenues and win new awards. However, our
current implementation plans call for the delivery of
significant network deployment revenues over the course of 2004,
so it is reasonable to expect that our backlog will decline in
the short term.

Since 1999, we have engaged in a number of
business dispositions, acquisitions and investments, some of
which have either generated significant cash proceeds or created
significant requirements for cash and these transactions
significantly affect the year-to-year comparability of our
financial statements. For example, in 1999 we disposed of our
hardware and software products business for cash proceeds of
about $22 million; in 2000, we sold our tower business for
cash proceeds of about $72 million; and in 2001, we sold
certain of our interests in NextWave Telecom, Inc. or NextWave
for cash proceeds of about $21 million. Later in that year
and during 2002, we acquired operations in our EMEA region,
which required cash of approximately $10 million. In 2003
we sold further interests in NextWave for another
$1 million and we initiated our investment in the joint
venture in China, which required total cash commitments of
$1.1 million. In 2004, we sold an unsecured claim against
NextWave for $0.8 million and recorded an impairment charge
of $0.2 million for our investment in the joint venture in
China, following changes in the local business conditions. We
expect to continue to consider business dispositions,
acquisitions and investments as a way of supporting our
longer-term strategies.

Trends That Have Affected or May Affect
Results of Operations and Financial Condition

The major trends that have affected or may affect
our business are as follows:



| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | project related revenues derived from a limited
    set of customers in each market where we do business;                                      
|
| |  | the difficulties that our customers often face in
    obtaining financing to fund the development, expansion and
    upgrade of their networks;

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| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the acceleration or the delay associated with the
    introduction of new technologies and services by our customers;                                 
|
| |  | the management and the services composition of
    our fixed price contracts;                                                                         
|
| |  | the impact of the percentage of subcontracted
    work (versus self perform work) on our large programs and the
    associated margin degradation; and
|
| |  | increased spending by wireless service providers
    in the areas of network design, deployment and optimization.                                     

Our business is characterized by a limited number
of projects awarded by a limited number of customers. This can
lead to volatility in our results as projects initially ramp up
and then wind down. As projects are completed, we are faced with
the task of replacing project revenues with new projects, either
from the same customer or from new customers. In addition, the
wireless industry is composed of a relatively small number of
wireless service providers and equipment vendors, and this
inevitably leads to issues of customer concentration.
Consequently, our business may be affected in any single market
by the changing priorities of a small group of customers.

Some of our customers have faced difficulty in
obtaining the necessary financing to fund the development,
expansion and upgrade of their networks. The state of the
wireless industry has an impact on our business, for example the
slowdown in the world economies in 2000 and the volatility in
the financial markets made it difficult for our customers to
predict both future demand for their services and future levels
of capital expenditure, which caused a significant decrease in
our revenue in 2001 and 2002.

We tend to benefit from projects undertaken by
our customers to introduce new technologies and services in
their networks and we tend to suffer when projects are delayed.
Revenues from 3G networks constituted approximately 25.1% and
10.9% of our total revenues for the six months ended
June 30, 2003 and 2004, respectively, and it is expected to
continue to be an area of business growth in the future. We have
experienced an increase in the percentage of fixed price
contracts awarded by our customers, and we expect this trend to
continue. A recent trend is for the award of fixed price
contracts to cover the design and deployment of a certain
geographic network area on a full turnkey basis, including
planning, engineering design, site acquisition, construction and
deployment services. In the six months ended June 30, 2004,
approximately 34.5% of our revenues were generated by work done
by subcontractors, principally for construction related
activities, and approximately 65.5% of our revenues were
generated by work that we perform through our own workforce,
compared to 13.2% and 86.8% for the same period in the previous
year. To the extent that these large turnkey projects include a
relatively large proportion of construction related activities,
we expect that the composition of our revenues by delivery
method will vary so as to decrease the proportion of services
that we perform ourselves through our own workforce and increase
the services that we deliver through third parties, typically
subcontractors for construction. A consequence of this change in
mix may be to reduce our average gross margins because
subcontracted work generally commands lower margins.

We believe our Americas region may benefit from
increased spending by certain United States wireless service
providers. This increased spending can be attributed to several
trends: (i) the implementation of new technologies such as
third generations (3G) wireless and broadband wireless;
(ii) license swaps as a result of wireless service
providers trying to maximize spectrum utilization and increase
coverage; (iii) network quality enhancement programs to
reduce churn; (iv) network expansion and capacity programs
geared toward enabling new and enhanced services; and
(v) other miscellaneous network upgrades and enhancements
required for market share maintenance and competitive reasons.

We have also observed an increase in spending on
wireless networks in developing countries. In March 2004,
we were selected by the Saudi Telecommunication Company
(STC) to provide approximately $27 million
worth of engineering consulting services for the expansion of
STCs GSM network in Saudi Arabia over 12 months, with
the possibility of renewal for an additional year at STCs
discretion. The recent increase in worldwide terrorism may
affect our business in developing countries. For example, the
U.S. State Department has recently issued security advisories
for U.S. Nationals in Saudi Arabia and certain other countries
in the Middle East. While we tend to staff these projects
largely with local or regional personnel, we

15



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do recognize that undertaking work in such areas
at this time carries a higher level of operating and political
risk than in other more developed areas.


Results of Operations

The discussion below provides information which
management believes is relevant to an assessment and
understanding of our consolidated results of operations and
financial condition. The discussion should be read in
conjunction with the consolidated financial statements and
accompanying notes thereto included elsewhere herein.

Revenues, Cost of Revenues and Gross
Margins

|                  |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |      |   |   |        |        |  |  |      |      |   |   |        |        |  |  |      |      |  
|----------------- | -------------- | --------------------------- | ------ | ------------------------- |  | ------------------ | ---- | ------------------ | - | ---------- | ------ | ------ |  | ---------- | ---- | ---- | - | - | ------ | ------ |  |  | ---- | ---- | - | - | ------ | ------ |  |  | ---- | ---- | -
|                  |                |                             |        |                          
|                  |                | Three Months Ended June 30, |        | Six Months Ended June 30,
|                  |                |                             |        |                          
|                  |                |                             |        |                           |  |                    |      |                   
|                  |                | 2003                        |        | 2004                      |  | 2003               |      | 2004              
|                  |                |                             |        |                           |  |                    |      |                   
|                  |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |     
|                  |                | (in                         |        |                           |  | (in                |      |                    |   | (in        |        |        |  | (in        |      |     
|                  |                | thousands)                  |        |                           |  | thousands)         |      |                    |   | thousands) |        |        |  | thousands) |      |     
|Revenues:         |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |      |   |   |        |        |  |  |      |      |   |   |        |        |  |  |      |     
|                  | Americas       |                             | $      | 7,166                     |  |                    |      |                    |   |            | $      | 32,748 |  |            |      |      |   |   | $      | 13,532 |  |  |      |      |   |   | $      | 59,738 |  |  |      |      |  
|                  | EMEA           |                             |        | 10,441                    |  |                    |      |                    |   |            |        | 17,828 |  |            |      |      |   |   |        | 20,765 |  |  |      |      |   |   |        | 35,056 |  |  |      |      |  
|                  | Asia and other |                             |        | 580                       |  |                    |      |                    |   |            |        | 2,042  |  |            |      |      |   |   |        | 1,030  |  |  |      |      |   |   |        | 2,873  |  |  |      |      |  
|                  |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |      |   |   |        |        |  |  |      |      |   |   |        |        |  |  |      |     
|                  |                | $                           | 18,187 |                           |  |                    |      |                    |   | $          | 52,618 |        |  |            |      |      |   | $ | 35,327 |        |  |  |      |      |   | $ | 97,667 |        |  |  |      |     
|                  |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |      |   |   |        |        |  |  |      |      |   |   |        |        |  |  |      |     
|                  |                | (% of
    revenue)          |        | (% of
    revenue)        |  | (% of
    revenue) |      | (% of
    revenue)
|Cost of revenues: |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |      |   |   |        |        |  |  |      |      |   |   |        |        |  |  |      |     
|                  | Americas       |                             | $      | 6,062                     |  |                    |      | 84.6               | % |            | $      | 27,509 |  |            |      | 84.0 | % |   | $      | 11,795 |  |  |      | 87.2 | % |   | $      | 50,895 |  |  |      | 85.2 | %
|                  | EMEA           |                             |        | 8,434                     |  |                    |      | 80.8               |   |            |        | 13,689 |  |            |      | 76.8 |   |   |        | 16,860 |  |  |      | 81.2 |   |   |        | 27,834 |  |  |      | 79.4 |  
|                  | Asia and other |                             |        | 364                       |  |                    |      | 62.8               |   |            |        | 1,441  |  |            |      | 70.6 |   |   |        | 804    |  |  |      | 78.0 |   |   |        | 2,007  |  |  |      | 69.9 |  
|                  |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |      |   |   |        |        |  |  |      |      |   |   |        |        |  |  |      |     
|                  |                | $                           | 14,860 |                           |  |                    | 81.7 | %                  |   | $          | 42,639 |        |  |            | 81.0 | %    |   | $ | 29,459 |        |  |  | 83.4 | %    |   | $ | 80,736 |        |  |  | 82.7 | %   
|                  |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |      |   |   |        |        |  |  |      |      |   |   |        |        |  |  |      |     
|Gross margins:    |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |      |   |   |        |        |  |  |      |      |   |   |        |        |  |  |      |     
|                  | Americas       |                             | $      | 1,104                     |  |                    |      | 15.4               | % |            | $      | 5,239  |  |            |      | 16.0 | % |   | $      | 1,737  |  |  |      | 12.8 | % |   | $      | 8,843  |  |  |      | 14.8 | %
|                  | EMEA           |                             |        | 2,007                     |  |                    |      | 19.2               |   |            |        | 4,139  |  |            |      | 23.2 |   |   |        | 3,905  |  |  |      | 18.8 |   |   |        | 7,222  |  |  |      | 20.6 |  
|                  | Asia and other |                             |        | 216                       |  |                    |      | 37.2               |   |            |        | 601    |  |            |      | 29.4 |   |   |        | 226    |  |  |      | 22.0 |   |   |        | 866    |  |  |      | 30.1 |  
|                  |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |      |   |   |        |        |  |  |      |      |   |   |        |        |  |  |      |     
|                  |                | $                           | 3,327  |                           |  |                    | 18.3 | %                  |   | $          | 9,979  |        |  |            | 19.0 | %    |   | $ | 5,868  |        |  |  | 16.6 | %    |   | $ | 16,931 |        |  |  | 17.3 | %   
|                  |                |                             |        |                           |  |                    |      |                    |   |            |        |        |  |            |      |      |   |   |        |        |  |  |      |      |   |   |        |        |  |  |      |     

Americas

Our activities in the region in the second
quarter of 2003 were rewarded with the award of a significant
network deployment project with US Cellular and verbal
notification of an award by Sprint, the latter resulting in a
contract in the following quarter. However, those awards did not
generate any meaningful revenue in the second quarter of 2003,
and network deployment projects represented about
$2.1 million of revenue while RF/wireless design business
represented about $5.1 million of revenue for the quarter.
Cost of revenues and gross margins for the second quarter of
2003 continued to be adversely affected by contract losses on
certain network deployment projects, while gross margins on
RF/wireless design business strengthened as demand grew.

For the first six months of 2003, network
deployment represented $4.2 million of revenue, reflecting
the lack of revenues in contract backlog from any significant
contract awards. RF/wireless design business continued to grow
during the period and represented about $9.3 million of
revenue. Cost of revenues and gross margins for network
deployment were depressed by contract losses in both quarters
and gross margins were negative 8.5% for the first six months of
the year. RF/wireless design business recorded cost of revenues
and gross margins in line with our expectations, and gross
margins for the first six months were 22.5%. The

16



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combined effect of the network deployment and
RF/wireless design business was to record gross margins of 12.8%
for the six months.


In the second quarter of 2004, we continued to
implement the US Cellular and Sprint network deployment
projects, with a major emphasis on subcontracted construction
activities. Network deployment represented about
$22.0 million of revenue, an increase of $19.9 million
over the same period in 2003. RF/wireless design business
continued to grow steadily and represented about
$10.7 million of revenue, an increase of about
$5.6 million over 2003. Cost of revenues and gross margins
for network deployment for the second quarter of 2004 were
affected by the large percentage of subcontracted construction
activity in the quarter, resulting in gross margins of 12.8%.
RF/wireless design business recorded cost of revenues and gross
margins in line with our expectations, resulting in gross
margins of 22.6% for the quarter.

For the first six months of 2004, network
deployment and RF/wireless design represented about
$39.3 million and $20.4 million of revenues,
respectively. Cost of revenues and gross margins for the six
months reflected the mix of the business and the significant
volume of subcontracted work, so that gross margins for the six
months for network deployment and RF/wireless design amounted to
11.6% and 21.1%, respectively, a combined gross margin for the
region of 14.8%.

EMEA

In the second quarter of 2003, our operations in
EMEA largely reflected the businesses that we had acquired in
late 2001 and 2002 together with the projects that we had won in
Algeria. The core businesses in Italy, United Kingdom and the
Netherlands accounted for over 80% of the total revenue for the
quarter, while the new business in Algeria accounted for less
than 20%. Cost of revenues and gross margins mostly reflected
the mix of the core businesses and were largely unaffected by
the new projects in Algeria. For the first six months of 2003,
revenues continued to be largely driven by the core businesses,
which together accounted for about 85% of revenues for the
period.

In the second quarter of 2004, revenues grew to
$17.8 million, an increase of $7.4 million over 2003.
Growth in the core businesses accounted for about $3.1 million
of this increase and about $4.3 million was attributable to
the growth in new business in Algeria, Saudi Arabia, Spain,
Greece, Germany and Qatar. This increase in new business was
mostly for time and materials based contracts, and this was
largely responsible for the improvement in gross margin from
19.2% in 2003 to 23.2% in 2004. For the first six months of
2004, revenues grew to $35.1 million, an increase of
$14.3 million over 2003. Gross margin improved from 18.8%
to 20.6% for the same reasons described above. While growth in
the United Kingdom and the Netherlands accounted for
$7.4 million of this increase, network deployment
activities in Italy reduced by about $1.8 million following the
completion by a major customer of their initial 3G roll-out. The
new businesses listed above accounted for about
$8.7 million of the increase.

Asia and Other

Asia and other generated revenues of
$0.6 million in the second quarter of 2003 and about
$2.0 million in the second quarter of 2004, an increase of
$1.4 million. In 2003, these revenues were generated by our
operations in Asia and our Wireless Institute. In the second
half of 2003, we started a new initiative, LCC Wireline, and
this accounted for nearly all of the increase in revenues of
$1.4 million.

17



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##### 



Operating Expenses

|                    |                                 |                                  |       |                  |       |      |       |       |       |   |        |        |       |   |        |        |        | 
|------------------- | ------------------------------- | -------------------------------- | ----- | ---------------- | ----- | ---- | ----- | ----- | ----- | - | ------ | ------ | ----- | - | ------ | ------ | ------ | 
|                    |                                 |                                  |       |                 
|                    |                                 | Three Months Ended               |       | Six Months Ended
|                    |                                 | June 30,                         |       | June 30,        
|                    |                                 |                                  |       |                 
|                    |                                 | 2003                             |       | 2004             |       | 2003 |       | 2004 
|                    |                                 |                                  |       |                  |       |      |       |      
|                    |                                 |                                  |       |                 
|                    |                                 | (in thousands)                   |       | (in thousands)  
|Operating expenses: |                                 |                                  |       |                  |       |      |       |       |       |   |        |        |       |   |        |       
|                    | Net bad debt expense (recovery) |                                  | $     | (528             | )     |      | $     | 100   |       |   | $      | (1,255 | )     |   | $      | 100    |       
|                    | General and administrative      |                                  |       | 5,259            |       |      |       | 6,500 |       |   |        | 10,724 |       |   |        | 12,733 |       
|                    |                                 |                                  |       |                  |       |      |       |       |       |   |        |        |       |   |        |       
|                    |                                 | Total general and administrative |       |                  | 4,731 |      |       |       | 6,600 |   |        |        | 9,469 |   |        |        | 12,833 | 
|                    |                                 |                                  |       |                  |       |      |       |       |       |   |        |        |       |   |        |       
|                    | Sales and marketing             |                                  |       | 1,481            |       |      |       | 1,884 |       |   |        | 3,437  |       |   |        | 3,652  |       
|                    | Restructuring charge (recovery) |                                  |       |                 |       |      |       | (924  | )     |   |        | (152   | )     |   |        | (924   | )     
|                    | Depreciation and amortization   |                                  |       | 810              |       |      |       | 613   |       |   |        | 1,606  |       |   |        | 1,369  |       
|                    |                                 |                                  |       |                  |       |      |       |       |       |   |        |        |       |   |        |       
|                    |                                 | $                                | 7,022 |                  |       | $    | 8,173 |       |       | $ | 14,360 |        |       | $ | 16,930 |       
|                    |                                 |                                  |       |                  |       |      |       |       |       |   |        |        |       |   |        |       

In 2003 bad debt recoveries were mostly
attributable to the recovery of amounts previously provided in
2002 for a fixed price contract in Algeria.

The increase in general and administrative
expenses in the second quarter of 2004 is largely attributable
to support costs for our contract in Saudi Arabia, which we
started in the first quarter of this year; increase in medical
and insurance costs for our US-based employees; and an increase
in our estimated costs for compliance with the requirements of
the Sarbanes-Oxley Act of 2002. The increase in sales and
marketing costs in the second quarter of 2004 is largely
attributable to the sales commissions for our contract in Saudi
Arabia. We expect the combined Selling, General and &
Administrative expenses in the last two quarters of 2004 to be
consistent with the second quarter.

The reduction in costs due to restructuring
results from our latest estimates of the restructuring reserve,
which we established in 2002. The reserve represents the future
costs of excess office space, offset by our estimates of future
income from sublease agreements. We have continued to sublet
excess space, either at rates better than anticipated or earlier
than anticipated, and this changes our estimates of future
sublease income.

Other Income and Expense

|                        |                  |                          |     |                  |     |               |     |               |      |   |       |     |       |   |     |     |      |  
|----------------------- | ---------------- | ------------------------ | --- | ---------------- | --- | ------------- | --- | ------------- | ---- | - | ----- | --- | ----- | - | --- | --- | ---- | -
|                        |                  |                          |     |                 
|                        |                  | Three Months Ended       |     | Six Months Ended
|                        |                  |                          |     |                 
|                        |                  | June 30, 2003            |     | June 30, 2004    |     | June 30, 2003 |     | June 30, 2004
|                        |                  |                          |     |                  |     |               |     |              
|                        |                  |                          |     |                 
|                        |                  | (in thousands)           |     | (in thousands)  
|Other income (expense): |                  |                          |     |                  |     |               |     |               |      |   |       |     |       |   |     |    
|                        | Interest income  |                          | $   | 101              |     |               | $   | 52            |      |   | $     | 197 |       |   | $   | 111 |     
|                        | Interest expense |                          |     | (41              | )   |               |     | (41           | )    |   |       | (49 | )     |   |     | (92 | )   
|                        | Other:           |                          |     |                  |     |               |     |               |      |   |       |     |       |   |     |     |     
|                        |                  | Gain on investments      |     |                  |    |               |     |               | 766  |   |       |     | 1,000 |   |     |     | 766  |  
|                        |                  | Impairment of investment |     |                  |    |               |     |               | (181 | ) |       |     |      |   |     |     | (181 | )
|                        |                  | Other                    |     |                  | 120 |               |     |               | (216 | ) |       |     | 369   |   |     |     | (64  | )
|                        |                  |                          |     |                  |     |               |     |               |      |   |       |     |       |   |     |    
|                        |                  |                          | 120 |                  |     |               | 369 |               |      |   | 1,369 |     |       |   | 521 |    
|                        |                  |                          |     |                  |     |               |     |               |      |   |       |     |       |   |     |    
|                        |                  | $                        | 180 |                  |     | $             | 380 |               |      | $ | 1,517 |     |       | $ | 540 |    
|                        |                  |                          |     |                  |     |               |     |               |      |   |       |     |       |   |     |    

Gain on investments of $1.0 million and
$0.8 million in 2003 and 2004 represents the cash received
from the sale of NextWave Pre-Petition interest and the cash
received on the sale of our general unsecured claim against
NextWave which we acquired as part of our acquisition of Koll
Telecommunications LLC in 1997, the Koll claim (see
note 7 to the condensed consolidated financial statements).

18



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##### 



Impairment of investment of $0.2 million
relates to our investment in the joint venture in China,
LCC/BOCO (see note 7 to the consolidated financial statements).

Other income of $0.1 million and expense of
$0.2 million in 2003 and 2004 are mostly attributable to
foreign currency gains and our share of equity losses in the
LCC/BOCO joint venture. Other income of $0.4 million for
the six-month period in 2003 was mostly attributable to gains in
foreign currency and our minority interest in Detron. In 2004,
other expense of $0.1 million was attributable primarily to
our share of losses in the LCC/BOCO joint venture offset by
foreign currency gains.

Tax Benefit or (Expense)

The expense for income taxes of $0.9 million
in the second quarter of 2004 was based on an estimated
effective income tax rate of 39.9% for the quarter, compared to
13.1% for the second quarter of 2003. The tax benefit of $0.8
million and the tax expense of $0.8 million for the six
months ended 2003 and 2004 respectively were computed at an
estimated effective income tax rate of 12.0% and 144.4%. We
currently expect that our estimated effective income tax rate
for the year will be in the range of 30% to 35%. The tax expense
in 2004 is driven by statutory taxes in jurisdictions in which
we are currently profitable and are anticipating the payment of
income taxes. The estimated effective income tax rate is
significantly higher than the statutory tax rates for the six
months ended June 30, 2004, due to losses generated in foreign
jurisdictions for which we have not taken income tax benefits.

Net Income (Loss)

In the second quarter of 2003, revenues of
$18.2 million generated an operating loss of
$3.7 million and resulted in a loss before tax of
$3.5 million. We recorded a tax expense of
$0.5 million due to cumulative adjustments in our estimated
tax rate for the year, and reported a net loss of
$4.0 million. For the first six months of 2003, revenues of
$35.3 million generated an operating loss of
$8.5 million, which after recording cash received of $1.0
million for the sale of our pre-petition interest in NextWave in
the first quarter of 2003, resulted in a loss before tax of
$7.0 million. We recorded tax benefit at an estimated rate
of 12.0% for the year and reported a net loss of
$6.1 million.

In the second quarter of 2004, revenues of $
52.6 million generated operating income of
$1.8 million. We recorded $0.8 million for the cash
received on the sale of the Koll claim,
$0.2 million for our share of equity losses in LCC/BOCO and
a further $0.2 million expense for the impairment of our
investment in LCC/BOCO, resulting in income before tax of
$2.2 million. We recorded a tax expense of
$0.9 million based on an estimated tax rate of 39.9% for
the quarter, and reported net income of $1.3 million. For
the first six months of 2004, revenues of $97.7 million
generated break-even operating income, which after recording
other income and expense for the Koll claim and our losses on
LCC/ BOCO, resulted in income before tax of $0.5 million.
We recorded tax expense of $0.8 million and reported a net
loss of $0.2 million.

Liquidity and Capital Resources

The following discussion relates to our sources
and uses of cash and cash requirements during the three months
ended June 30, 2003 and 2004.



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

|                                                        |                                           |                  |         |               |   |   |         |         |  
|------------------------------------------------------- | ----------------------------------------- | ---------------- | ------- | ------------- | - | - | ------- | ------- | -
|                                                        |                                           |                 
|                                                        |                                           | Six Months Ended
|                                                        |                                           |                 
|                                                        |                                           | June 30, 2003    |         | June 30, 2004
|                                                        |                                           |                  |         |              
|                                                        |                                           |                 
|                                                        |                                           | (in thousands)  
|Net cash used in operating activities                   |                                           | $                | (12,699 | )             |   | $ | (10,331 | )      
|Net cash used in investing activities                   |                                           |                  | (718    | )             |   |   | (2,344  | )      
|Net cash provided by (used in) financing
    activities |                                           |                  | 1,784   |               |   |   | 893     |        
|                                                        |                                           |                  |         |               |   |   |         |        
|                                                        | Net decrease in cash and cash equivalents |                  | $       | (11,633       | ) |   | $       | (11,782 | )
|                                                        |                                           |                  |         |               |   |   |         |        

19



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##### 



In the first six months of 2003, activities
continued at a comparatively low level; we reported revenues of
$35.3 million and a net loss of $6.1 million. Cash
used in operating activities was $12.7 million and cash
used in investing activities was $0.7 million; cash
generated from financing activities of $1.8 million was mostly
attributable to borrowings made under the line of credit
established in the second quarter of 2003 for LCC Detron, in the
Netherlands. Overall, cash decreased by $11.6 million
during the period.

In the first six months of 2004, activities were
significantly increased compared to 2003; revenues of
$97.7 million resulted in a net loss of $0.2 million. Cash
used in operating activities in the period was
$10.3 million, reflecting the increase in receivables of
$20.4 million, partly offset by an increase in accounts
payable and accrued expenses of $11.4 million. Cash used in
investing activities was $2.3 million, a large part of
which was attributable to the purchase of test and measurement
equipment for a new contract won in the EMEA region, while cash
generated by financing activities was $0.9 million.
Overall, cash decreased by $11.8 million during the period.



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

|                          |                                       |                   |        |               |  |   |        |        | 
|------------------------- | ------------------------------------- | ----------------- | ------ | ------------- |  | - | ------ | ------ | 
|                          |                                       | December 31, 2003 |        | June 30, 2004
|                          |                                       |                   |        |              
|                          |                                       |                  
|                          |                                       | (thousands)      
|Cash and cash equivalents |                                       | $                 | 28,943 |               |  | $ | 17,161 |       
|Restricted cash           |                                       |                   | 1,568  |               |  |   | 1,540  |       
|Short-term investments    |                                       |                   | 520    |               |  |   |       |       
|                          |                                       |                   |        |               |  |   |        |       
|                          | Total cash and short-term investments |                   | $      | 31,031        |  |   | $      | 18,701 | 
|                          |                                       |                   |        |               |  |   |        |       
|Line of credit            |                                       | $                 | 1,840  |               |  | $ | 1,265  |       
|                          |                                       |                   |        |               |  |   |        |       
|Working capital           |                                       | $                 | 54,980 |               |  | $ | 53,636 |       
|                          |                                       |                   |        |               |  |   |        |       

During the first six months of 2004 the principal
requirements for cash were to finance the increase in
receivables of $20.4 million. A significant part of this
increase in receivables was funded through our vendors, and
accounts payable and accrued expenses increased by
$11.4 million in the period. We have granted extended
payment terms to one customer in Algeria, and this contract
accounted for about 10% of the receivables at the end of the
second quarter. However, we expect to collect about 60% of the
total amount due from this customer by the end of this year and
the remaining 40% in the first half of next year. We have also
experienced growth in our unbilled receivables as we performed
work on major deployment programs ahead of contractual billing
milestones.

In the second half of this year, we expect our
cash requirements to reduce as we collect certain extended
receivables and complete certain billing milestones associated
with our large deployment programs. Although we may still
experience some short-term decrease in our total cash balances,
we currently expect our cash to increase by the end of this
year. We believe that for at least the next twelve months we
have adequate cash to fund our operations, however this
expectation is subject to risk if we have any delays on our
large deployment contracts.

As of June 30, 2004, we had no material cash
commitments and had not engaged in any off-balance sheet
financing.

Critical Accounting Policies

Our critical accounting policies are as follows:



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

20



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##### 





| |                    
| | -------------------
| | Revenue recognition

Our principal sources of revenues consists of
design and system deployment services. We provide design
services on a contract basis, usually in a customized plan for
each client, and generally charge for engineering services on a
time and materials or fixed price basis. We generally offer
deployment services on a fixed price, time-certain basis. The
portion of our revenues from fixed-price contracts was 78.9% and
77.6% for the six months ended June 30, 2003 and 2004,
respectively. We recognize revenues on fixed-price contracts
using the percentage-of-completion method. With the
percentage-of-completion method, expenses on each project are
recognized as incurred, and revenues are recognized based on the
ratio of the current costs incurred for the project to the then
estimated total costs of the project. Accordingly, revenues
recognized in a given period depend on, among other things, the
costs incurred on each individual project and our then current
estimate of the total remaining costs to complete individual
projects. Considerable judgment on the part of our management
may be required in determining estimates to complete a project
including the scope of the work to be completed, and reliance on
the customer or other vendors to fulfill some task(s). If in any
period we significantly increase the estimate of the total costs
to complete a project, we may recognize very little or no
additional revenues with respect to that project. If total
contract cost estimates increase, gross profit for any single
project may be significantly reduced or eliminated. If the total
contract cost estimates indicate that there is a loss, the loss
is recognized in the period the determination is made. At
December 31, 2003 and June 30, 2004, respectively, we
had $35.0 million and $40.6 million of unbilled
receivables.



| |                                
| | -------------------------------
| | Allowance for doubtful accounts

The preparation of our consolidated financial
statements requires our management to make estimates and
assumptions that affect the reported amount of assets,
liabilities, contingent assets and liabilities and the reported
amounts of revenues and expenses during the reported period.
Specifically, our management must make estimates of the
probability of collection of accounts receivable. Management
specifically analyzes accounts receivable balances, customer
concentrations, customer credit-worthiness, current economic
trends and changes in customer payment terms when evaluating the
adequacy of the valuation allowance for doubtful accounts. For
the year ended December 31, 2003 and the quarter ended
June 30, 2004, we derived 72.9% and 81.9%, respectively, of
total revenues from our ten largest customers, indicating
significant customer concentration risk with our receivables.
These ten largest customers constituted 81.2% and 60.0% of our
net receivable balance as of December 31, 2003 and
June 30, 2004, respectively. Lastly, we frequently perform
services for development stage customers, which carry a higher
degree of risk, particularly as to the collection of accounts
receivable. These customers may be particularly vulnerable to
the current tightening of available credit and general economic
slowdown.



| |                            
| | ---------------------------
| | Accounting for income taxes

As part of the process of preparing our
consolidated financial statements an estimate for income taxes
is required for each of the jurisdictions in which we operate.
This process requires estimating the actual current tax exposure
together with assessing temporary differences resulting from
differing treatment of items, such as deferred revenues, for tax
accounting purposes. These differences result in deferred tax
assets and liabilities, which are included in the consolidated
balance sheet. We must then assess the likelihood that the
deferred tax assets will be recovered from future taxable income
and to the extent we believe that recovery is not likely, we
must establish a valuation allowance. The valuation allowance is
based on our estimates of taxable income by jurisdiction in
which we operate and the period over which the deferred tax
assets will be recoverable. In the event the actual results
differ from these estimates, we may need to increase or decrease
the valuation allowance, which could materially have an impact
on the financial position and results of operations.

Considerable management judgment may be required
in determining our provision for income taxes, the deferred tax
assets and liabilities and any valuation allowance recorded
against the net deferred tax assets. We have recorded a
valuation allowance of $8.3 million and $6.2 million
as of December 31, 2003 and June 30, 2004,
respectively, due to uncertainties related to our ability to
utilize some of the deferred tax assets before they expire.
These deferred tax assets primarily consist of foreign net
operating losses carried forward, foreign tax credits and
non-cash compensation accruals relating to stock options issued
under a phantom membership

21



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##### 



plan in effect prior to our initial public
offering. The net deferred tax assets as of December 31,
2003 and June 30, 2004, were $5.0 million and
$4.2 million, respectively.




| |                     
| | --------------------
| | Restructuring charge

In 2002 we recorded restructuring charges of
$13.5 million. Included in these restructuring charges was
a charge for excess facilities aggregating $12.5 million. This
facility charge primarily relates to leased office space, which
we no longer occupy. The facility charge equals the existing
lease obligation less anticipated rental receipts to be received
from existing and potential subleases. This requires significant
judgments about the length of time the space will remain vacant,
anticipated cost escalators and operating costs associated with
the leases, the market rate at which the space will be
subleased, and broker fees or other costs necessary to market
the space. These judgments were based upon independent market
analysis and assessment from experienced real estate brokers.
The restructuring charge calculation assumes as of June 30,
2004 that we will receive $11.9 million in sublease income,
of which $6.0 million is committed.

Item 3:     Quantitative
and Qualitative Disclosures about Market Risk

We are exposed to the impact of foreign currency
fluctuations. The exposure to exchange rates relates primarily
to our foreign subsidiaries. Subsidiaries with material foreign
currency exposure are in Great Britain, The Netherlands and
Italy. For our foreign subsidiaries, exchange rates can have an
impact on the United States dollar value of their reported
earnings and the intercompany transactions with the subsidiaries.

Approximately 37.1% of the Companys
revenues were generated outside the United States for the six
month ended June 30, 2004, the majority of which were in
Europe. In connection with the increased availability of 3G
equipment in Europe, we anticipate continued growth of our
international operations, particularly in Europe, the Middle
East and Africa, in 2004 and beyond. As a result, fluctuations
in the value of foreign currencies against the United States
dollar may have a significant impact on our reported results.
Revenues and expenses denominated in foreign currencies are
translated monthly into United States dollars at the weighted
average exchange rate. Consequently, as the value of the dollar
strengthens or weakens relative to other currencies in our major
markets the resulting translated revenues, expenses and
operating profits become lower or higher, respectively.

Fluctuations in currency exchange rates also can
have an impact on the United States dollar amount of our
shareholders equity. The assets and liabilities of the
non-U.S. subsidiaries are translated into United States dollars
at the exchange rate in effect on the date of the balance sheet
for the respective reporting period. The resulting translation
adjustments are recorded in shareholders equity as
accumulated other comprehensive loss. Consequently, the
accumulated other comprehensive income component of
shareholders equity decreased $0.4 million during the
six months ended June 30, 2004. As of June 30, 2004, the
total amount of long-term intercompany receivable/payables in
non-U.S. subsidiaries subject to this equity adjustment, using
the exchange rate as of the same date, was $11.7 million.

We are exposed to the impact of foreign currency
fluctuations due to our London and U.S. offices funding foreign
subsidiaries. While these intercompany balances are eliminated
in consolidation, exchange rate changes do affect consolidated
earnings. Foreign subsidiaries with amounts owed to or from the
London operations at June 30, 2004 (denominated in Euros)
include Italy in the amount of $3.1 million and The
Netherlands in the amount of $0.4 million. These balances
generated a foreign exchange gain of $0.1 million included
in our consolidated results at June 30, 2004. A
hypothetical appreciation of the Euro and British Pound of 10%
would result in a $0.1 million net increase to our
operating losses generated outside the United States. This was
estimated using a 10% appreciation factor to the average monthly
exchange rates applied to net income or loss for each of our
subsidiaries in the respective period. Foreign exchange gains
and losses recognized on any transactions are included in the
condensed consolidated statements of operations.

We currently do not hedge any of these risks in
our foreign subsidiaries because: (i) our subsidiaries
generally earn revenues and incur expenses within a single
country and, consequently, do not incur currency risks in
connection with the conduct of their normal operations;
(ii) other foreign operations are minimal; and
(iii) we do not believe that hedging transactions are
justified by the current exposure and cost at this time.

22



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##### 



Item 4:     Controls
and Procedures

(a) Evaluation of disclosure controls and
procedures

We carried out an evaluation, under the
supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934) as of June 30,
2004. Based on that evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that as of June 30,
2004, our disclosure controls and procedures were effective in
timely notification to them of information we are required to
disclose in our periodic SEC filings and in ensuring that this
information is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and
regulations.

(b) Changes in internal control

During the period covered by this report, there
were no significant changes in our internal control over
financial reporting that have materially affected, or were
reasonably likely to materially affect, our disclosure control
over financial reporting.

23



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##### 



PART II:     OTHER
INFORMATION

Item 1:     Legal
Proceedings

We are party to various non-material legal
proceedings and claims incidental to our business. We do not
believe that these matters will have a material adverse impact
on our consolidated results of operations or financial condition.



|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 2: | Changes in Securities, Use of Proceeds, and
    Issuer Purchases of Equity Securities

Not Applicable



|        |                                
|------- | -------------------------------
|Item 3: | Defaults Upon Senior Securities

Not Applicable



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

The Annual Meeting of Shareholders was held on
May 26, 2004. All of the proposals for Shareholder
consideration at the Annual Meeting were approved. The following
is a tabulation of the voting on each proposal presented at the
Annual Meeting.

Proposal
1 Election of
Directors

|                        |  |         |      |              |  |             |               |              |  |  |              |  |  |  |      | 
|----------------------- |  | ------- | ---- | ------------ |  | ----------- | ------------- | ------------ |  |  | ------------ |  |  |  | ---- | 
|                        |  | Term    |      |              |  | Votes       |               | Broker      
|Elected Director        |  | Expires |      | Votes For(1) |  | Withheld(1) |               | Non-Votes(1)
|                        |  |         |      |              |  |             |               |             
|C. Thomas Faulders, III |  |         | 2005 |              |  |             | 16,357,268(A) |              |  |  | 1,107,975(A) |  |  |  | 0(A) | 
|                        |  |         |      |              |  |             | 45,375,770(B) |              |  |  | 0(B)         |  |  |  | 0(B) | 
|Mark D. Ein             |  |         | 2005 |              |  |             | 16,367,168(A) |              |  |  | 981,075(A)   |  |  |  | 0(A) | 
|                        |  |         |      |              |  |             | 45,375,770(B) |              |  |  | 0(B)         |  |  |  | 0(B) | 
|Steven J. Gilbert       |  |         | 2005 |              |  |             | 16,367,268(A) |              |  |  | 1,097,975(A) |  |  |  | 0(A) | 
|                        |  |         |      |              |  |             | 45,375,770(B) |              |  |  | 0(B)         |  |  |  | 0(B) | 
|Julie Dobson            |  |         | 2005 |              |  |             | 16,367,268(A) |              |  |  | 1,097,075(A) |  |  |  | 0(A) | 
|                        |  |         |      |              |  |             | 45,375,770(B) |              |  |  | 0(B)         |  |  |  | 0(B) | 
|Susan Ness              |  |         | 2005 |              |  |             | 16,367,268(A) |              |  |  | 1,097,975(A) |  |  |  | 0(A) | 
|                        |  |         |      |              |  |             | 45,375,770(B) |              |  |  | 0(B)         |  |  |  | 0(B) | 
|Rajendra Singh          |  |         | 2005 |              |  |             | 16,357,268(A) |              |  |  | 1,107,975(A) |  |  |  | 0(A) | 
|                        |  |         |      |              |  |             | 45,375,770(B) |              |  |  | 0(B)         |  |  |  | 0(B) | 
|Neera Singh             |  |         | 2005 |              |  |             | 16,357,268(A) |              |  |  | 1,107,975(A) |  |  |  | 0(A) | 
|                        |  |         |      |              |  |             | 45,375,770(B) |              |  |  | 0(B)         |  |  |  | 0(B) | 

Proposal
2 Adoption of the
amended and restated equity incentive plan

|       |               |            |  |               |              |              |  |  |      |  |  |  |      | 
|------ | ------------- | ---------- |  | ------------- | ------------ | ------------ |  |  | ---- |  |  |  | ---- | 
|Votes  |               | Votes      |  | Votes         |              | Broker      
|For(1) |               | Against(1) |  | Abstaining(1) |              | Non-Votes(1)
|       |               |            |  |               |              |             
|       | 2,836,627(A)  |            |  |               | 8,504,236(A) |              |  |  | 0(A) |  |  |  | 0(A) | 
|       | 45,375,770(B) |            |  |               | 0(B)         |              |  |  | 0(B) |  |  |  | 0(B) | 

Proposal
3 Ratification of the
appointment of KPMG LLP as the independent auditors of the
Company for the fiscal year ended December 31, 2004

|       |               |            |  |               |            |              |  |  |      |  |  |  |      | 
|------ | ------------- | ---------- |  | ------------- | ---------- | ------------ |  |  | ---- |  |  |  | ---- | 
|Votes  |               | Votes      |  | Votes         |            | Broker      
|For(1) |               | Against(1) |  | Abstaining(1) |            | Non-Votes(1)
|       |               |            |  |               |            |             
|       | 16,446,052(A) |            |  |               | 971,731(A) |              |  |  | 0(A) |  |  |  | 0(A) | 
|       | 45,375,770(B) |            |  |               | 0(B)       |              |  |  | 0(B) |  |  |  | 0(B) | 



---



|          |                                                                                                                                                                                                                                                                                                                                                                       
|--------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note (1): | The shareholders are entitled to vote as a single
    class, with each share of the Companys Class A Common
    Stock having one vote and each share of the Companys
    Class B Common Stock having ten votes. (A) shows votes
    represented by the Companys Class A Common Stock and
    (B) shows votes represented by the Companys
    Class B Common Stock.

24



---



##### 





|        |                  
|------- | -----------------
|Item 5: | Other Information

Not Applicable



|        |                                     
|------- | ------------------------------------
|Item 6: | Exhibits and Reports on
    Form 8-K

(a) Exhibits

|      |     |  |   |   |  |                                                                                                                                                                            |                                                                                                                                                                                                                                                                             
|----- | --- |  | - | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 3.1 |  |   |  |  |                                                                                                                                                                            | Restated Certificate of Incorporation of the LCC
    International, Inc. (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).           
|10.33 |     |  |  |   |  | LCC International, Inc. Amended and Restated
    Equity Incentive Plan                                                                                                    
|10.34 |     |  |  |   |  | LCC International, Inc. Change in Central
    Severance Plan and Summary Plan Description                                                                                 
|11    |     |  |  |   |  | Calculation of Net Income Per Share                                                                                                                                       
|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.                

(b) Reports on Form 8-K

On May 10, 2004, we filed a Current Report
on Form 8-K, which reported that on May 10, 2004, we
issued a press release announcing our first quarters
results for 2004. A copy of the press release was furnished as
an exhibit under Item 12 of such Form 8-K.

On August 9, 2004, we filed a Current Report
on Form 8-K, which reports that on August 9, 2004, we
issued a press release announcing our second quarters
results for 2004. A copy of the press release was furnished as
an exhibit under Item 12 of such Form 8-K.

25



---



##### 



Signature

Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.



| |                                         
| | ----------------------------------------
| | LCC International, Inc. and Subsidiaries
|
| | /s/ GRAHAM B. PERKINS                   
| |                                         
| | Graham B. Perkins                       
| | Senior Vice President, Chief Financial  
| | Officer and Treasurer                   
| | (Principal Financial Officer and        
| | Principal Accounting Officer)           

Date: August 13, 2004


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