<PAGE>   1
 
================================================================================
 
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                            ------------------------
 
                                   FORM 10-Q
 
                                   (MARK ONE)
 
<TABLE>
<S>   <C>
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
      ENDED SEPTEMBER 30, 1998
                                   OR
[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
      FROM                TO                .
</TABLE>
 
                        COMMISSION FILE NUMBER: 0-21213

                            ------------------------
 
                            LCC INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                     <C>
               DELAWARE                               54-1807038
       (State of Incorporation)          (IRS Employer Identification Number)
</TABLE>
 
<TABLE>
<S>                                                       <C>
          7925 JONES BRANCH DRIVE, MCLEAN, VA               22102
        (Address of principal executive offices)          (Zip Code)
</TABLE>
 
       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  
                                ---              ---

    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 November 12, 1998, the registrant had outstanding 7,146,119 shares of
Class A Common Stock, par value $0.01 per share (the "Class A Common Stock") and
8,460,984 shares of Class B Common Stock, par value $0.01 per share (the "Class
B Common Stock").
 
================================================================================
<PAGE>   2
 
                    LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 
                         QUARTERLY REPORT ON FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 1998
 
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                         PAGE
                                                                        NUMBER
                                                                        ------
<S>       <C>                                                           <C>
PART I:   FINANCIAL INFORMATION
ITEM 1:   FINANCIAL STATEMENTS
          Condensed consolidated statements of operations for the
            three and nine month periods ended September 30, 1997 and
            1998......................................................     2
          Condensed consolidated balance sheets as of December 31,
            1997 and September 30, 1998...............................     3
          Condensed consolidated statements of cash flows for the nine
            months ended September 30, 1997 and 1998..................     4
          Notes to condensed consolidated financial statements........     5
ITEM 2:   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS.................................     7
PART II:  OTHER INFORMATION...........................................    15
ITEM 1:   Legal Proceedings...........................................    15
ITEM 2:   Changes in Securities.......................................    15
ITEM 3:   Defaults Upon Senior Securities.............................    15
ITEM 4:   Submission Of Matters to a Vote of Security Holders.........    15
ITEM 5:   Other Information...........................................    15
ITEM 6:   Exhibits and Reports on Form 8K.............................    15
</TABLE>
<PAGE>   3
 
                         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)
 
<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED    NINE MONTHS ENDED
                                                             SEPTEMBER 30,        SEPTEMBER 30,
                                                          -------------------   -----------------
                                                            1997       1998      1997      1998
                                                          --------   --------   -------   -------
<S>                                                       <C>        <C>        <C>       <C>
REVENUES:
  Service...............................................  $24,587    $21,988    $68,623   $66,083
  Product...............................................   15,906      7,105     43,540    27,709
  Asset management......................................       --        248         --       576
                                                          -------    -------    -------   -------
                                                           40,493     29,341    112,163    94,368
                                                          -------    -------    -------   -------
COST OF REVENUES:
  Service...............................................   15,610     17,681     45,411    49,296
  Product...............................................    7,128      5,209     22,047    17,333
                                                          -------    -------    -------   -------
                                                           22,738     22,890     67,458    66,629
                                                          -------    -------    -------   -------
GROSS PROFIT............................................   17,755      6,451     44,705    27,739
                                                          -------    -------    -------   -------
OPERATING EXPENSES:
  Sales and marketing...................................    2,314      2,436      6,360     7,393
  General and administrative............................    5,118     10,343     16,903    22,631
  Research and development..............................    1,683      1,597      5,230     4,947
  Special (credit)......................................    (3894)        --      (3894)       --
  Non-cash compensation.................................       44         47        534       293
  Depreciation and amortization.........................    2,053      1,905      5,415     4,578
                                                          -------    -------    -------   -------
                                                            7,318     16,328     30,548    39,842
                                                          -------    -------    -------   -------
OPERATING INCOME (LOSS).................................   10,437     (9,877)    14,157   (12,103)
                                                          -------    -------    -------   -------
OTHER INCOME (EXPENSE):
  Interest income.......................................      225        149        478       675
  Interest expense......................................     (893)      (593)    (2,693)   (1,790)
  Other income (expense)................................      142       (273)       745      (592)
                                                          -------    -------    -------   -------
                                                             (526)      (717)    (1,470)   (1,707)
                                                          -------    -------    -------   -------
INCOME (LOSS) BEFORE INCOME TAXES.......................    9,911    (10,594)    12,687   (13,810)
PROVISION (BENEFIT) FOR INCOME TAXES....................    4,328     (3,515)     5,585    (4,834)
                                                          -------    -------    -------   -------
NET INCOME (LOSS).......................................  $ 5,583    $(7,079)   $ 7,102   $(8,976)
                                                          =======    =======    =======   =======
NET INCOME (LOSS) PER SHARE:
  Basic.................................................  $  0.38    $ (0.45)   $  0.49   $ (0.58)
                                                          =======    =======    =======   =======
  Diluted...............................................  $  0.32    $ (0.45)   $  0.45   $ (0.58)
                                                          =======    =======    =======   =======
WEIGHTED AVERAGE SHARES USED IN THE CALCULATION OF NET
  INCOME PER SHARE:
  Basic.................................................   14,762     15,574     14,618    15,472
                                                          =======    =======    =======   =======
  Diluted...............................................   18,994     15,574     15,821    15,472
                                                          =======    =======    =======   =======
</TABLE>
 
     See accompanying notes to condensed consolidated financial statements.
                                        2
<PAGE>   4
 
                    LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  1997           1998
                                                              ------------   -------------
                                                                              (UNAUDITED)
<S>                                                           <C>            <C>
ASSETS:
Current assets:
    Cash and cash equivalents...............................    $ 15,838       $  7,120
    Short-term investments..................................       8,619             67
    Receivables, net of allowance for doubtful accounts of
      $15,426 and $16,967 at December 31, 1997 and September
      30, 1998, respectively:
         Trade accounts receivable..........................      30,643         27,641
         Due from related parties and affiliates............       1,375            889
         Unbilled receivables...............................      11,695          9,583
    Inventory, net..........................................       7,400          8,241
    Deferred income taxes, net..............................       9,874         17,273
    Prepaid expenses and other current assets...............       1,315          3,511
                                                                --------       --------
         Total current assets...............................      86,759         74,325
Property and equipment, net.................................      10,531         22,552
Software development costs, net.............................       6,133         10,986
Investment in joint venture.................................       1,300             --
Deferred income taxes, net..................................       1,513            449
Other assets................................................       4,782          4,612
                                                                --------       --------
                                                                $111,018       $112,924
                                                                ========       ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
    Note payable............................................    $  1,395       $  2,157
    Accounts payable........................................       4,994          7,551
    Accrued expenses........................................       9,895         10,721
    Accrued employee compensation and benefits..............       9,038          9,730
    Obligations under incentive plans.......................       1,106             50
    Deferred revenue........................................       4,650          5,164
    Income taxes payable....................................       7,507          8,966
    Other current liabilities...............................       1,193          2 091
                                                                --------       --------
         Total current liabilities..........................      39,778         46,430
Convertible subordinated debt...............................      50,000         50,000
Other liabilities...........................................       1,038          1,544
                                                                --------       --------
    Total liabilities.......................................      90,816         97,974
                                                                --------       --------
Preferred stock:
    10,000 shares authorized; 0 shares issued and
      outstanding...........................................          --             --
Class A common stock, $.01 par value:
    70,000 shares authorized; 6,644 and 7,145 shares issued
      and outstanding at December 31, 1997 and September 30,
      1998, respectively....................................          66             71
Class B common stock, $.01 par value:
    20,000 shares authorized; 8,461 shares issued and
      outstanding at December 31, 1997 and September 30,
      1998..................................................          85             85
Paid-in capital.............................................      33,210         36,742
Retained deficit............................................      (8,847)       (17,823)
Note receivable from shareholder............................      (2,800)        (2,800)
                                                                --------       --------
    Subtotal................................................      21,714         16,275
Accumulated other comprehensive loss -- foreign currency
  translation adjustments...................................      (1,512)        (1,325)
                                                                --------       --------
    Total shareholders' equity..............................      20,202         14,950
                                                                --------       --------
                                                                $111,018       $112,924
                                                                ========       ========
</TABLE>
 
     See accompanying notes to condensed consolidated financial statements.
                                        3
<PAGE>   5
 
                    LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                               NINE MONTHS ENDED
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                1997       1998
                                                              --------   --------
<S>                                                           <C>        <C>
Cash flows from operating activities:
     Net income (loss)......................................  $  7,102   $ (8,976)
     Adjustments to reconcile net cash provided by operating
      activities:
          Depreciation and amortization.....................     5,415      4,578
          Provision for doubtful accounts...................     1,313      2,346
          Non-cash compensation.............................       534        293
          Loss from investments in joint ventures, net......       222        267
          Changes in operating assets and liabilities:
               Trade, unbilled, and other receivables.......     1,752      4,199
               Accounts payable and accrued expenses........   (10,087)     4,075
               Inventory....................................      (101)      (841)
               Other current assets and liabilities.........     3,826     (7,502)
               Other non-current assets and liabilities.....     3,328        810
                                                              --------   --------
Net cash provided by (used in) operating activities.........    13,304       (751)
                                                              --------   --------
Cash flows from investing activities:
     (Increase) decrease in short term investments, net.....    (4,602)     8,552
     Purchases of property and equipment....................    (4,287)   (14,995)
     Increase in capitalized software.......................    (3,293)    (5,783)
     Investment in joint ventures...........................        --        289
                                                              --------   --------
Net cash (used in) investing activities.....................   (12,182)   (11,937)
                                                              --------   --------
Cash flows from financing activities:
     Proceeds from note payable.............................        --      1,303
     Payments on note payable...............................   (10,445)      (541)
     Proceeds from issuance of common stock, net............       289        588
     Proceeds from exercise of options......................     2,754      2,620
                                                              --------   --------
Net cash (used in) provided by financing activities.........    (7,402)     3,970
                                                              --------   --------
Net (decrease) in cash and cash equivalents.................    (6,280)    (8,718)
Cash and cash equivalents at beginning of period............    13,732     15,838
                                                              --------   --------
Cash and cash equivalents at end of period..................  $  7,452   $  7,120
                                                              ========   ========
Supplemental disclosures of cash flow information
     Cash paid during the quarter for:
          Interest..........................................  $  1,783   $  1,141
          Income taxes......................................       956      1,314
</TABLE>
 
     See accompanying notes to condensed consolidated financial statements.
                                        4
<PAGE>   6
 
                    LCC INTERNATIONAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
 
NOTE 1:  DESCRIPTION OF OPERATIONS
 
     LCC International, Inc. (also referred to as the "Company") is a leading
provider of integrated services and products relating to the design,
engineering, deployment, operation and maintenance of wireless communications
systems. In addition, through its Microcell Management, Inc. ("Microcell
Management") subsidiary, the Company offers wireless network operators the
opportunity to finance and outsource the ownership and maintenance of
transmission towers used in their networks. The services and products provided
by the Company are as follows:
 
SERVICES
 
     Engineering and design services.  The Company provides engineering and
design services for cellular phone system operators, personal communication
system (PCS) operators and other wireless communication system providers.
 
     Program management services.  The Company provides program management
services related to the build-out of wireless communications systems.
 
PRODUCTS
 
     Software products.  The Company develops and markets proprietary software
and data, which support the design and operation of wireless communication
systems.
 
     Hardware products.  The Company designs, assembles and sells field
measurement and network analysis tools used in the implementation, testing and
maintenance of wireless communication systems.
 
ASSET MANAGEMENT
 
     The Company, through Microcell Management: (i) builds multi-tenant towers
to the initial committed operator's specifications and leases space thereon to
such operator and other operators, (ii) purchases existing multi-tenant towers
from operators and leases back space to the existing users thereof as well as to
new operators, or (iii) leases space on an existing tower owned or to be built
by Microcell Management.
 
NOTE 2:  BASIS OF PRESENTATION
 
     The condensed consolidated financial statements of LCC International, Inc.
and subsidiaries included herein have been prepared by the Company without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission and reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of the results for the interim period.
 
     Certain information and footnote disclosure normally included in the
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These interim financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997. Operating results for the interim periods
are not necessarily indicative of results for an entire year.
 
     Certain reclassifications of prior year amounts have been made to conform
with the current year presentation.
 
                                        5
<PAGE>   7
 
NOTE 3:  INVENTORIES
 
     Inventories consist of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                       DECEMBER 31,   SEPTEMBER 30,
                                                           1997           1998
                                                       ------------   -------------
<S>                                                    <C>            <C>
Field measurement and network analysis tools.........    $ 4,249         $2,763
Parts and accessories................................      4,190          6,212
                                                         -------         ------
                                                           8,439          8,975
Less -- reserve for obsolete and slow moving
  inventory..........................................     (1,039)          (734)
                                                         -------         ------
                                                         $ 7,400         $8,241
                                                         =======         ======
</TABLE>
 
NOTE 4:  OTHER COMPREHENSIVE INCOME (LOSS)
 
     During the first quarter of 1998, the Company adopted SFAS No. 130,
Reporting Comprehensive Income, which established standards for reporting and
displaying comprehensive income and its components in the financial statements.
Comprehensive income is defined as net income 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 refers to
revenues, expenses, gains and losses that under generally accepted accounting
principles are included in comprehensive income, but excluded from net income.
Other comprehensive income consists solely of foreign currency translation
adjustments at September 30, 1997 and 1998. Comprehensive income (loss) and
other comprehensive income (loss), for the nine months ended September 30, is as
follows (in thousands).
 
<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED   NINE MONTHS ENDED
                                                      SEPTEMBER 30,        SEPTEMBER 30,
                                                    ------------------   ------------------
                                                     1997       1998      1997       1998
                                                    -------   --------   -------   --------
<S>                                                 <C>       <C>        <C>       <C>
Net income (loss).................................  $5,583    $(7,079)   $7,102    $(8,976)
                                                    ------    -------    ------    -------
Other comprehensive income (loss), before tax.....     252        809     (1299)       317
Income tax provision (benefit) related to items of
  comprehensive income............................      54        284      (466)       130
                                                    ------    -------    ------    -------
Other comprehensive income (loss), net of tax.....     198        525      (833)       187
                                                    ------    -------    ------    -------
Comprehensive income (loss).......................  $5,781    $(6,554)   $6,269    $(8,789)
                                                    ======    =======    ======    =======
</TABLE>
 
NOTE 5:  ACQUISITION OF KOLL TELECOMMUNICATIONS SERVICES, LLC
 
     On July 20, 1998, the Company acquired the remaining 66.7% membership
interest in Koll Telecommunications Services, LLC (KTS) bringing its total
membership interest to 100.0%. Prior to the acquisition, the Company owned 33.3%
of KTS' membership interests, Castle Rock Telecommunications Co., LLC (CRT) held
approximately 36.7% of KTS' membership interest, and Koll Management Services,
Inc. (KMS), held the remaining approximately 30.0%. In the transaction, KTS
redeemed the ownership interests of KMS in exchange for KMS' assumption of
certain contract rights and associated assets and liabilities. KTS also redeemed
the membership interests of CRT in exchange for an earn-out agreement entitling
CRT to 40.0% of the pre-tax income, after certain adjustments, derived by KTS
from its existing contracts.
 
NOTE 6:  SUBSEQUENT EVENTS
 
     Subsequent to September 30, 1998, the Company received approximately $0.9
million from Telcom Ventures, representing payment of $0.7 million principal and
approximately $0.2 million interest under the Company's $3.5 million loan to
Telcom Ventures.
 
     On October 20, 1998, the Company's Board of Directors approved a
restructuring plan that will result in a fourth quarter charge of approximately
$2.0 million to $3.0 million. The charge will be taken to cover the one-time
costs associated with the elimination of approximately 100 positions from the
Company's workforce and the closure of the Company's offices in Singapore,
Columbia and Germany. The Company is considering whether further measures,
resulting in an additional fourth quarter charge, may be necessary.
 
                                        6
<PAGE>   8
 
                    LCC INTERNATIONAL, INC. AND SUBSIDIARIES
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998
 
     This quarterly report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Exchange Act of 1934. These
are in paragraphs 4, 7, 31, 35, 38, ,41, 42, 44, 45 and 46 of the Management's
Discussion and Analysis of Financial Condition and Results of Operations
(beginning below). A more complete discussion of business risks is included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
 
OVERVIEW
 
     The Company is one of the world's largest independent providers of RF
engineering and program management services and products to the wireless
telecommunications industry. The Company has provided these services, along with
related proprietary software tools and field measurement and analysis equipment,
to operators of more than 200 wireless systems in more than 50 countries.
 
     The Company's revenues are generated through contracts for RF engineering
and program management services, licenses of the Company's software products and
sales of the Company's field measurement and analysis products. The Company
provides engineering design services on a contract basis, usually in a
customized plan for each client and generally charges for engineering services
on a time and materials or fixed price basis. The Company generally provides
program management services on a time and materials or fixed price basis. The
Company's revenues also include reimbursement for expenses, including the living
expenses of engineers on customer sites. The software tools used by the
Company's engineers, which are used as part of the customer's system after
completion of the project pursuant to a license, are recorded as product, not
service revenues. Revenues from software tools are earned under license
arrangements, which in the U.S., often consists of an annual fee per workstation
or per cell site and which are for a fixed term that requires renewal by the
customer to retain the software. The Company charges an up-front fee in many
cases outside the U.S. where customers are not accustomed to paying annual
licensing fees for software. A portion of the revenues from licensing software
to customers, apart from those associated with engineering design services
contracts, consists of upgrades or additional software modules developed by the
Company following the initial licensing. Revenues from field measurement and
analysis equipment consist primarily of one-time payments, although there are
some periodic rental payments and there may be additional charges for equipment
maintenance and upgrades.
 
     In December 1996, through the formation of a new subsidiary, Microcell
Management, Inc. ("Microcell Management"), the Company entered the wireless
infrastructure asset management business to acquire/develop and manage RF
transmission towers. Capitalized cost related to tower development was
approximately $0.7 million and $14.5 million at September 30, 1997 and 1998,
respectively.
 
     Service revenue consists of revenues from engineering services and program
management services. Product revenues consist of revenues from software tools
and field measurement and analysis products. The Company derives a significant
portion of its revenues from its international customers. Export sales were
approximately 37.2% of consolidated revenues in 1997, but due to strong
international wireless growth are expected to increase in 1998 to approximately
50.0% of consolidated revenues.
 
     Cost of revenues consists of costs associated with engineering design
services and program management services as well as costs associated with the
production and design of field measurement and analysis equipment, licensing of
software and related maintenance costs. Sales and marketing expenses consist of
salaries, sales commissions, bonuses, travel and other expenses required to
implement the Company's marketing, sales and customer support plans. General and
administrative expenses consist of the compensation, benefits, professional
services, office and occupancy costs required to manage the Company's business.
Non-cash compensation consists of awards under a program for key executives
adopted in 1994. Such plan was accounted for as a variable plan, and therefore,
to the extent that the deemed fair market value of the Company increased,
compensation expense increased accordingly. In connection with the Company's
initial
 
                                        7
<PAGE>   9
 
public offering in September 1996, the Company granted stock options to replace
the awards granted under this plan.
 
     The key drivers of the Company's growth have historically been: (i) the
issuances of new or additional wireless telecommunications licenses by
governmental authorities to wireless operators, (ii) increases in the number of
cell sites operated and the number of subscribers served by wireless network
operators, (iii) the introduction of new services or technologies, (iv) the
increasing complexity of the systems deployed by wireless network operators, and
(v) the expansion and optimization of existing systems by wireless network
operators.
 
     The Company has experienced fluctuations in revenues in each of the past
several years, with greater revenues in the second half of its calendar year and
lesser amounts in the first half. This trend may or may not continue as the
Company broadens its product and service offerings. A significant portion of the
Company's software license agreements are concluded in the last month of the
calendar quarter, generally with a concentration of such revenues in the final
ten business days of that month. The Company believes that these revenue
fluctuations are caused primarily by customer buying patterns. In any case, due
to the relatively fixed nature of certain costs, including personnel and
facilities expenses, a decline or shortfall in quarterly and/or annual revenues
typically results in lower profitability.
 
RESULTS OF OPERATIONS
 
     The following table and discussion provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated results of operations and financial condition. The discussion
should be read in conjunction with the condensed consolidated financial
statements and accompanying notes thereto included elsewhere herein.
 
<TABLE>
<CAPTION>
                                                                    PERCENTAGE OF REVENUE
                                                              ---------------------------------
                                                              THREE MONTHS         NINE MONTHS
                                                                  ENDED               ENDED
                                                              SEPTEMBER 30,       SEPTEMBER 30,
                                                              -------------       -------------
                                                              1997    1998        1997    1998
                                                              -----   -----       -----   -----
<S>                                                           <C>     <C>         <C>     <C>
Revenues:
     Service................................................   60.7%   74.9%       61.2%   70.0%
     Product................................................   39.3    24.2        38.8    29.4
     Asset management.......................................    0.0     0.9         0.0     0.6
                                                              -----   -----       -----   -----
                                                              100.0   100.0       100.0   100.0
Cost of revenues............................................   56.2    78.0        60.1    70.6
                                                              -----   -----       -----   -----
Gross profit................................................   43.8    22.0        39.9    29.4
                                                              -----   -----       -----   -----
Operating expenses:
     Sales and marketing....................................    5.7     8.3         5.7     7.8
     General and administrative.............................   12.6    35.3        15.1    24.0
     Research and development...............................    4.2     5.4         4.7     5.2
     Special (credit).......................................   (9.6)     --        (3.5)     --
     Non-cash compensation..................................    0.1     0.2         0.5     0.3
     Depreciation and amortization..........................    5.1     6.5         4.8     4.9
                                                              -----   -----       -----   -----
          Total operating expenses..........................   18.1    55.7        27.3    42.2
                                                              -----   -----       -----   -----
Operating income (loss).....................................   25.7   (33.7)       12.6   (12.8)
                                                              -----   -----       -----   -----
Other income (expense):
     Interest income........................................    0.6     0.5         0.4     0.7
     Interest (expense).....................................   (2.2)   (2.0)       (2.4)   (1.9)
     Other income (expense).................................    0.4    (0.9)        0.7    (0.6)
                                                              -----   -----       -----   -----
          Total other (expense).............................   (1.2)   (2.4)       (1.3)   (1.8)
                                                              -----   -----       -----   -----
Income (loss) before income taxes...........................   24.5   (36.1)       11.3   (14.6)
Provision (benefit) for income taxes........................   10.7   (12.0)        5.0    (5.1)
                                                              -----   -----       -----   -----
Net income (loss)...........................................   13.8%  (24.1)%       6.3%   (9.5)%
                                                              =====   =====       =====   =====
</TABLE>
 
                                        8
<PAGE>   10
 
                     THREE MONTHS ENDED SEPTEMBER 30, 1997
                                  COMPARED TO
                     THREE MONTHS ENDED SEPTEMBER 30, 1998
 
     Revenues.  Revenues for the three months ended September 30, 1998 were
$29.3 million compared to $40.5 million for the prior year, a decrease of $11.2
million or 27.5%. Service revenues were $22.0 million compared to $24.6 million
for the prior year, a decrease of $2.6 million or 10.6%. Service revenues
decreased primarily as a result of a decrease in engineering and design services
professional services fees offset, in part, by an increase in program management
volume. Program management revenues had declined in 1997 as a result of the
Company's decision to suspend or decrease services for two C-Block operators.
Product revenues were $7.1 million compared to $15.9 million for the prior year,
a decrease of $8.8 million or 55.3%. The decrease is due to software and field
measurement equipment sales lagging behind 1997 levels as a result of customer
spending constraints due primarily to cost cutting measures in the face of
increased industry competition, the continued economic downturn in the
Asia-Pacific region and a softness in the U.S. domestic market. In addition,
release of the Company's next generation network propagation modeling tool has
been delayed resulting in a reduction in software sales.
 
     Cost of Revenues.  Cost of revenues for the three months ended September
30, 1998 was $22.9 million compared to $22.7 for the prior year, an increase of
$0.2 million or 0.7%. As a percentage of total revenues, cost of revenues was
78.0% and 56.2% for 1998 and 1997, respectively. Service cost of revenues for
the three months ended September 30, 1998 was $17.7 million compared to $15.6
million for the prior year, an increase of $2.1 million or 13.3%. As a
percentage of total service revenues, service cost of revenues was 80.4% and
63.5% for 1998 and 1997, respectively. The increase in service cost of revenues
is due primarily to a change in revenue mix favoring lower margin program
management work. Product cost of revenues for the three months ended September
30, 1998 was $5.2 million compared to $7.1 million for the prior year, a
decrease of $1.9 million or 26.9%. Product cost of revenues as a percentage of
product revenues was 73.3% and 44.8% for 1998 and 1997, respectively. Both the
dollar and percentage change is due primarily to the change in revenue mix year
over year as well as lower sales volume.
 
     Gross Profit.  Gross profit for the three months ended September 30, 1998
was $6.5 million compared to $17.8 million for the prior year, a decrease of
$11.3 million or 63.7%. As a percentage of total revenues, gross profit was
22.0% and 43.8% for 1998 and 1997, respectively. The decrease in gross profit
was due primarily to the decrease in revenues and increase in service cost of
revenues, discussed above.
 
     General and Administrative.  General and administrative expenses were $10.3
million for the three months ended September 30, 1998 compared to $5.1 million
for the prior year, an increase of $5.2 million. The increase is due primarily
to increased costs related to Microcell Management which commenced operations in
January 1997, an increase in the allowance for doubtful accounts, in part due to
the continued aging of receivables from the Company's Asia-Pacific customers,
unsuccessful merger & acquisition activity, including the Company's proposed
exchange of its hardware products business, and costs related to the Executive
Management of the Company and related changes thereto during 1998.
 
     Special (Credit).  During September 1997, the Company recognized an
approximate $3.9 million recovery of the special charge recorded in December
1996 related to Pocket Communications, Inc. and NextWave Telecom, Inc.
 
     Interest Expense.  Interest expense was $0.6 million for the three months
ended September 30, 1998 compared to $0.9 million for the prior year, a decrease
of $0.3 million or 33.6%. The decrease is due primarily to the decrease in
interest rates on the MCI convertible subordinated debt. On October 23, 1997,
the Company announced that it had agreed with MCI to defer the Company's option
to convert the notes in 1997. As part of the agreement, interest payable under
the notes was reduced from 6.8% to 4.4% per annum. In November 1998, the
Company's window to convert the MCI subordinated debt into 2,841,099 shares of
the Company's Class A Common Stock was extended to November 22, 1998.
 
     Other Income (Expense).  Other expense was $0.3 million for the three
months ended September 30, 1998 compared to other income of $0.1 million for the
prior year, a decrease of $0.4 million. The decrease is due primarily to foreign
currency transaction loss of $0.3 million in 1998 and the expiration of the
24-month
 
                                        9
<PAGE>   11
 
distribution rights arrangement for the Company's hardware and software products
which was granted with the sale of the Company's 50.5% interest in Telemate S.A.
in January 1996.
On July 20, 1998, the Company acquired the remaining 66.7% membership interest
in KTS, bringing its total membership interest to 100.0%. Prior to the
acquisition, the Company owned 33.3% of KTS' membership interest, Castle Rock
Telecommunications Co., LLC (CRT) held approximately 36.7% of KTS' membership
interest, and Koll Management Services, Inc. (KMS), held the remaining
approximately 30.0%. In the transaction, KTS redeemed the ownership interests of
KMS in exchange for KMS' assumption of certain contract rights and associated
assets and liabilities. KTS also redeemed the membership interests of CRT in
exchange for an earn-out agreement entitling CRT to 40.0% of the pre-tax income,
after certain adjustments, derived by KTS from its existing contracts.
 
     Provision (benefit) for Income Taxes.  The (benefit) for income taxes was
$(3.5) million for the three months ended September 30, 1998 compared to a
provision of $4.3 million for the prior year. The benefit for income taxes was
recorded in 1998 based on a consolidated annual effective income tax rate of
35%. The provision for income taxes was recorded in 1997 using a consolidated
annual effective income tax rate of approximately 43.7%. The change in effective
income tax rates is due to the impact of the Company's foreign operations which
are taxed at various rates and a valuation reserve for tax benefits related to
losses from foreign operations.
 
                                       10
<PAGE>   12
 
                      NINE MONTHS ENDED SEPTEMBER 30, 1997
                                  COMPARED TO
                      NINE MONTHS ENDED SEPTEMBER 30, 1998
 
     Revenues.  Revenues for the nine months ended September 30, 1998 were $94.4
million compared to $112.2 million for the prior year, a decrease of $17.8
million or 15.9%. Service revenues were $66.1 million compared to $68.6 million
for the prior year, a decrease of $2.5 million or 3.7%. Service revenues
decreased primarily as a result of a decrease in engineering and design services
professional fees, offset by an increase in program management volume. Program
management revenues had declined in 1997 as a result of the Company's decision
to suspend or decrease services for two C-Block operators. Product revenues were
$27.7 million compared to $43.5 million for the prior year, a decrease of $15.8
million or 36.4%. The decrease in product revenues is primarily a result of
customer spending constraints due to cost cutting measures in the face of
increased competition, the continued economic downturn in the Asia-Pacific
region and a softness in the U.S. domestic market. In addition, release of the
Company's next generation network propagation tool has been delayed resulting in
a reduction in software sales.
 
     Cost of Revenues.  Cost of revenues for the nine months ended September 30,
1998 was $66.6 million compared to $67.5 for the prior year, a decrease of $0.9
million or 1.2%. As a percentage of total revenues, cost of revenues was 70.6%
and 60.1% for 1998 and 1997, respectively. Service cost of revenues for the nine
months ended September 30, 1998 was $49.3 million compared to $45.4 million for
the prior year, an increase of $3.9 million or 8.6%. As a percentage of total
service revenues, service cost of revenues was 74.6% and 66.2% for 1998 and
1997, respectively. The increase is due primarily to a change in revenue mix
favoring lower margin program management work. Product cost of revenues for the
nine months ended September 30, 1998 was $17.3 million compared to $22.0 million
for the prior year, a decrease of $4.7 million or 21.4%. Product cost of
revenues as a percentage of product revenues, was 62.6% and 50.6% for 1998 and
1997, respectively. Both the dollar and percentage decrease is due primarily to
the change in revenue mix year over year as well as lower sales volume.
 
     Gross Profit.  Gross profit for the nine months ended September 30, 1998
was $27.7 million compared to $44.7 million for the prior year, a decrease of
$17.0 million or 38.0%. As a percentage of total revenues, gross profit was
29.4% and 39.9% for 1998 and 1997, respectively. The decrease in gross profit
was due to the decrease in product revenues as well as the increase in service
cost of revenues, both discussed above.
 
     Sales and Marketing.  Sales and marketing expenses were $7.4 million for
the nine months ended September 30, 1998 compared to $6.4 million for the prior
year, an increase of $1.0 million or 16.3%. The increase is due primarily to
increased business development costs year over year as a result of the continued
regionalization of the Company's business on a world wide basis.
 
     General and Administrative.  General and administrative expenses were $22.6
million for the nine months ended September 30, 1998 compared to $16.9 million
for the prior year, an increase of $5.7 million or 33.9%. The increase is due
primarily to increased costs related to Microcell Management which commenced
operations in January 1997, an increase in the allowance for doubtful accounts
in part due to the continued aging of receivables from the Company's
Asia-Pacific customers, unsuccessful merger & acquisition activities, including
the Company's proposed exchange of it's hardware products business and costs
related to the Executive Management of the Company and related changes thereto
during 1998.
 
     Special (Credit).  During September 1997, the Company recognized an
approximate $3.9 million recovery of the special charge recorded in December
1996 related to Pocket Communications, Inc. and NextWave Telecom, Inc.
 
     Non-Cash Compensation.  Non-cash compensation was $0.3 million for the nine
months ended September 30, 1998, compared to $0.5 million for the prior year, a
decrease of $0.2 million or 45.1%. The decrease is a result of certain awards
becoming fully vested and related expense recognition completed.
 
     Depreciation and Amortization.  Depreciation and amortization expense was
$4.6 million for the nine months ended September 30, 1998 compared to $5.4
million for the prior year, a decrease of $0.8 million or 15.5%. The decrease is
a result of lower depreciation expense as a result of certain equipment,
primarily computers and related equipment, becoming fully depreciated.
 
                                       11
<PAGE>   13
 
     Interest Income.  Interest income was $0.7 million for the nine months
ended September 30, 1998 compared to $0.5 million for the prior year, an
increase of $0.2 million or 41.2%. The increase is a result of an increase in
the amount of funds available for investment year over year.
 
     Interest Expense.  Interest expense was $1.8 million for the nine months
ended September 30, 1998 compared to $2.7 million for the prior year, a decrease
of $0.9 million or 33.5%. The decrease is due primarily to the decrease in
interest rates on the MCI convertible subordinated debt. On October 23, 1997,
the Company announced that it had agreed with MCI to defer the Company's option
to convert the notes in 1997. As part of the agreement, interest payable under
the notes was reduced from 6.8% to 4.4% per annum. In November 1998, the
Company's window to convert the MCI subordinated debt into 2,841,099 shares of
the Company's Class A Common Stock was extended to November 22, 1998.
 
     Other Income (Expense).  Other income (expense) was $(0.6) million for the
nine months ended September 30, 1998 compared to other income of $0.7 million
for the prior year, a decrease of $1.3 million. The decrease is due primarily to
foreign currency transaction losses of $0.3 million in 1998, the expiration of
the 24-month distribution rights arrangement for the Company's hardware and
software products which was granted with the sale of the Company's 50.5%
interest in Telemate S.A. in January 1996 and a reduction in income recognized
from the Company's 33.3% joint venture with Koll Telecommunications Services,
LLC ("KTS"). On July 20, 1998, the Company acquired the remaining 66.7%
membership interest in KTS, bringing its total membership interest to 100.0%.
Prior to the acquisition, the Company owned 33.3% of KTS' membership interest,
Castle Rock Telecommunications Co., LLC (CRT) held approximately 36.7% of KTS'
membership interest, and Koll Management Services, Inc. (KMS), held the
remaining approximately 30.0%. In the transaction, KTS redeemed the ownership
interests of KMS in exchange for KMS' assumption of certain contract rights and
associated assets and liabilities. KTS also redeemed the membership interests of
CRT in exchange for an earn-out agreement entitling CRT to 40.0% of the pre-tax
income, after certain adjustments, derived by KTS from its existing contracts.
 
     Provision (Benefit) for Income Taxes.  The (benefit) for income taxes was
$(4.8) million for the nine months ended September 30, 1998 compared to a
provision of $5.6 million for the prior year. The benefit for income taxes was
recorded in 1998 using a consolidated annual effective income tax rate of 35%.
The provision for income taxes was recorded in 1997 based on a consolidated
annual effective income tax rate of approximately 44.0%. The change in effective
income tax rates is due to the impact of the Company's foreign operations which
are taxed at various rates and a valuation reserve for tax benefits related to
losses from foreign operations.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Cash and cash equivalents, were $7.1 million at September 30, 1998 compared
to $15.8 million at December 31, 1997 a decrease of $8.7 million or 55.0%. Net
cash used in operations was $0.8 million for the nine months ended September 30,
1998. Net cash used in investing activities was $11.9 million, consisting
primarily of cash paid for additions to property and equipment ($15.0 million)
and an increase in capitalized software ($5.8 million), offset by a decrease in
short-term investments ($8.6 million). Net cash provided by financing activities
was $4.0 million, representing cash received from stock issuances as a result of
options exercised during the period, cash received for shares purchased under
the Company's Employee Stock Purchase Plan and net proceeds during the period
from the ETP Credit Facility (see below). Short-term investments were $0.1
million at September 30, 1998 compared to $8.6 million at December 31, 1997, a
decrease of $8.5 million. The decrease is a result of the funding of capital
expenditures for the Company's Microcell Management subsidiary.
 
     During December 1997, the company increased its allowance for doubtful
accounts due to the continued aging of receivables from its Asia-Pacific
customers. The economic downturn and exchange rate fluctuations in the
Asia-Pacific region during the latter part of calendar 1997 had resulted in
certain of the Company's customers experiencing difficulty in arranging in a
timely fashion needed additional financing and hard currency to satisfy U.S.
dollar denominated liabilities to the Company. As a result of the uncertainty
associated with the collection of amounts due, the Company recorded additional
reserves of approximately $2.9 million to cover potential Asia-Pacific region
exposure and established procedures to require downpay-
 
                                       12
<PAGE>   14
 
ment or use of letters of credit for certain Asia-Pacific sales. During the
quarter ended September 30, 1998, the Company recorded additional reserves of
approximately $2.5 million, in part as a result of the continued aging of
receivables from the Company's Asia-Pacific customers.
 
     The Company anticipates a significant commitment for capital expenditures
for its Microcell Management subsidiary. This effort is currently funded from
the Company's current working capital. The Company is engaged in discussions
with various sources of financing to fund the continued growth and development
of its tower business above and beyond the use of the Company's working capital.
There can be no assurance that the Company will be successful in obtaining such
financing. In addition, under the Company's software development program, the
Company capitalized in accordance with Statement of Financial Accounting
Standards No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed," $3.3 million and $5.8 million in the nine month
periods ended September 30,1997 and 1998, respectively.
 
     Net cash provided by operations was $13.3 million for the nine months ended
September 30, 1997. Net cash used in investing activities was $12.2 million,
consisting primarily of cash paid for additions to property and equipment ($4.3
million), an increase in capitalized software ($3.3 million) and an increase in
short term investments ($4.6 million). Net cash used in financing activities was
$7.4 million, representing cash paid in total satisfaction of the note agreement
established for the purchase of ETP in December 1996 of $10.4 million, offset by
cash received from stock issuances as a result of options exercised during the
period and cash received for shares purchased under the Company's Employee Stock
Purchase Plan.
 
     Working capital was $27.9 million at September 30, 1998 versus $47.0
million at December 31, 1997, a decrease of $19.1 million or 40.6%. The decrease
in working capital was primarily due to internal funding of capital expenditures
for the Company's Microcell Management subsidiary.
 
     In February 1998, the Company adopted a stock repurchase program pursuant
to which the Company is authorized to purchase, through open market
transactions, privately negotiated transactions, or in such other manner as will
comply with the provisions of the Securities Exchange Act of 1934, and the rules
and regulations thereunder, up to one million shares of Class A Common Stock.
The actual timing and blocks of shares to be purchased will depend on a variety
of factors, including price and market conditions. As of September 30, 1998, the
Company had not purchased any shares pursuant to this program.
 
     On October 20, 1998 the Company's Board of Directors approved a
restructuring plan that will result in a fourth quarter charge of approximately
$2.0 million to $3.0 million. The charge will be taken to cover the one-time
costs associated with the elimination of approximately 100 positions from the
Company's workforce and the closure of the Company's offices in Singapore,
Columbia and Germany. The Company is considering whether further measures,
resulting in an additional fourth quarter charge, may be necessary.
 
     The Company has a credit facility with Chase Manhattan Bank Co. NA, which
consists of a revolving loan and letter of credit facility in an aggregate
principal amount not to exceed $20 million. The revolving loan commitment
expires in September 1999. Interest under the credit facility accrues at the
Company's election (subject to certain restrictions and limitations) at either
(i) the variable rate equal to the greater of (a) the Federal funds rate plus
one-half of one percent, and (b) the announced prime commercial lending rate of
Chase, or (ii) a fixed rate for a designated period of time determined by
reference to the London Interbank Market. The payment and performance of the
obligations of the Company under the credit facility are secured by
substantially all of the assets of the Company. Effective December 30, 1996 the
Credit Facility was amended to revise the financial ratios and certain other
covenants contained therein for the effect of the special charge recorded by the
Company. Effective December 15, 1997, the Credit Facility was amended to
"carve-out" a separate credit facility for ETP (the "ETP Credit Facility") in
the aggregate principal amount of $2.5 million. ETP and Microcell executed the
amended credit facility as parties and guarantors of the Company's obligation.
The Company has pledged 65% of the equity of ETP and 100% of the Company's
equity of Microcell Management to Chase as security for repayment under the
facility. Effective September 30, 1998, the Company obtained a waiver for
non-compliance with its financial ratios. The Company believes that it may be in
technical default under the same convenants, and is actively engaged in
discussions with Chase regarding possible amendments to, or waivers under, the
credit facility. No amounts were outstanding under the Credit Facility during
the period January 1, 1998 through September 30, 1998 with the exception of
amounts, if any, outstanding under the ETP Credit Facility and outstanding
letters of credit.
                                       13
<PAGE>   15
 
Approximately $2.2 million was outstanding under the ETP Credit Facility and
there were approximately $5.8 million outstanding letters of credit at September
30, 1998.
 
     In November 1998, the Company's window to convert the MCI subordinated debt
into 2,841,099 shares of the Company's Class A Common Stock was extended to
November 22, 1998.
 
     The Company currently believes that its cash and cash equivalents,
short-term investments, cash flow from operations and credit, assuming continued
availability under the credit facility, will be sufficient to satisfy the
current and anticipated future capital requirements of the Company.
 
IMPACT OF THE YEAR 2000 ISSUE
 
     The Year 2000 issue results from a programming convention in which computer
programs use two digits rather than four to define the applicable year (the
"Year 2000 Issue"). Software, hardware or firmware may recognize a date using
"00" as the year 1900, rather than the year 2000. Such an inability of computer
programs to recognize a year that begins with "20" could result in system
failures, miscalculations or errors causing disruptions of operations or other
business problems, including, among others, a temporary inability to process
transactions, send invoices or engage in similar normal business activities.
 
     The Company has undertaken a program to address the Year 2000 Issue with
respect to the following: (i) the Company's information technology and operating
systems; (ii) the Company's non-information technology systems (such as
buildings, plant, equipment and other infrastructure systems that may contain
embedded microcontroller technology); (iii) certain systems of the Company's
major vendors and material service providers (insofar as they relate to the
Company's business activities with such parties); and (iv) the Company's
material clients (insofar as the Year 2000 Issue relates to the Company's
ability to provide services to such clients).
 
     Internal Systems.  The Company has invested in the implementation and
maintenance of accounting and reporting systems and equipment that are intended
to enable the Company to provide adequately for its information and reporting
needs and which are also Year 2000 compliant. Substantially all of the Company's
internal systems have already been certified as Year 2000 compliant through
testing or other mechanisms and the Company has not delayed any systems projects
due to the Year 2000 Issue. Management believes that the future costs associated
with Year 2000 Issues for its internal systems will be insignificant and
therefore not impact the Company's business, financial condition and results of
operations. The Company is in the process of performing its Year 2000
modifications and expects to have its internal computer systems Year 2000
compliant by the end of 1998.
 
     The Company's technical personnel have completed their assessment of the
impact of the Year 2000 Issue on the Company's products and determined that all
active products determined to be non-compliant will be modified to be Year 2000
compliant or placed on the Company's list of discontinued products. However,
there can be no guarantee that the systems of other companies on which the
Company's systems rely will be timely converted, or that a failure to convert by
another company, or a conversion that is incompatible with the Company's
systems, would not have a material adverse effect on the Company.
 
     Third Party Systems.  The Company has initiated formal communications with
all of its significant suppliers and large customers to determine the extent to
which the Company is vulnerable to those third parties' failure to remediate
their own Year 2000 Issue. The Company has received responses regarding Year
2000 compliance from some of such third parties. The third parties that
responded have indicated that their hardware and/or software is or is expected
to be Year 2000 compliant.
 
     Contingency Plans.  The Company has started to consider possible general
contingency plans for Year 2000 failures. The Company intends to complete its
determination of worst case scenarios after it has received and analyzed
responses to substantially all of the inquiries it has made of third parties. As
the Company progresses in this process, the Company will develop remedial and
contingency plans to address such risks.
 
     Costs.  The Company will utilize both internal and external resources to
reprogram, or replace, and test software for Year 2000 modifications. The
Company has not separately tracked the costs incurred in connection with the
Year 2000 effort, however, total cost associated with the required modifications
and
 
                                       14
<PAGE>   16
 
conversions is not expected to be material to the Company's consolidated results
of operations and financial position. The total cost of the program is being
funded through operating cash flows.
 
     Risks.  Although the Company's Year 2000 efforts are intended to minimize
the adverse effects of the Year 2000 Issue on the Company's business and
operations, the actual effects of the issue and the success or failure of the
Company's efforts described above cannot be known until the year 2000. Failure
by the Company and its major vendors, other material service providers and
material clients to address adequately their respective Year 2000 issues in a
timely manner could have a material adverse effect on the Company's business,
results of operations and financial condition.
 
                                       15
<PAGE>   17
 
PART II -- OTHER INFORMATION
 
Item 1:  Legal Proceedings
 
         Not Applicable
 
Item 2:  Changes in Securities
 
         Not Applicable
 
Item 3:  Defaults Upon Senior Securities
 
         Not Applicable
 
Item 4:  Submission of Matters to a Vote of Security Holders
 
         Not Applicable
 
Item 5:  Other Information.  On October 1, 1998 the Company filed a Current
         Report on Form 8-K which reported that, on September 18, 1998, the
         Company, LCC Europe GmbH, a subsidiary of the Company ("LCC GmbH"),
         Allen Telecom Inc.("Allen") and Allen Telecom Investments, Inc.
         ("ATII") signed an Asset Exchange Agreement pursuant to which the
         Company and LCC GmbH agreed to convey to Allen substantially all the
         assets and certain liabilities of the Company's hardware business
         segment in exchange for the conveyance to the Company by Allen and ATII
         of substantially all of the assets and certain liabilities of Allen's
         business of providing frequency planning and coordinating services as
         well as systems design, field engineering and software products for the
         wireless communications industry (the "Asset Exchange Agreement").
 
         On October 20, 1998 the Company filed a Current Report on Form 8-K
         dated which reported that, on October 19, 1998, the Company and Allen
         announced that they terminated the Asset Purchase Agreement.
 
         On October 7, 1998 the Company filed a Current Report on Form 8-K
         which reported that, on October 5, 1998, the Company announced the
         resignation of Dr. Geoffrey S. Carroll as its President and Chief
         Executive Officer and the appointment of Dr. Rajendra Singh,
         Chairperson of the Company's Board of Directors, as interim chief
         executive.
 
Item 6:  Exhibits and Reports on Form 8-K.
 
         (a) None.
 
         (b) None.
 
                                       16
<PAGE>   18
 
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.
 
<TABLE>
<S>                                                         <C>
                                                            LCC International, Inc. and Subsidiaries
 
Date: November 16, 1998
  -------------------------------------------------         Signed: /s/ RICHARD HOZIK
                                                            --------------------------------------------
                                                                    Richard Hozik
                                                                    Senior Vice President, Treasurer
                                                                    and Chief Financial Officer
</TABLE>
 
                                       17
<PAGE>   19
 
                                                                      EXHIBIT II
 
                COMPUTATIONS OF EARNINGS (LOSS) PER COMMON SHARE
<TABLE>
<CAPTION>
                                                              1997                                          1998
                                    ---------------------------------------------------------   ----------------------------
                                           THREE MONTHS                   NINE MONTHS                   THREE MONTHS
                                               ENDED                         ENDED                         ENDED
                                           SEPTEMBER 30,                 SEPTEMBER 30,                 SEPTEMBER 30,
                                    ---------------------------   ---------------------------   ----------------------------
                                     NET              PER SHARE    NET              PER SHARE     NET              PER SHARE
                                    INCOME   SHARES    AMOUNT     INCOME   SHARES    AMOUNT     (LOSS)    SHARES    AMOUNT
                                    ------   ------   ---------   ------   ------   ---------   -------   ------   ---------
<S>                                 <C>      <C>      <C>         <C>      <C>      <C>         <C>       <C>      <C>
Basic EPS
    Net Income (loss) Available to
      Common Shareholders.........  $5,583   14,762     $0.38     $7,102   14,618     $0.49     $(7,079)  15,574    $(0.45)
                                                        =====                         =====                         ======
Effect of Dilutive Securities
    Convertible Debt..............     510    2,841
    Stock Option Plans............            1,391                         1,203
                                    ------   ------               ------   ------               -------   ------
Dilutive EPS
    Net Income (loss) Available to
      Common Stockholders and
      Conversions.................  $6,093   18,994     $0.32     $7,102   15,821     $0.45     $(7,079)  15,574    $(0.45)
                                    ======   ======     =====     ======   ======     =====     =======   ======    ======
 
<CAPTION>
                                                1998
                                    ----------------------------
                                            NINE MONTHS
                                               ENDED
                                           SEPTEMBER 30,
                                    ----------------------------
                                      NET              PER SHARE
                                    (LOSS)    SHARES    AMOUNT
                                    -------   ------   ---------
<S>                                 <C>       <C>      <C>
Basic EPS
    Net Income (loss) Available to
      Common Shareholders.........  $(8,976)  15,472    $(0.58)
                                    =======             ======
Effect of Dilutive Securities
    Convertible Debt..............
    Stock Option Plans............
                                    -------   ------
Dilutive EPS
    Net Income (loss) Available to
      Common Stockholders and
      Conversions.................  $(8,976)  15,472    $(0.58)
                                    =======   ======    ======
</TABLE>
 
NOTE: The Company's subordinated debt, which is exchangeable into 2.8 million
shares of the Company's Class A Common Stock, was outstanding during the three
and nine months ended September 30, 1997 and 1998, but was not included in the
computation of diluted earnings per share (except for the computation for the
three months ended September 30, 1997) because of the effect of which would have
been anti-dilutive. The Company's Option Plans for the three and nine month
periods ended September 30, 1998 were not included in the computation of diluted
earnings per share because of the effect of which would have been anti-dilutive.
 
                                       18