##### Table of Contents









United States Securities and Exchange
Commission

Washington, DC 20549




---

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 September 30, 2001              
|     |  | 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)




---

|                                         |  |                                     
|---------------------------------------- |  | ------------------------------------
|                                        
|                                        
|                                        
|                                        
|Delaware                                 |  | 54-1807038                          
|(State of Incorporation)                 |  | (IRS 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

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, 2001, the registrant had
outstanding 12,215,670 shares of Class A Common Stock, par
value $0.01 per share (the Class A Common
Stock) and 8,439,833 shares of Class B Common Stock,
par value $0.01 per share (the Class B Common Stock).



---






---

TABLE OF CONTENTS



|                                                     |                                                                                       |  |  |  |  |  |  | 
|---------------------------------------------------- | ------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                       
|                                                     | Item 1. Financial Statements                                                         
|Condensed Consolidated Balance Sheets               
|Condensed Consolidated Statements of Cash Flows     
|Notes to Condensed Consolidated Financial Statements
|                                                     | Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                     | Item 1: Legal Proceedings                                                            
|                                                     | Item 2: Changes in Securities                                                        
|                                                     | Item 3: Defaults Upon Senior Securities                                              
|                                                     | Item 4: Submission of Matters to a Vote of Security Holders                          
|                                                     | Item 5: Other Information                                                            
|                                                     | Item 6: Exhibits and Reports on Form 8-K                                             
|Calculation of Net Income Per Share                 



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##### Table of Contents



LCC International, Inc. and
Subsidiaries

Quarterly Report on Form 10-Q

For the quarter ended September 30,
2001


INDEX

|         |  |                                                                                                                               |  |        |    | 
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | ------ | -- | 
|         |  |                                                                                                                               |  | Page  
|         |  |                                                                                                                               |  | Number
|         |  |                                                                                                                               |  |       
|PART  I: |  | FINANCIAL INFORMATION                                                                                                         |  |        |    | 
|        
|        
|        
|        
|ITEM 1:  |  | FINANCIAL STATEMENTS                                                                                                          |  |        |    | 
|        
|        
|        
|        
|         |  | Condensed consolidated statements of operations
	for the three and nine months ended September 30, 2000 and
	2001 (unaudited) |  |        | 3  | 
|        
|        
|        
|        
|         |  | Condensed consolidated balance sheets as of
	December 31, 2000 and September 30, 2001 (unaudited)                             |  |        | 4  | 
|        
|        
|        
|        
|         |  | Condensed consolidated statements of cash flows
	for the nine months ended September 30, 2000 and 2001
	(unaudited)           |  |        | 5  | 
|        
|        
|        
|        
|         |  | Notes to condensed consolidated financial
	statements                                                                         |  |        | 6  | 
|        
|        
|        
|        
|ITEM 2:  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF
	FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                        |  |        | 10 | 
|        
|        
|        
|        
|PART II: |  | OTHER INFORMATION                                                                                                             |  |        |    | 
|        
|        
|        
|        
|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 | 

2



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##### Table of Contents






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 |        | Nine Months Ended
|                                                                      |                                                          | September 30,      |        | September 30,    
|                                                                      |                                                          |                    |        |                  
|                                                                      |                                                          | 2000               |        | 2001              |   | 2000 |        | 2001  
|                                                                      |                                                          |                    |        |                   |   |      |        |       
|REVENUES:                                                             |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Service                                                  |                    | $      | 40,912            |   |      | $      | 34,347 |   |   | $       | 104,359 |   |   | $       | 106,534 |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Tower ownership and management                           |                    |        | 25                |   |      |        |       |   |   |         | 1,008   |   |   |         |        |  
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                      |                                                          |                    | 40,937 |                   |   |      | 34,347 |        |   |   | 105,367 |         |   |   | 106,534 |        
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|COST OF REVENUES:                                                     |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Service                                                  |                    |        | 29,886            |   |      |        | 26,099 |   |   |         | 76,326  |   |   |         | 83,500  |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Tower ownership and management                           |                    |        | 10                |   |      |        |       |   |   |         | 333     |   |   |         |        |  
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                      |                                                          |                    | 29,896 |                   |   |      | 26,099 |        |   |   | 76,659  |         |   |   | 83,500  |        
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|GROSS PROFIT                                                          |                                                          |                    | 11,041 |                   |   |      | 8,248  |        |   |   | 28,708  |         |   |   | 23,034  |        
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|OPERATING (INCOME) EXPENSE:                                           |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Sales and marketing                                      |                    |        | 1,934             |   |      |        | 1,758  |   |   |         | 6,081   |   |   |         | 5,376   |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | General and administrative                               |                    |        | 5,292             |   |      |        | 5,170  |   |   |         | 14,146  |   |   |         | 11,806  |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Gain on sale of tower portfolio and
	administration, net |                    |        | (889              | ) |      |        |       |   |   |         | (26,195 | ) |   |         | (2,323  | )
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Depreciation and amortization                            |                    |        | 621               |   |      |        | 752    |   |   |         | 2,213   |   |   |         | 2,217   |  
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                      |                                                          |                    | 6,958  |                   |   |      | 7,680  |        |   |   | (3,755  | )       |   |   | 17,076  |        
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|OPERATING INCOME                                                      |                                                          |                    | 4,083  |                   |   |      | 568    |        |   |   | 32,463  |         |   |   | 5,958   |        
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|OTHER INCOME (EXPENSE):                                               |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Interest income                                          |                    |        | 623               |   |      |        | 418    |   |   |         | 1,441   |   |   |         | 1,504   |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Interest expense                                         |                    |        | (6                | ) |      |        | (5     | ) |   |         | (261    | ) |   |         | (5      | )
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Other                                                    |                    |        | (287              | ) |      |        | 22,377 |   |   |         | (850    | ) |   |         | 22,189  |  
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                      |                                                          |                    | 330    |                   |   |      | 22,790 |        |   |   | 330     |         |   |   | 23,688  |        
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|INCOME FROM OPERATIONS BEFORE INCOME TAXES                            |                                                          |                    | 4,413  |                   |   |      | 23,358 |        |   |   | 32,793  |         |   |   | 29,646  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|PROVISION FOR INCOME TAXES                                            |                                                          |                    | 2,509  |                   |   |      | 9,343  |        |   |   | 14,429  |         |   |   | 11,858  |        
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|NET INCOME                                                            |                                                          | $                  | 1,904  |                   |   | $    | 14,015 |        |   | $ | 18,364  |         |   | $ | 17,788  |        
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|NET INCOME PER SHARE:                                                 |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Basic                                                    |                    | $      | 0.09              |   |      | $      | 0.68   |   |   | $       | 0.90    |   |   | $       | 0.87    |  
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                      | Diluted                                                  |                    | $      | 0.09              |   |      | $      | 0.68   |   |   | $       | 0.82    |   |   | $       | 0.85    |  
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|WEIGHTED AVERAGE SHARES USED IN CALCULATION OF
	NET INCOME PER SHARE: |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Basic                                                    |                    |        | 20,417            |   |      |        | 20,552 |   |   |         | 20,320  |   |   |         | 20,491  |  
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                                      | Diluted                                                  |                    |        | 22,368            |   |      |        | 20,654 |   |   |         | 22,363  |   |   |         | 20,873  |  
|                                                                      |                                                          |                    |        |                   |   |      |        |        |   |   |         |         |   |   |         |        

See accompanying notes to condensed consolidated
financial statements.

3



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##### Table of Contents



LCC International, Inc. and
Subsidiaries






Condensed Consolidated Balance
Sheets


(In thousands)


|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |        |         | 
|-------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ------- | ------------- | ------ | - | ------- | ------ | ------- | 
|                                                                                 |                                                                                                                                       | December 31,                            |         | September 30,
|                                                                                 |                                                                                                                                       | 2000                                    |         | 2001         
|                                                                                 |                                                                                                                                       |                                         |         |              
|                                                                                 |                                                                                                                                       |                                         |         | (Unaudited)  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|ASSETS:                                                                          |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Current assets:                                                                  |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Cash and cash equivalents                                                                                                             |                                         | $       | 22,271        |        |   | $       | 15,739 |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Short-term investments                                                                                                                |                                         |         | 20,064        |        |   |         | 47,306 |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Receivables, net of allowance for doubtful
	accounts of $1,829 and $3,221 at December 31, 2000 and
	September 30, 2001, respectively: |                                         |         |               |        |   |         |        |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 |                                                                                                                                       | Trade accounts receivable               |         |               | 31,306 |   |         |        | 27,166  | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 |                                                                                                                                       | Due from related parties and affiliates |         |               | 746    |   |         |        | 580     | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 |                                                                                                                                       | Unbilled receivables                    |         |               | 17,050 |   |         |        | 16,605  | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Deferred income taxes, net                                                                                                            |                                         |         | 1,850         |        |   |         | 3,865  |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Prepaid expenses and other current assets                                                                                             |                                         |         | 1,858         |        |   |         | 1,027  |        
|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                 |                                                                                                                                       | Total current assets                    |         |               | 95,145 |   |         |        | 112,288 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Property and equipment, net                                                      |                                                                                                                                       |                                         | 5,638   |               |        |   | 5,630   |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Investments                                                                      |                                                                                                                                       |                                         | 3,650   |               |        |   | 5,163   |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Deferred income taxes, net                                                       |                                                                                                                                       |                                         | 5,066   |               |        |   | 3,672   |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Other assets                                                                     |                                                                                                                                       |                                         | 546     |               |        |   | 879     |       
|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                 |                                                                                                                                       | $                                       | 110,045 |               |        | $ | 127,632 |       
|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       
|LIABILITIES AND SHAREHOLDERS
	EQUITY:                                           |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Current liabilities:                                                             |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Accounts payable                                                                                                                      |                                         | $       | 5,926         |        |   | $       | 4,675  |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Accrued expenses                                                                                                                      |                                         |         | 10,465        |        |   |         | 6,239  |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Accrued employee compensation and benefits                                                                                            |                                         |         | 12,420        |        |   |         | 12,405 |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Deferred revenue                                                                                                                      |                                         |         | 332           |        |   |         | 13     |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Income taxes payable                                                                                                                  |                                         |         | 5,725         |        |   |         | 14,043 |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Other current liabilities                                                                                                             |                                         |         | 817           |        |   |         | 1,516  |        
|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                 |                                                                                                                                       | Total current liabilities               |         |               | 35,685 |   |         |        | 38,891  | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Other liabilities                                                                |                                                                                                                                       |                                         | 5,944   |               |        |   | 2,204   |       
|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                 |                                                                                                                                       | Total liabilities                       |         |               | 41,629 |   |         |        | 41,095  | 
|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       
|Preferred stock:                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | 10,000 shares authorized; 0 shares issued and
	outstanding                                                                            |                                         |         |              |        |   |         |       |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Class A common stock, $0.01 par value:                                           |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | 70,000 shares authorized; 12,040 and 12,187
	shares issued and outstanding at December 31, 2000 and
	September 30, 2001, respectively |                                         |         | 120           |        |   |         | 122    |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Class B common stock, $0.01 par value:                                           |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | 20,000 shares authorized; 8,450 and 8,440 shares
	issued and outstanding at December 31, 2000 and
	September 30, 2001, respectively   |                                         |         | 85            |        |   |         | 84     |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Paid-in capital                                                                  |                                                                                                                                       |                                         | 91,407  |               |        |   | 92,243  |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Accumulated deficit                                                              |                                                                                                                                       |                                         | (18,381 | )             |        |   | (593    | )     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Notes receivable from shareholders                                               |                                                                                                                                       |                                         | (2,325  | )             |        |   | (2,325  | )     
|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                 | Subtotal                                                                                                                              |                                         |         | 70,906        |        |   |         | 89,531 |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Accumulated other comprehensive loss 
	foreign currency translation adjustments |                                                                                                                                       |                                         | (2,490  | )             |        |   | (2,994  | )     
|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                 |                                                                                                                                       | Total shareholders equity              |         |               | 68,416 |   |         |        | 86,537  | 
|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       
|                                                                                 |                                                                                                                                       | $                                       | 110,045 |               |        | $ | 127,632 |       
|                                                                                 |                                                                                                                                       |                                         |         |               |        |   |         |       

See accompanying notes to condensed consolidated
financial statements.

4



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##### Table of Contents



LCC International, Inc. and
Subsidiaries






Condensed Consolidated Statements of Cash
Flows


(In thousands)


(Unaudited)


|                                                      |                                                                                              |                                                 |                                          |         |         |         |        |         |         |        |  
|----------------------------------------------------- | -------------------------------------------------------------------------------------------- | ----------------------------------------------- | ---------------------------------------- | ------- | ------- | ------- | ------ | ------- | ------- | ------ | -
|                                                      |                                                                                              |                                                
|                                                      |                                                                                              | Nine Months Ended                              
|                                                      |                                                                                              | September 30,                                  
|                                                      |                                                                                              |                                                
|                                                      |                                                                                              | 2000                                            |                                          | 2001   
|                                                      |                                                                                              |                                                 |                                          |        
|Cash flows from operating activities:                 |                                                                                              |                                                 |                                          |         |         |         |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Net income                                                                                   |                                                 | $                                        | 18,364  |         |         | $      | 17,788  |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Adjustments to reconcile net income to net cash
	provided by (used in) operating activities: |                                                 |                                          |         |         |         |        |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              | Depreciation and amortization                   |                                          |         | 2,213   |         |        |         | 2,217   |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              | Provision (recovery) for doubtful accounts      |                                          |         |        |         |        |         | 1,964   |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              | Deferred income taxes                           |                                          |         | 13,789  |         |        |         | (466    | )     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              | Realized gain on sale of investments and assets |                                          |         |        |         |        |         | (22,395 | )     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              | Gain on sale of tower portfolio                 |                                          |         | (26,195 | )       |        |         | (2,323  | )     
|                                                      |                                                                                              | Changes in operating assets and liabilities     |                                          |         |         |         |        |         |         |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              |                                                 | Trade, unbilled, and other receivables   |         |         | (22,124 | )      |         |         | 2,756  |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              |                                                 | Accounts payable and accrued expenses    |         |         | (2,275  | )      |         |         | (5,862 | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              |                                                 | Other current assets and liabilities     |         |         | (2,528  | )      |         |         | 9,774  |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              |                                                 | Other non-current assets and liabilities |         |         | (686    | )      |         |         | (1,909 | )
|                                                      |                                                                                              |                                                 |                                          |         |         |         |        |        
|Net cash provided by (used in) operating
	activities  |                                                                                              |                                                 | (19,442                                  | )       |         |         | 1,544  |        
|                                                      |                                                                                              |                                                 |                                          |         |         |         |        |        
|Cash flows from investing activities:                 |                                                                                              |                                                 |                                          |         |         |         |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Purchases of short term investments, net                                                     |                                                 |                                          | (15,470 | )       |         |        | (27,242 | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Purchases of property and equipment                                                          |                                                 |                                          | (3,425  | )       |         |        | (2,523  | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from sale of property and equipment                                                 |                                                 |                                          | 209     |         |         |        | 29      |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Investments                                                                                  |                                                 |                                          | (2,532  | )       |         |        | (1,755  | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from sale of investments and assets                                                 |                                                 |                                          |        |         |         |        | 22,624  |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from tower portfolio sale, net                                                      |                                                 |                                          | 72,176  |         |         |        |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Redemption of minority shareholders                                                          |                                                 |                                          | (7,174  | )       |         |        |        |        
|                                                      |                                                                                              |                                                 |                                          |         |         |         |        |        
|Net cash provided by (used in) investing
	activities  |                                                                                              |                                                 | 43,784                                   |         |         |         | (8,867 | )      
|                                                      |                                                                                              |                                                 |                                          |         |         |         |        |        
|Cash flows from financing activities:                 |                                                                                              |                                                 |                                          |         |         |         |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from issuance of common stock, net                                                  |                                                 |                                          | 435     |         |         |        | 420     |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from exercise of options                                                            |                                                 |                                          | 1,502   |         |         |        | 371     |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from line of credit                                                                 |                                                 |                                          | 9,700   |         |         |        |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Payments on line of credit                                                                   |                                                 |                                          | (14,235 | )       |         |        |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Repayment of loan from shareholder                                                           |                                                 |                                          | 800     |         |         |        |        |        
|                                                      |                                                                                              |                                                 |                                          |         |         |         |        |        
|Net cash provided by (used in) financing
	activities  |                                                                                              |                                                 | (1,798                                   | )       |         |         | 791    |        
|                                                      |                                                                                              |                                                 |                                          |         |         |         |        |        
|Net increase (decrease) in cash and cash
	equivalents |                                                                                              |                                                 | 22,544                                   |         |         |         | (6,532 | )      
|                                                     
|                                                     
|                                                     
|                                                     
|Cash and cash equivalents at beginning of period      |                                                                                              |                                                 | 1,951                                    |         |         |         | 22,271 |        
|                                                      |                                                                                              |                                                 |                                          |         |         |         |        |        
|Cash and cash equivalents at end of period            |                                                                                              | $                                               | 24,495                                   |         |         | $       | 15,739 |        
|                                                      |                                                                                              |                                                 |                                          |         |         |         |        |        
|Supplemental disclosures of cash flow information:    |                                                                                              |                                                 |                                          |         |         |         |        |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Cash paid during the quarter for:                                                            |                                                 |                                          |         |         |         |        |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              | Interest                                        |                                          | $       | 148     |         |        | $       |        |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                              | Income taxes                                    |                                          |         | 1,980   |         |        |         | 3,943   |       

See accompanying notes to condensed consolidated
financial statements.

5



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##### Table of Contents



LCC International, Inc. and
Subsidiaries






Notes to Condensed Consolidated Financial
Statements


(Unaudited)


Note 1:  Description of
Operations

LCC International, Inc. and subsidiaries
(referred to herein as the Company) provide
end-to-end solutions for wireless voice and data communications
networks with offerings ranging from high level technical
consulting, system design and deployment and ongoing management
and optimization services.

The Company operates in a highly competitive
environment subject to rapid technological change and emergence
of new technologies. Historically, the key drivers of growth in
the Companys wireless service 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; and (4) the increasing
complexity of wireless systems in operation. Although the
Company believes that its services are transferable to emerging
technologies, rapid changes in technology could have an adverse
financial impact on the Company.

Note 2:  Basis of
Presentation

The condensed consolidated financial statements
of the Company 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 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 the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.
Operating results for the interim periods are not necessarily
indicative of results for an entire year.

Note 3:  Other Comprehensive
Income

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 accounting
principles generally accepted in the United States of America
are included in comprehensive income, but excluded from net
income. Other comprehensive income consists solely of foreign
currency translation adjustments at September 30, 2000 and
2001. Comprehensive income for the three and nine months ended
September 30, 2000 and 2001 is as follows (in thousands).

|                                                                              |  |                    |       |                   |  |      |        |      |  |   |        |   |  |   |        |  
|----------------------------------------------------------------------------- |  | ------------------ | ----- | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                              |  |                    |       |                  
|                                                                              |  | Three Months Ended |       | Nine Months Ended
|                                                                              |  | September 30,      |       | September 30,    
|                                                                              |  |                    |       |                  
|                                                                              |  | 2000               |       | 2001              |  | 2000 |        | 2001
|                                                                              |  |                    |       |                   |  |      |        |     
|Net income                                                                    |  | $                  | 1,904 |                   |  | $    | 14,015 |      |  | $ | 18,364 |   |  | $ | 17,788 |  
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Other comprehensive income (loss), before tax                                 |  |                    | (602  | )                 |  |      | 30     |      |  |   | (940   | ) |  |   | (840   | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Income tax expense (benefit) related to items of
	comprehensive income (loss) |  |                    | 265   |                   |  |      | (12    | )    |  |   | 414    |   |  |   | 336    |  
|                                                                              |  |                    |       |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Other comprehensive income (loss), net of tax                                 |  |                    | (337  | )                 |  |      | 18     |      |  |   | (526   | ) |  |   | (504   | )
|                                                                              |  |                    |       |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Comprehensive income                                                          |  | $                  | 1,567 |                   |  | $    | 14,033 |      |  | $ | 17,838 |   |  | $ | 17,284 |  
|                                                                              |  |                    |       |                   |  |      |        |      |  |   |        |   |  |   |        |  

Note 4:  Investments

In February 2001, the Company invested an
additional $1.7 million to maintain its 15.0% interest in
Plan + Design Netcare AG (PDN). The
Company uses the cost method to account for this investment.

In June 2001, the US Court of Appeals for
the District of Columbia issued its decision in the case
captioned NextWave Personal Communications Inc. and NextWave
Power Partners Inc. v. Federal Communications Commission and
United States of America, et. al, Case Nos. 00-1402 and 00-1403.
The US Court of Appeals ruled that a provision in federal
bankruptcy law prohibited the Federal Communications Commission

6



---



##### Table of Contents



(the FCC) from canceling certain
broadband personal communications services licenses that it had
granted to NextWave Personal Communications Inc.
(NPCI). The FCC revoked these licenses after NPCI
filed for bankruptcy protection on June 8, 1998. On
July 19, 2001, Alaska Native Wireless, L.L.C., Verizon
Wireless and Voicestream Wireless filed a petition to initiate
an investigation and audit with the FCC requesting an
investigation of whether NextWave is eligible to hold C and F
Block licenses, whether is complies with the foreign ownership
requirements, and whether NextWave has the ability to meet its
future regulatory responsibilities. NextWave filed a response on
July 30, 2001 and the matter is pending. On August 6,
2001, the FCC filed a motion with the US Court of Appeals
seeking to stay execution of the decision and indicating that
the Acting Solicitor General has authorized the filing of a
petition for certiorari before the United States Supreme Court,
which the FCC plans to file on or before September 22,
2001. The FCCs motion for a stay of execution was denied.
However, in October 2001, the FCC filed its petition for
certiorari with the United States Supreme Court.


Also on August 6, 2001, NextWave filed its
Second Plan of Reorganization under Chapter 11 with the US
Bankruptcy Court for the Southern District of New York (the
NextWave Plan). Various objections have been filed
in the case. Substantive hearings in the case have been delayed
pending attempts by the FCC, NextWave and certain other wireless
carriers to resolve and settle the matter.

The Company held 1,666,666 shares of Class B
Common Stock of NextWave Telecom, Inc. (NextWave
Telecom). NextWave Telecom is the parent corporation of
NPCI. The Company 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
the Company and NextWave Telecom under an agreement dated
March 12, 1996 (the March Agreement). The
Company also acquired warrants to purchase an additional 123,356
shares of Class B Common Stock at $3.00 per share. Under
the March Agreement, NextWave Telecom agreed to use the Company
to provide not less than (a) $14 million of radio frequency
engineering services and (b) $35 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.
Shares of Class B Common Stock of NextWave Telecom have
traded on the OTC Bulletin Board under the symbol
NXLC.

The total amount of pre-petition debt owed to the
Company by NextWave Telecom and certain of its subsidiaries
(collectively, NextWave) was approximately
$14.25 million, plus post-petition interest thereon. This
amount includes the Companys interest, amounting to
approximately $650,000 plus post-petition interest thereon, in a
general unsecured claim against NextWave that was acquired by
the Company in connection with its acquisition of Koll
Telecommunications LLC in 1997. The total amount owed by
NextWave to the Company is reflected in the Companys
general unsecured claims filed in bankruptcy court. These
unsecured claims will be amended and increased if the March
Agreement is rejected in the bankruptcy proceedings. The Company
does not carry any assets or liabilities on its books or records
relating to its equity investment in NextWave or the March
Agreement; these balances were written off in previous years.

In September 2001, the Company sold all of
its 1,666,666 shares of Class B common stock and the
Companys pre-petition debt claims against NextWave Telecom
resulting in a gain of $21.4 million which equaled the
proceeds from the sale. The sale of current pre-petition debt
was without recourse to the Company and excluded the claims of
Koll Telecommunications and any post petition contract rejection
claims.

In September 1999, the Company, through its
wholly-owned subsidiary, LCC, United Kingdom, Limited, acquired
19.9% of Tecnosistemi S.p.A. (Tecnosistemi)
(formerly, Italtel Sistemi, S.p.A.) for $1.1 million. The
Company, until September 2000, applied the equity method to
account for its investment in Tecnosistemi. During
September 2000, Tecnosistemi merged into Tecneudosia S.p.A.
As a result of the merger, the Companys ownership
percentage was decreased to 9.4% and the Company discontinued
application of the equity method. In July 2001, the Company
sold all of its shares in Tecnosistemi resulting in a gain of
$1.0 million.

Note 5:  Tower Portfolio Sale and
Administration

During March 2000, Microcell Management,
Inc. (Microcell), a subsidiary of the Company,
completed the initial closing of the sale of its
telecommunication tower portfolio to Pinnacle Towers Inc.

7



---



##### Table of Contents



(Pinnacle) pursuant to an Asset
Purchase Agreement between Pinnacle and Microcell. Pursuant to
the Asset Purchase Agreement, Microcell agreed to sell up to 197
tower sites owned or to be constructed by Microcell for a total
purchase price of up to $80 million in cash payable as the
sites are conveyed to Pinnacle. As of August 2001, 177
tower sites were conveyed to Pinnacle for net proceeds of
$72.2 million. All of the towers that will convey have been
conveyed to Pinnacle.


As a part of the sale transaction, Microcell and
Pinnacle entered into a Master Antenna Site Lease pursuant to
which Microcell has agreed to lease, until December 31,
2002, the unoccupied space on each telecommunication tower sold
to Pinnacle. The Company had deferred $5.2 million of the
gain as of December 31, 2000 which relates to the remaining
lease obligations under the Master Antenna Site Lease. The
Company has recognized $2.3 million of the gain during the
nine months ended September 2001 due to the subleasing of a
portion of the unoccupied space on some of the telecommunication
towers. The remaining $2.9 million is included in current
and other long-term liabilities as of September 30, 2001.

During 2000, Microcell and Pinnacle also entered
into a Tower Services Agreement pursuant to which Microcell was
engaged to provide Pinnacle with audit, maintenance, and program
management services regarding site improvement and capacity
upgrades for an initial 204 sites and additional sites that may
be added by mutual agreement. The Services Agreement provided
for minimum annual payments to Microcell of $10 million for
project management and audit services, of which
$0.675 million has been executed to date. The Services
Agreement also provided for approximately $1.0 million per
year for maintenance services based on the current number of
sites as to which Microcell has been engaged. In each case, the
pricing and scope of services were subject to annual review and
re-negotiation on or around June 1 of each year. The Company has
received notice of termination of the Services Agreement
including notice that the $10.0 million annual commitment will
not be renewed into the current contract year. The Company has
commenced arbitration with respect to the recovery of
approximately $3.7 million related to Pinnacles
failure to satisfy its minimum purchase commitment for the
June 2000 to June 2001 contract year.

Note 6:  Contingencies

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

Note 7:  Segment
Information

The Companys operating segments include
Services (Design Services and Deployment Services) and Tower
ownership and management. Design Services provides engineering
and design services for cellular phone system operators,
personal communication system (PCS) operators and
other wireless communication system providers. Deployment
Services provides program and construction management services
related to the build-out of wireless communication systems.

Segment detail is summarized as follows (in
thousands):

|                                |                         |               |        |                 |         |               |        |         |         |      |        |       |       |   |       |   |    |   |        |         |         |   |        |         |         | 
|------------------------------- | ----------------------- | ------------- | ------ | --------------- | ------- | ------------- | ------ | ------- | ------- | ---- | ------ | ----- | ----- | - | ----- | - | -- | - | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                                |                         |               |        |                 |         |               |        |         |         |     
|                                |                         |               |        | Tower Ownership |         |              
|                                |                         | Services      |        | and Management  |         | Segment Total
|                                |                         |               |        |                 |         |              
|                                |                         | 2000          |        | 2001            |         | 2000          |        | 2001    |         | 2000 |        | 2001 
|                                |                         |               |        |                 |         |               |        |         |         |      |        |      
|Nine Months Ended September 30, |                         |               |        |                 |         |               |        |         |         |      |        |       |       |   |       |   |    |   |        |         |         |   |        |        
|                               
|                               
|                               
|                               
|Revenues:                       |                         |               |        |                 |         |               |        |         |         |      |        |       |       |   |       |   |    |   |        |         |         |   |        |        
|                               
|                               
|                               
|                               
|                                | From external customers |               | $      | 104,359         |         |               | $      | 106,534 |         |      | $      | 1,008 |       |   | $     |  |    |   | $      | 105,367 |         |   | $      | 106,534 |        
|                               
|                               
|                               
|                               
|                                | Inter-segment revenue   |               |        |                |         |               |        |        |         |      |        |      |       |   |       |  |    |   |        |        |         |   |        |        |        
|                                |                         |               |        |                 |         |               |        |         |         |      |        |       |       |   |       |   |    |   |        |         |         |   |        |        
|                                |                         | Total revenue |        | $               | 104,359 |               |        | $       | 106,534 |      |        | $     | 1,008 |   |       | $ |   |   |        | $       | 105,367 |   |        | $       | 106,534 | 
|                                |                         |               |        |                 |         |               |        |         |         |      |        |       |       |   |       |   |    |   |        |         |         |   |        |        
|Net income                      |                         | $             | 12,311 |                 |         | $             | 20,710 |         |         | $    | 15,517 |       |       | $ | 1,396 |   |    | $ | 27,828 |         |         | $ | 22,106 |        
|                                |                         |               |        |                 |         |               |        |         |         |      |        |       |       |   |       |   |    |   |        |         |         |   |        |        
|                                |                         | Total assets  |        | $               | 101,855 |               |        | $       | 127,585 |      |        | $     | 1,078 |   |       | $ | 47 |   |        |         |         |   |        |         |         | 
|                                |                         |               |        |                 |         |               |        |         |         |      |        |       |       |   |       |   |    |   |        |         |         |   |        |        

8



---



##### Table of Contents



|                                  |                         |               |       |                 |        |               |        |        |        |      |     |      |    |   |   |   |   |   |       |        |        |   |        |        |        | 
|--------------------------------- | ----------------------- | ------------- | ----- | --------------- | ------ | ------------- | ------ | ------ | ------ | ---- | --- | ---- | -- | - | - | - | - | - | ----- | ------ | ------ | - | ------ | ------ | ------ | 
|                                  |                         |               |       |                 |        |               |        |        |        |     
|                                  |                         |               |       | Tower Ownership |        |              
|                                  |                         | Services      |       | and Management  |        | Segment Total
|                                  |                         |               |       |                 |        |              
|                                  |                         | 2000          |       | 2001            |        | 2000          |        | 2001   |        | 2000 |     | 2001
|                                  |                         |               |       |                 |        |               |        |        |        |      |     |     
|Three Months Ended
	September 30, |                         |               |       |                 |        |               |        |        |        |      |     |      |    |   |   |   |   |   |       |        |        |   |        |       
|                                 
|                                 
|                                 
|                                 
|Revenues:                         |                         |               |       |                 |        |               |        |        |        |      |     |      |    |   |   |   |   |   |       |        |        |   |        |       
|                                 
|                                 
|                                 
|                                 
|                                  | From external customers |               | $     | 40,912          |        |               | $      | 34,347 |        |      | $   | 25   |    |   | $ |  |   |   | $     | 40,937 |        |   | $      | 34,347 |       
|                                 
|                                 
|                                 
|                                 
|                                  | Inter-segment revenue   |               |       |                |        |               |        |       |        |      |     |     |    |   |   |  |   |   |       |       |        |   |        |       |       
|                                  |                         |               |       |                 |        |               |        |        |        |      |     |      |    |   |   |   |   |   |       |        |        |   |        |       
|                                  |                         | Total revenue |       | $               | 40,912 |               |        | $      | 34,347 |      |     | $    | 25 |   |   | $ |  |   |       | $      | 40,937 |   |        | $      | 34,347 | 
|                                  |                         |               |       |                 |        |               |        |        |        |      |     |      |    |   |   |   |   |   |       |        |        |   |        |       
|Net income                        |                         | $             | 4,917 |                 |        | $             | 15,441 |        |        | $    | 987 |      |    | $ |  |   |   | $ | 5,904 |        |        | $ | 15,441 |       
|                                  |                         |               |       |                 |        |               |        |        |        |      |     |      |    |   |   |   |   |   |       |        |        |   |        |       

A reconciliation of net income reported for the
operating segments to the amount in the condensed consolidated
financial statements is as follows (in thousands):

|                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|---------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                   |  |                    |        |                  
|                                   |  | Three Months Ended |        | Nine Months Ended
|                                   |  | September 30,      |        | September 30,    
|                                   |  |                    |        |                  
|                                   |  | 2000               |        | 2001              |  | 2000 |        | 2001
|                                   |  |                    |        |                   |  |      |        |     
|Segment total                      |  | $                  | 5,904  |                   |  | $    | 15,441 |      |  | $ | 27,828 |   |  | $ | 22,106 |  
|                                  
|                                  
|                                  
|                                  
|Unallocated corporate expenditures |  |                    | (4,000 | )                 |  |      | (1,426 | )    |  |   | (9,464 | ) |  |   | (4,593 | )
|                                  
|                                  
|                                  
|                                  
|Eliminations                       |  |                    |       |                   |  |      |       |      |  |   |       |   |  |   | 275    |  
|                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Consolidated net income            |  | $                  | 1,904  |                   |  | $    | 14,015 |      |  | $ | 18,364 |   |  | $ | 17,788 |  
|                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  

Note 8:  Recovery of
Receivables

On March 28, 2001, the United States
Bankruptcy Court, District of Maryland, Northern Division,
entered an order confirming the Amended Joint Plan of
Reorganization Under Chapter 11 (the Plan) for
DCR PCS, Inc. (DCR) and Pocket Communications, Inc.
(Pocket). The Plan provides that the Companys
claim against DCR will be allowed in the amount of
$5.0 million. The Company received payment of
$5.0 million on April 11, 2001 which has been
recognized as a recovery of a bad debt during the quarter ended
June 30, 2001 and was recorded as a reduction in general
and administrative expense. The Plan also provides that
LCCs general unsecured claim against Pocket will be
allowed in the amount filed minus $5.0 million, or
approximately $12.4 million, which is to be paid at the
same percentage recovery received by the Pocket general
unsecured creditors as a class (excluding certain creditors
which also hold secured claims under the Plan and who have
agreed to forgo recovery on the first $5.8 million in
available funds) after the resolution of certain remaining
disputed claims and the calculation of administrative fees and
expenses of the estate. Based on the current estimates of the
Official Committee of Unsecured Creditors, there is a potential
of recovery on the Pocket general unsecured claims of 10% to 16%
of the allowed amount. Any additional amounts recovered will be
recognized if and when received. As of September 30, 2001,
the Company did not carry any assets or liabilities on its books
or records relating to Pocket; the balance was written off in
previous years.

During 1997, the Company recorded a charge for
receivables due from a Malaysian corporation. On March 15,
2001, the Company received payment of $2.1 million, net of
taxes withheld at the source of $0.4 million, as complete
settlement on these balances after the Malaysian Corporation
successfully emerged from bankruptcy. This amount has been
recognized as a recovery of bad debt during the quarter ended
March 31, 2001 and was recorded as a reduction in general
and administrative expense.

Note 9:  Subsequent Events

On October 17, 2001, the Company offered to
exchange all eligible outstanding options under the Amended and
Restated LCC International, Inc. 1996 Employee Stock Option Plan
(the 1996 plan) for new options the Company will
grant under the 1996 plan. Eligible outstanding options are all
options with an exercise price of $10.50 or more that are held
by an employee of the Company other than the Companys
Chief Executive Officer. The Company will grant a new option for
one option share for each option for two option shares tendered
by an employee and accepted for exchange. The new options will
be granted on or about the first business day which is at least
six months and one day following the date the Company cancels
the accepted options for exchange. The exercise price of the new
options will be equal to the closing price of the Companys
Class A common stock on the business day immediately
preceding the date of grant. The terms of the new options other
than the exercise price will be substantially the same as the
terms of the options tendered for exchange. The Companys
offer to exchange will expire on November 20, 2001, unless
the offer is extended by the Company.

9



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##### Table of Contents



LCC International, Inc. and
Subsidiaries






Managements Discussion and Analysis
of

Financial Condition and Results of
Operations


For the Three and Nine Months Ended
September 30, 2000 and 2001

This quarterly report on Form 10-Q contains
forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1934. The
Managements Discussion and Analysis of Financial Condition
and Results of Operations includes, without limitation,
forward-looking statements regarding the Companys ability
to pursue and secure new business opportunities and its working
capital. 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, 2000.

Overview

The Company provides integrated end-to-end
services solutions for wireless voice and data communications
networks with offerings ranging from high level technical
consulting, system design and deployment and ongoing management
and optimization services. Since its inception in 1983, the
Company has delivered wireless network solutions to more than
200 customers in over 50 countries.

In the last two years, the Company has made
several strategic decisions that have enabled it to return to
its core competency in providing end-to-end wireless services.
In October 1999, the company disposed of its software
product business and, in March 2000, the Company sold its
telecommunication tower business. In addition, during the last
two years, the Company has entered into a number of joint
ventures and strategic investments to enhance its wireless
capabilities with a particular focus on certain international
markets.

The Company operates in a highly competitive
environment subject to rapid technological change and emergence
of new technologies. Historically, the key drivers of growth in
the companys 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; and (4) the increasing
complexity of wireless systems in operation.

The Companys principal sources of revenues
are design services and system deployment services. The Company
provides 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 offers its deployment services on a
fixed-price, time-certain basis. Revenues are recognized for
such contracts using the percentage-of-completion method. Under
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, revenue
recognized in a given period depends on, among other things, the
costs incurred on each individual project and the current
estimate of the total costs to complete a project. If 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, such loss is recognized
in the period such determination is made.

Cost of revenues consists of costs associated
with engineering design and program management services. 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, office and occupancy, and other costs required for the
finance, human resources, information systems and executive
office functions.

10



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##### Table of Contents



Results of Operations

The following table and discussion provide
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.

|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |       |       | 
|------------------------------------------ | ---------------------------------------- | ---------------------------- | ---- | ------------------ | ----- | ---- | ---- | ----- | ----- |  | ---- | ----- | ----- | - | ---- | ----- | ----- | 
|                                           |                                          |                             
|                                           |                                          | Percentage of Revenues      
|                                           |                                          |                             
|                                           |                                          |                              |      |                   
|                                           |                                          | Three Months Ended           |      | Nine Months Ended?
|                                           |                                          | September 30,                |      | September 30,     
|                                           |                                          |                              |      |                   
|                                           |                                          | 2000                         |      | 2001               |       | 2000 |      | 2001 
|                                           |                                          |                              |      |                    |       |      |      |      
|Revenues:                                  |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|                                          
|                                          
|                                          
|                                          
|                                           | Services                                 |                              |      | 99.9               | %     |      |      | 100.0 | %     |  |      | 99.0  | %     |   |      | 100.0 | %    
|                                          
|                                          
|                                          
|                                          
|                                           | Tower ownership and management           |                              |      | 0.1                |       |      |      | 0.0   |       |  |      | 1.0   |       |   |      | 0.0   |      
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|                                           |                                          | Total revenues               |      |                    | 100.0 |      |      |       | 100.0 |  |      |       | 100.0 |   |      |       | 100.0 | 
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|Cost of revenues:                          |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|                                          
|                                          
|                                          
|                                          
|                                           | Services                                 |                              |      | 73.0               |       |      |      | 76.0  |       |  |      | 72.4  |       |   |      | 78.4  |      
|                                          
|                                          
|                                          
|                                          
|                                           | Tower ownership and management           |                              |      | 0.0                |       |      |      | 0.0   |       |  |      | 0.3   |       |   |      | 0.0   |      
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|                                           |                                          | Total cost of revenues       |      |                    | 73.0  |      |      |       | 76.0  |  |      |       | 72.7  |   |      |       | 78.4  | 
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|Gross profit:                              |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|                                          
|                                          
|                                          
|                                          
|                                           | Services                                 |                              |      | 26.9               |       |      |      | 24.0  |       |  |      | 26.6  |       |   |      | 21.6  |      
|                                          
|                                          
|                                          
|                                          
|                                           | Tower ownership and management           |                              |      | 0.1                |       |      |      | 0.0   |       |  |      | 0.7   |       |   |      | 0.0   |      
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|                                           |                                          | Total gross profit           |      |                    | 27.0  |      |      |       | 24.0  |  |      |       | 27.3  |   |      |       | 21.6  | 
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|Operating expenses:                        |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|                                          
|                                          
|                                          
|                                          
|                                           | Sales and marketing                      |                              |      | 4.7                |       |      |      | 5.1   |       |  |      | 5.8   |       |   |      | 5.0   |      
|                                          
|                                          
|                                          
|                                          
|                                           | General and administrative               |                              |      | 12.9               |       |      |      | 15.0  |       |  |      | 13.4  |       |   |      | 11.1  |      
|                                          
|                                          
|                                          
|                                          
|                                           | Tower portfolio sale and operations, net |                              |      | (2.2               | )     |      |      | 0.0   |       |  |      | (24.9 | )     |   |      | (2.2  | )    
|                                          
|                                          
|                                          
|                                          
|                                           | Depreciation and amortization            |                              |      | 1.5                |       |      |      | 2.2   |       |  |      | 2.1   |       |   |      | 2.1   |      
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|                                           |                                          | Total operating expenses     |      |                    | 16.9  |      |      |       | 22.3  |  |      |       | (3.6  | ) |      |       | 16.0  | 
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|Operating income                           |                                          |                              | 10.1 |                    |       |      | 1.7  |       |       |  | 30.9 |       |       |   | 5.6  |      
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|Other income (expense):                    |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|                                          
|                                          
|                                          
|                                          
|                                           | Interest income                          |                              |      | 1.5                |       |      |      | 1.2   |       |  |      | 1.4   |       |   |      | 1.4   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Interest expense                         |                              |      | (0.0               | )     |      |      | 0.0   |       |  |      | (0.2  | )     |   |      | 0.0   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Other                                    |                              |      | (0.7               | )     |      |      | 65.1  |       |  |      | (0.8  | )     |   |      | 20.8  |      
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|                                           |                                          | Total other income (expense) |      |                    | 0.8   |      |      |       | 66.3  |  |      |       | 0.4   |   |      |       | 22.2  | 
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|Income from operations before income taxes |                                          |                              | 10.9 |                    |       |      | 68.0 |       |       |  | 31.3 |       |       |   | 27.8 |      
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|Provision for income taxes                 |                                          |                              | 6.1  |                    |       |      | 27.2 |       |       |  | 13.7 |       |       |   | 11.1 |      
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      
|Net income                                 |                                          |                              | 4.8  | %                  |       |      | 40.8 | %     |       |  | 17.6 | %     |       |   | 16.7 | %    
|                                           |                                          |                              |      |                    |       |      |      |       |       |  |      |       |       |   |      |      

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##### Table of Contents



Three Months Ended September 30,
2000

Compared to


Three Months Ended September 30,
2001


Revenues.Revenues
for the three months ended September 30, 2001 were
$34.3 million compared to $40.9 million for the prior
year, a decrease of $6.6 million or 16.1%. This decrease is
largely related to a decline in deployment revenue in the United
States of $3.1 million and $2.2 million in the Middle
East.

Cost of Revenues.Cost of revenues for the three months ended September 30, 2001
was $26.1 million compared to $29.9 million for the
prior year, a decrease of $3.8 million. As a percentage of
total revenues, cost of revenues was 76.0% and 73.0% for 2001
and 2000, respectively. Cost of revenues was higher as a
percentage of revenue in 2001 because of increased competitive
pressures in the telecommunications marketplace driven by a
slowdown in customer spending.

Gross Profit.Gross
profit for the three months ended September 30, 2001 was
$8.2 million compared to $11.0 million for the prior
year, a decrease of $2.8 million or 25.3%. As a percentage
of total revenues, gross profit was 24.0% and 27.0% for 2001 and
2000, respectively. Reductions in customer spending resulting in
increased competition are softening gross profit in 2001
compared to the same period of the prior year.

Sales and Marketing.Sales and marketing expenses were $1.8 million for the
three months ended September 30, 2001 compared to
$1.9 million for the prior year, a decrease of
$0.1 million. As a percentage of total revenues, sales and
marketing was 5.1% and 4.7% for 2001 and 2000, respectively. The
decline in revenue increased the sales and marketing expense as
a relative percentage.

General and
Administrative.General and
administrative expenses were $5.2 million for the three months
ended September 30, 2001 compared to $5.3 million for
the prior year. As a percentage of revenues, general and
administrative expenditures were 15.0% and 12.9% for 2001 and
2000, respectively. The increased expense as a percentage of
revenues reflect the relative reduction in revenues in 2001
compared to 2000.

Depreciation and
Amortization.Depreciation and
amortization expense was $0.8 million for the three months
ended September 30, 2001 compared to $0.6 million for the
prior year.

Interest Income.Interest income was $0.4 million for the three months ended
September 30, 2001 compared to $0.6 million for the
prior year. The interest income decline was largely driven by
lower yields available for short-term investments.

Other Income
(Expense).Other income was
$22.4 million for the three months ended September 30,
2001 compared to ($0.3) million for the prior year. In the
current quarter, the company sold all of its Nextwave
Class B common stock and its current debt claims against
Nextwave resulting in a gain of $21.4 million. The Company
also sold its investment in Tecnosistemi, resulting in a gain of
$1.0 million in the quarter ended September 30, 2001.
Other expense for the same quarter ended September 2000,
was largely attributed to foreign currency losses.

Provision for Income
Taxes.The provision for income taxes
was recorded for the three months ended September 30, 2001
using an effective income tax rate of 40.0% compared to 56.9%
for the comparable period in 2000. The higher tax rate for the
three months ended September 30, 2000 reflected an increase
in the effective tax rate from 42% to 44% for the nine months
ended September 30, 2000. The increased effective tax rate
in 2000 reflected a change in estimated non-deductible expenses
resulting from the portfolio sale.

Net Income.Net
income was $14.0 million for the three months ended
September 30, 2001 compared to $1.9 million in the
prior year. The difference in net income can be attributed to a
gain from the sale of both the investment in Tecnosistemi and
Nextwave assets, partially offset by reduced operating income in
2001.

12



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##### Table of Contents



Nine Months Ended September 30,
2000

Compared to


Nine Months Ended September 30,
2001


Revenues.Revenues
for the nine months ended September 30, 2001 were
$106.5 million compared to $105.4 million for the
prior year, an increase of $1.1 million or 1.0%. Increased
revenue from the XM Satellite contract of $10.7 million was
the primary driver of the increase, offset by decreases in
international operations, primarily in the Middle East,
attributable to a slowdown in a large network deployment
contract.

Cost of Revenues.Cost of revenues for the nine months ended September 30, 2001
was $83.5 million compared to $76.7 million for the
prior year, an increase of $6.8 million. As a percentage of
total revenues, cost of revenues was 78.4% and 72.7% for 2001
and 2000, respectively. Cost increased relative to revenue on a
large fixed price contract in the Middle East by
$3.1 million in the first half of the year. Other increased
costs include, an additional provision for expatriate employee
reimbursed taxes of $1.3 million, increased health
insurance costs of $1.0 million, and costs associated with
lower utilization of professional staff of $0.6 million.

Gross Profit.Gross
profit for the nine months ended September 30, 2001 was
$23.0 million compared to $28.7 million for the prior
year, a decrease of $5.7 million or 19.9%. As a percentage
of total revenues, gross profit was 21.6% and 27.3% for 2001 and
2000, respectively. The decline in gross profit margin in 2001
is attributable to additional items of cost, discussed in Cost
of Revenues, and contract margin declines caused by increased
competition driven by a slowdown in customer spending.

Sales and Marketing.Sales and marketing expenses were $5.4 million for the nine
months ended September 30, 2001 compared to
$6.1 million for the prior year, a decrease of
$0.7 million. As a percentage of total revenues, sales and
marketing was 5.0% and 5.8% for 2001 and 2000, respectively. The
decrease is attributed both to the timing of certain sales and
marketing expenses as well as reductions from cost saving
measures.

General and
Administrative.General and
administrative expenses were $11.8 million for the nine
months ended September 30, 2001 compared to $14.1 million
for the prior year. General and administrative expenditures in
2001 include a net benefit of $7.4 million relative to the
recovery of a receivable balance written-off in prior years from
two bankrupt clients, offset by bad debt reserves for the
current year of $2.0 million, employee severance and
related costs of $0.6 million, increased health care costs
of $0.3 million and other administrative costs associated
with international growth and expansion.

Gain on Sale of Tower Portfolio and
Administration, net.During February
2000, the Company entered into an agreement for the sale of
tower sites that it owned. As part of the sale agreement the
Company agreed to lease unoccupied space on the towers,
effectively guaranteeing a minimum rent level of $5.2 million on
the towers sold. The gain from the tower portfolio sale deferred
an amount corresponding to this rent commitment, until the space
was leased to another tenant. In the current year, the Company
recognized $2.3 million of this previously deferred revenue.

Depreciation and
Amortization.Depreciation and
amortization expense was $2.2 million for the nine months
ended September 30, 2001 compared to $2.2 million for the
prior year.

Interest Income.Interest income was $1.5 million for the nine months ended
September 30, 2001 compared to $1.4 million for the
prior year. Interest income in 2001 was higher than the prior
year, since more working capital was available for investment.
This was offset by a decline in yields available for short-term
investments in 2001.

Other Income
(Expense).Other income was
$22.2 million for the nine months ended September 30,
2001 compared to an expense of $0.9 million for the prior
year. The other income in the current year is largely
attributable to the sale of all of the Companys Nextwave
Class B common stock and its current debt claims against
Nextwave resulting in a gain of $21.4 million. The Company
also sold its investment in Tecnosistemi, resulting in a gain of
$1.0 million in 2001. Other expense in the prior year was
primarily due to losses using the equity method of accounting.

Provision for Income
Taxes.The provision for income taxes
was recorded for the nine months ended September 30, 2001
using an effective income tax rate of 40.0% compared to 44.0%
for the comparable period in 2000. The higher tax rate in 2000
reflects permanent differences relative to the tower portfolio
sale.

Net Income.Net
income was $17.8 million for the nine months ended
September 30, 2001 compared to $18.4 million in the
prior year. Excluding the gain from the sale of the tower
portfolio, Nextwave assets, and Tecnosistemi investment, the net
income is $3.0 million in 2001 and $3.7 million in
2000.

13



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##### Table of Contents



Liquidity and Capital Resources

Cash and cash equivalents combined with
short-term investments at September 30, 2001 provide total
liquid assets of $63.0 million. Working capital was
$73.4 million at September 30, 2001, an increase of
$13.9 million from December 31, 2000. The Company
believes it has sufficient working capital for the next year to
meet existing operational needs.

Quantitative and Qualitative Disclosure
Regarding Market Risk

The Companys primary international
operations are in Europe, Brazil, Egypt and Asia and therefore,
the Company is exposed to foreign currency exchange risk. The
international operations have been able to fund themselves and
as such have required minimal funding from the parent company.
Due to the amount of currency being exchanged, the Company has
not hedged, or otherwise attempted to mitigate its foreign
currency exchange risk.

14



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##### Table of Contents



PART II  OTHER
INFORMATION




Item 1:  Legal
Proceedings

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




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

Not Applicable




Item 6:  Exhibits and Reports
on Form 8-K



| |     |         
| | --- | --------
| | (a) | Exhibits

11  Calculation of Net Income Per Share

(b)  Reports on Form 8-K

On September 26, 2001 the Company filed a
Current Report on Form 8-K which reported that the Company
had issued a press release announcing the sale of all of its
common stock of NextWave Telecom and certain current debt claims
against NextWave.

On October 16, 2001 the Company filed a
Current Report on Form 8-K which reported that the Company
filed a Tender Offer Statement on Schedule TO with the
Securities and Exchange Commission in connection with the
Companys offer to exchange eligible outstanding options.

On November 5, 2001, the Company filed a
Current Report on Form 8-K which reported that the Company
on November 5, 2001, issued a press release announcing its
revenues and operating results for the third quarter of 2001.

15



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##### Table of Contents



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



| |         |                    
| | ------- | -------------------
| | Signed: | /s/ DAVID N. WALKER

| |                                 
| | --------------------------------
| |                                 
| | David N. Walker                 
| | Senior Vice President, Treasurer
| | and Chief Financial Officer     

Date:  November 14, 2001


16