##### 






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 March 31, 2003                   
|     |  | 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 or Other Jurisdiction of
    Incorporation or Organization) |  | (I.R.S. Employer Identification Number)
|                                                                  
|7925 Jones Branch Drive, McLean, VA                                |  | 22102                                  
|(Address of Principal Executive Offices)                           |  | (Zip Code)                             

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

Not Applicable




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

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:


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

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

As of May 1, 2003 the registrant had
outstanding 14,647,359 shares of Class A Common Stock, par
value $0.01 per share (the Class A Common
Stock) and 6,318,874 shares of Class B Common Stock,
par value $0.01 per share (the Class B Common Stock).









---



##### 



LCC International, Inc. and
Subsidiaries

Quarterly Report on Form 10-Q

For the quarter ended March 31,
2003


INDEX

|         |  |                                                                                                        |  |        |    | 
|-------- |  | ------------------------------------------------------------------------------------------------------ |  | ------ | -- | 
|         |  |                                                                                                        |  | Page  
|         |  |                                                                                                        |  | Number
|         |  |                                                                                                        |  |       
|PART I:  |  | FINANCIAL INFORMATION                                                                                  |  |        |    | 
|ITEM 1:  |  | FINANCIAL STATEMENTS                                                                                   |  |        |    | 
|         |  | Condensed consolidated statements of operations
    for the three months ended March 31, 2002 and 2003 |  |        | 3  | 
|         |  | Condensed consolidated balance sheets as of
    December 31, 2002 and March 31, 2003                   |  |        | 4  | 
|         |  | Condensed consolidated statements of cash flows
    for the three months ended March 31, 2002 and 2003 |  |        | 5  | 
|         |  | Notes to condensed consolidated financial
    statements                                               |  |        | 6  | 
|ITEM 2:  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS              |  |        | 11 | 
|ITEM 3:  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK                                         |  |        | 18 | 
|ITEM 4:  |  | CONTROLS AND PROCEDURES                                                                                |  |        | 19 | 
|PART II: |  | OTHER INFORMATION                                                                                      |  |        |    | 
|ITEM 1:  |  | Legal Proceedings                                                                                      |  |        | 20 | 
|ITEM 2:  |  | Changes in Securities                                                                                  |  |        | 20 | 
|ITEM 3:  |  | Defaults Upon Senior Securities                                                                        |  |        | 20 | 
|ITEM 4:  |  | Submission of Matters to a Vote of Security
    Holders                                                |  |        | 20 | 
|ITEM 5:  |  | Other Information                                                                                      |  |        | 20 | 
|ITEM 6:  |  | Exhibits and Reports on Form 8-K                                                                       |  |        | 20 | 

2



---



##### 



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
|                                                   |                               | March 31,         
|                                                   |                               |                   
|                                                   |                               | 2002               |        | 2003  
|                                                   |                               |                    |        |       
|REVENUES                                           |                               | $                  | 17,398 |        |   | $ | 17,140 |       
|COST OF REVENUES                                   |                               |                    | 16,270 |        |   |   | 14,599 |       
|                                                   |                               |                    |        |        |   |   |        |       
|GROSS PROFIT                                       |                               |                    | 1,128  |        |   |   | 2,541  |       
|                                                   |                               |                    |        |        |   |   |        |       
|OPERATING EXPENSES:                                |                               |                    |        |        |   |   |        |       
|                                                   | Sales and marketing           |                    |        | 2,295  |   |   |        | 1,956  |  
|                                                   | General and administrative    |                    |        | 5,105  |   |   |        | 4,738  |  
|                                                   | Restructuring charge          |                    |        |       |   |   |        | (152   | )
|                                                   | Depreciation and amortization |                    |        | 691    |   |   |        | 796    |  
|                                                   |                               |                    |        |        |   |   |        |       
|                                                   |                               |                    | 8,091  |        |   |   | 7,338  |       
|                                                   |                               |                    |        |        |   |   |        |       
|OPERATING LOSS                                     |                               |                    | (6,963 | )      |   |   | (4,797 | )     
|                                                   |                               |                    |        |        |   |   |        |       
|OTHER INCOME (EXPENSE):                            |                               |                    |        |        |   |   |        |       
|                                                   | Interest income               |                    |        | 302    |   |   |        | 88     |  
|                                                   | Other                         |                    |        | 2      |   |   |        | 1,249  |  
|                                                   |                               |                    |        |        |   |   |        |       
|                                                   |                               |                    | 304    |        |   |   | 1,337  |       
|                                                   |                               |                    |        |        |   |   |        |       
|LOSS FROM OPERATIONS BEFORE INCOME TAXES           |                               |                    | (6,659 | )      |   |   | (3,460 | )     
|BENEFIT FOR INCOME TAXES                           |                               |                    | (1,598 | )      |   |   | (1,298 | )     
|                                                   |                               |                    |        |        |   |   |        |       
|NET LOSS                                           |                               | $                  | (5,061 | )      |   | $ | (2,162 | )     
|                                                   |                               |                    |        |        |   |   |        |       
|NET LOSS PER SHARE:                                |                               |                    |        |        |   |   |        |       
|                                                   | Basic                         |                    | $      | (0.24  | ) |   | $      | (0.10  | )
|                                                   |                               |                    |        |        |   |   |        |       
|                                                   | Diluted                       |                    | $      | (0.24  | ) |   | $      | (0.10  | )
|                                                   |                               |                    |        |        |   |   |        |       
|WEIGHTED AVERAGE SHARES USED IN CALCULATION OF NET |                               |                    |        |        |   |   |        |       
|                                                   | LOSS PER SHARE:               |                    |        |        |   |   |        |        |  
|                                                   | Basic                         |                    |        | 20,833 |   |   |        | 20,958 |  
|                                                   |                               |                    |        |        |   |   |        |       
|                                                   | Diluted                       |                    |        | 20,833 |   |   |        | 20,958 |  
|                                                   |                               |                    |        |        |   |   |        |       

See accompanying notes to condensed consolidated
financial statements.

3



---



##### 



LCC International, Inc. and
Subsidiaries



Condensed Consolidated Balance
Sheets


(In thousands, except per share
data)


|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |        |        | 
|----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ------- | ----------- | ------ | - | ------- | ------ | ------ | 
|                                                                                    |                                                                                                                                         | December 31,                            |         | March 31,  
|                                                                                    |                                                                                                                                         | 2002                                    |         | 2003       
|                                                                                    |                                                                                                                                         |                                         |         |            
|                                                                                    |                                                                                                                                         |                                         |         | (Unaudited)
|ASSETS:                                                                             |                                                                                                                                         |                                         |         |             |        |   |         |       
|Current assets:                                                                     |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    | Cash and cash equivalents                                                                                                               |                                         | $       | 37,507      |        |   | $       | 33,026 |       
|                                                                                    | Restricted cash                                                                                                                         |                                         |         | 1,308       |        |   |         | 1,537  |       
|                                                                                    | Short-term investments                                                                                                                  |                                         |         | 514         |        |   |         | 514    |       
|                                                                                    | Receivables, net of allowance for doubtful
    accounts of $3,122 and $2,663 at December 31, 2002 and
    March 31, 2003, respectively: |                                         |         |             |        |   |         |        |       
|                                                                                    |                                                                                                                                         | Trade accounts receivable               |         |             | 13,165 |   |         |        | 11,783 | 
|                                                                                    |                                                                                                                                         | Unbilled receivables                    |         |             | 12,369 |   |         |        | 14,763 | 
|                                                                                    |                                                                                                                                         | Due from related parties and affiliates |         |             | 61     |   |         |        | 159    | 
|                                                                                    | Deferred income taxes, net                                                                                                              |                                         |         | 3,932       |        |   |         | 5,249  |       
|                                                                                    | Prepaid expenses and other current assets                                                                                               |                                         |         | 1,835       |        |   |         | 1,690  |       
|                                                                                    | Prepaid tax receivable and prepaid taxes                                                                                                |                                         |         | 8,285       |        |   |         | 7,683  |       
|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    |                                                                                                                                         | Total current assets                    |         |             | 78,976 |   |         |        | 76,404 | 
|Property and equipment, net                                                         |                                                                                                                                         |                                         | 5,010   |             |        |   | 4,559   |       
|Deferred income taxes, net                                                          |                                                                                                                                         |                                         | 504     |             |        |   | 81      |       
|Goodwill and other intangibles                                                      |                                                                                                                                         |                                         | 11,273  |             |        |   | 11,013  |       
|Other assets                                                                        |                                                                                                                                         |                                         | 960     |             |        |   | 1,018   |       
|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    |                                                                                                                                         | $                                       | 96,723  |             |        | $ | 93,075  |       
|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       
|LIABILITIES AND SHAREHOLDERS
    EQUITY:                                           |                                                                                                                                         |                                         |         |             |        |   |         |       
|Current liabilities:                                                                |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    | Accounts payable                                                                                                                        |                                         | $       | 7,316       |        |   | $       | 7,950  |       
|                                                                                    | Accrued expenses                                                                                                                        |                                         |         | 10,543      |        |   |         | 9,760  |       
|                                                                                    | Accrued employee compensation and benefits                                                                                              |                                         |         | 6,272       |        |   |         | 6,017  |       
|                                                                                    | Deferred revenue                                                                                                                        |                                         |         | 41          |        |   |         | 863    |       
|                                                                                    | Income taxes payable                                                                                                                    |                                         |         | 882         |        |   |         | 414    |       
|                                                                                    | Accrued restructuring current                                                                                                           |                                         |         | 3,937       |        |   |         | 3,608  |       
|                                                                                    | Other current liabilities                                                                                                               |                                         |         | 26          |        |   |         | 154    |       
|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    |                                                                                                                                         | Total current liabilities               |         |             | 29,017 |   |         |        | 28,766 | 
|                                                                                    | Accrued restructuring                                                                                                                   |                                         |         | 5,786       |        |   |         | 5,153  |       
|                                                                                    | Other liabilities                                                                                                                       |                                         |         | 832         |        |   |         | 597    |       
|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    |                                                                                                                                         | Total liabilities                       |         |             | 35,635 |   |         |        | 34,516 | 
|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       
|Shareholders equity:                                                               |                                                                                                                                         |                                         |         |             |        |   |         |       
|Preferred stock:                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    | 10,000 shares authorized; 0 shares issued and
    outstanding                                                                           |                                         |         |            |        |   |         |       |       
|Class A common stock, $0.01 par value:                                              |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    | 70,000 shares authorized; 14,632 and 14,644
    shares issued and outstanding at December 31, 2002 and
    March 31, 2003, respectively |                                         |         | 146         |        |   |         | 146    |       
|Class B common stock, $0.01 par value:                                              |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    | 20,000 shares authorized; 6,319 shares issued and
    outstanding at December 31, 2002 and March 31, 2003,
    respectively             |                                         |         | 63          |        |   |         | 63     |       
|Paid-in capital                                                                     |                                                                                                                                         |                                         | 94,132  |             |        |   | 94,152  |       
|Accumulated deficit                                                                 |                                                                                                                                         |                                         | (30,079 | )           |        |   | (32,241 | )     
|Note receivable from shareholder                                                    |                                                                                                                                         |                                         | (1,625  | )           |        |   | (1,625  | )     
|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    | Subtotal                                                                                                                                |                                         |         | 62,637      |        |   |         | 60,495 |       
|Accumulated other comprehensive loss 
    foreign currency translation adjustments |                                                                                                                                         |                                         | (1,549  | )           |        |   | (1,936  | )     
|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    |                                                                                                                                         | Total shareholders equity              |         |             | 61,088 |   |         |        | 58,559 | 
|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       
|                                                                                    |                                                                                                                                         | $                                       | 96,723  |             |        | $ | 93,075  |       
|                                                                                    |                                                                                                                                         |                                         |         |             |        |   |         |       

See accompanying notes to condensed consolidated
financial statements.

4



---



##### 



LCC International, Inc. and
Subsidiaries



Condensed Consolidated Statements of Cash
Flows


(In thousands)


(Unaudited)


|                                                        |                                                                                 |                                   |                                              |                                          |   |       |        |        |   |      |        |  
|------------------------------------------------------- | ------------------------------------------------------------------------------- | --------------------------------- | -------------------------------------------- | ---------------------------------------- | - | ----- | ------ | ------ | - | ---- | ------ | -
|                                                        |                                                                                 |                                  
|                                                        |                                                                                 | Three Months Ended               
|                                                        |                                                                                 | March 31,                        
|                                                        |                                                                                 |                                  
|                                                        |                                                                                 | 2002                              |                                              | 2003                                    
|                                                        |                                                                                 |                                   |                                              |                                         
|Cash flows from operating activities:                   |                                                                                 |                                   |                                              |                                          |   |       |        |       
|                                                        | Net loss                                                                        |                                   | $                                            | (5,061                                   | ) |       | $      | (2,162 | )
|                                                        | Adjustments to reconcile net loss to net cash
    used in operating activities: |                                   |                                              |                                          |   |       |        |        |  
|                                                        |                                                                                 |                                   | Depreciation and amortization                |                                          |   | 691   |        |        |   | 796  |       
|                                                        |                                                                                 |                                   | Provision (recovery) for doubtful accounts   |                                          |   | 678   |        |        |   | (728 | )     
|                                                        |                                                                                 |                                   | Restructuring charge (recovery)              |                                          |   |      |        |        |   | (152 | )     
|                                                        |                                                                                 |                                   | Changes in operating assets and liabilities: |                                          |   |       |        |        |   |      |       
|                                                        |                                                                                 |                                   |                                              | Trade, unbilled, and other receivables   |   |       | 7,679  |        |   |      | (450   | )
|                                                        |                                                                                 |                                   |                                              | Accounts payable and accrued expenses    |   |       | (5,483 | )      |   |      | (404   | )
|                                                        |                                                                                 |                                   |                                              | Other current assets and liabilities     |   |       | (1,625 | )      |   |      | 235    |  
|                                                        |                                                                                 |                                   |                                              | Other non-current assets and liabilities |   |       | (706   | )      |   |      | (1,189 | )
|                                                        |                                                                                 |                                   |                                              |                                          |   |       |        |       
|Net cash used in operating activities                   |                                                                                 |                                   | (3,827                                       | )                                        |   |       | (4,054 | )     
|                                                        |                                                                                 |                                   |                                              |                                          |   |       |        |       
|Cash flows from investing activities:                   |                                                                                 |                                   |                                              |                                          |   |       |        |       
|                                                        | Proceeds from sales of short-term investments                                   |                                   |                                              | (21                                      | ) |       |        |       |  
|                                                        | Purchases of property and equipment                                             |                                   |                                              | (406                                     | ) |       |        | (250   | )
|                                                        | Proceeds from disposals of property and equipment                               |                                   |                                              |                                         |   |       |        | 32     |  
|                                                        | Business acquisitions                                                           |                                   |                                              | (7,146                                   | ) |       |        |       |  
|                                                        |                                                                                 |                                   |                                              |                                          |   |       |        |       
|Net cash used in investing activities                   |                                                                                 |                                   | (7,573                                       | )                                        |   |       | (218   | )     
|                                                        |                                                                                 |                                   |                                              |                                          |   |       |        |       
|Cash flows from financing activities:                   |                                                                                 |                                   |                                              |                                          |   |       |        |       
|                                                        | Proceeds from issuance of common stock, net                                     |                                   |                                              |                                         |   |       |        | 20     |  
|                                                        | Proceeds from exercise of options                                               |                                   |                                              | 109                                      |   |       |        |       |  
|                                                        | Increase in restricted cash                                                     |                                   |                                              |                                         |   |       |        | (229   | )
|                                                        | Repayment of loan to shareholder                                                |                                   |                                              | 700                                      |   |       |        |       |  
|                                                        |                                                                                 |                                   |                                              |                                          |   |       |        |       
|Net cash provided by (used in) financing
    activities |                                                                                 |                                   | 809                                          |                                          |   |       | (209   | )     
|                                                        |                                                                                 |                                   |                                              |                                          |   |       |        |       
|Net decrease in cash and cash equivalents               |                                                                                 |                                   | (10,591                                      | )                                        |   |       | (4,481 | )     
|Cash and cash equivalents at beginning of period        |                                                                                 |                                   | 52,658                                       |                                          |   |       | 37,507 |       
|                                                        |                                                                                 |                                   |                                              |                                          |   |       |        |       
|Cash and cash equivalents at end of period              |                                                                                 | $                                 | 42,067                                       |                                          |   | $     | 33,026 |       
|                                                        |                                                                                 |                                   |                                              |                                          |   |       |        |       
|Supplemental disclosures of cash flow information:      |                                                                                 |                                   |                                              |                                          |   |       |        |       
|                                                        |                                                                                 | Cash paid during the quarter for: |                                              |                                          |   |       |        |        |   |     
|                                                        |                                                                                 |                                   | Income taxes                                 |                                          | $ | 1,316 |        |        | $ | 3    |       

Supplemental disclosures of non-cash investing
and financing activities:

In January 2002, the Company purchased all of the
assets of Smith Woolley Telecom for a purchase price of
approximately $8.6 million. The purchase price consisted of
$7.1 million in cash included above as part of business
acquisitions and the issuance of 215,000 shares of the
Companys Class A Common Stock, par value $0.01 per
share. The value of the Class A Common Stock was
approximately $1.5 million. As a result, common stock and
additional paid in capital increased, offset by an increase to
goodwill and other intangibles.

See accompanying notes to condensed consolidated
financial statements.

5



---



##### 



LCC International, Inc. and
Subsidiaries



Notes to Condensed Consolidated Financial
Statements


(Unaudited)


Note 1:  Description of
Operations

The Company provides integrated end-to-end
solutions for wireless voice and data communication networks
with service offerings to include high level technical
consulting, system design and deployment and ongoing operations
and maintenance services. The Company operates in a highly
competitive environment subject to rapid technological change
and emergence of new technologies. Historically, the key drivers
of changes 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; (4) the increasing complexity
of wireless systems in operation; and (5) changes in
wireless infrastructure spending and deployment. Although the
Company believes that its services are transferable to emerging
technologies, rapid changes in technology and deployment 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 periods.

Certain information and footnote disclosure
normally included in the consolidated financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or
omitted. The interim financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Companys Annual Report on
Form 10-K for the year ended December 31, 2002.
Operating results for the interim periods are not necessarily
indicative of results for an entire year.

Note 3:  Recent Accounting
Pronouncements

In July 2002, the Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standard (SFAS) No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. The statement provides specific guidance for the
recognition, measurement and reporting of costs associated with
exiting an activity or disposing of a long-lived asset,
including restructuring charges that the Company currently
accounts for under Emerging Issues Task Force (EITF)
Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a
Restructuring). The provisions are effective after
December 31, 2002. The Companys adoption of SFAS
No. 146 may have an effect on the timing of future
restructuring charges taken, if and when they occur.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others(FIN 45). FIN 45 requires a
guarantor to recognize a liability, at the inception of the
guarantee, for the fair value of obligations it has undertaken
in issuing the guarantee and also to include more detailed
disclosures in respect to those guarantees. FIN 45 is effective
on a prospective basis for guarantees issued or modified
starting January 1, 2003 and requires the additional
disclosures for the interim and annual financial statements for
periods ending after December 15, 2002. The Company does
not anticipate issuing any guarantees which would be required to
be recognized as a liability under FIN 45 and therefore, the
Company does not expect the adoption of this interpretation to
have a material impact on the Companys financial condition
and results of operations.

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest
Entities(FIN 46). FIN 46 gives further
guidance to Accounting Research Bulletin (ARB)
No. 51, Consolidated Financial Statements.ARB No. 51 requires companies to consolidate their
financial statements when one

6



---



##### 



company has a controlling financial interest,
which is usually having a majority of the voting interest.
FIN 46 further defines a controlling financial interest
where the majority voting interest requirement is not met, a
variable interest entity, and if the assets, liabilities and
results of activities of the variable interest entity should be
included in the consolidated statements of the company.
FIN 46 is effective for all arrangements entered into after
January 31, 2003. As of March 31, 2003, the Company
had not entered into any such arrangements.


Note 4:  Equity-Based
Compensation

The Company accounts for equity-based
compensation arrangements in accordance with the provisions of
Accounting Principles Board (APB) No. 25 and
complies with the disclosure provisions of FASB SFAS
No. 123, as amended by FASB SFAS No. 148. All
equity-based awards to non-employees are accounted for at their
fair value in accordance with FASB SFAS No. 123. Under APB
No. 25, compensation expense is based upon the difference,
if any, on the date of grant, between the fair value of the
Companys stock and the exercise price.

Had compensation cost for the Companys
stock based-compensation plans and employee stock purchase plan
been determined on the fair value at the grant dates for awards
under those plans, consistent with FASB SFAS No. 123, the
Companys net loss and net loss per share would have been
reported at the pro forma amounts indicated below.

|                   |              |                    |   |        |       |   |   |        |       |  
|------------------ | ------------ | ------------------ | - | ------ | ----- | - | - | ------ | ----- | -
|                   |              |                   
|                   |              | Three Months Ended
|                   |              | March 31,         
|                   |              |                   
|                   |              | 2002               |   | 2003  
|                   |              |                    |   |       
|Net loss:          |              |                    |   |        |       |   |   |       
|                   | As reported  |                    | $ | (5,061 | )     |   | $ | (2,162 | )    
|                   | Pro forma    |                    | $ | (5,781 | )     |   | $ | (2,777 | )    
|Net loss per share |              |                    |   |        |       |   |   |       
|                   | As reported: |                    |   |        |       |   |   |        |      
|                   |              | Basic              |   | $      | (0.24 | ) |   | $      | (0.10 | )
|                   |              |                    |   |        |       |   |   |       
|                   |              | Diluted            |   | $      | (0.24 | ) |   | $      | (0.10 | )
|                   |              |                    |   |        |       |   |   |       
|                   | Pro forma:   |                    |   |        |       |   |   |        |      
|                   |              | Basic              |   | $      | (0.28 | ) |   | $      | (0.13 | )
|                   |              |                    |   |        |       |   |   |       
|                   |              | Diluted            |   | $      | (0.28 | ) |   | $      | (0.13 | )
|                   |              |                    |   |        |       |   |   |       

Note 5:  Restructuring
Charge

During the second quarter of 2002, the Company
adopted a restructuring plan and recorded a restructuring charge
of $10.0 million. During the fourth quarter of 2002, the
Company recorded an additional $3.5 million restructuring
charge relating to the costs of excess office space. The
restructuring plan was in response to the low utilization of
professional employees caused by the completion of several large
fixed-price contracts and the difficulty in obtaining new
contracts as a result of the slowdown in wireless
telecommunications infrastructure spending. The cost of the
severance and associated expenses was approximately
$1.0 million and resulted in a work force reduction of
approximately 140 people. In addition, the Company had excess
facility costs relative to the space occupied by the employees
affected by the reduction in force, space previously occupied by
divested operations, and reduced business use of office space
resulting from a continued trend for clients to provide
professional staff office space while performing their services.
The charge for the excess office space was approximately
$12.5 million, which included $1.5 million in
written-off leasehold improvements and other assets related to
the excess space. The facility charge takes the existing lease
obligation, less the anticipated rental receipts to be received
from existing and potential subleases. This charge required
significant judgments about the length of time that space will
remain vacant, anticipated cost escalators and operating costs
associated with the leases, market rate of the subleased space,
and broker fees or other costs necessary to market the space.
During the first quarter of 2003, the Company reversed excess
severance payable of approximately $0.2 million.

7



---



##### 



A reconciliation of the restructuring activities
is as follows:

|                                              |                                                         |                |       |            |   |       |        |        |   |   |        |        |  
|--------------------------------------------- | ------------------------------------------------------- | -------------- | ----- | ---------- | - | ----- | ------ | ------ | - | - | ------ | ------ | -
|                                              |                                                         | Severance      |       | Facilities |   | Total
|                                              |                                                         |                |       |            |   |      
|                                              |                                                         |               
|                                              |                                                         | (in thousands)
|Restructuring charge                          |                                                         | $              | 1,030 |            |   | $     | 12,492 |        |   | $ | 13,522 |       
|Reclassification of deferred rent             |                                                         |                |      |            |   |       | 639    |        |   |   | 639    |       
|                                              |                                                         |                |       |            |   |       |        |        |   |   |        |       
|                                              |                                                         |                | 1,030 |            |   |       | 13,131 |        |   |   | 14,161 |       
|Charges against the provision:                |                                                         |                |       |            |   |       |        |        |   |   |        |       
|                                              | Excess office space                                     |                |       |           |   |       |        | (2,152 | ) |   |        | (2,152 | )
|                                              | Severance and associated costs paid                     |                |       | (878       | ) |       |        |       |   |   |        | (878   | )
|                                              | Leasehold improvements and other assets
    written-off |                |       |           |   |       |        | (1,461 | ) |   |        | (1,461 | )
|                                              | Other                                                   |                |       |           |   |       |        | 53     |   |   |        | 53     |  
|                                              |                                                         |                |       |            |   |       |        |        |   |   |        |       
|Restructuring payable as of December 31, 2002 |                                                         |                | 152   |            |   |       | 9,571  |        |   |   | 9,723  |       
|                                              |                                                         |                |       |            |   |       |        |        |   |   |        |       
|Charges against the provision                 |                                                         |                |       |            |   |       |        |        |   |   |        |       
|                                              | Excess office space                                     |                |       |           |   |       |        | (710   | ) |   |        | (710   | )
|                                              | Other                                                   |                |       |           |   |       |        | (100   | ) |   |        | (100   | )
|                                              | Reversal of severance payable no longer required        |                |       | (152       | ) |       |        |       |   |   |        | (152   | )
|                                              |                                                         |                |       |            |   |       |        |        |   |   |        |       
|                                              |                                                         |                |      |            |   |       | (810   | )      |   |   | (962   | )     
|                                              |                                                         |                |       |            |   |       |        |        |   |   |        |       
|Restructuring payable as of March 31, 2003    |                                                         | $              |      |            |   | $     | 8,761  |        |   | $ | 8,761  |       
|                                              |                                                         |                |       |            |   |       |        |        |   |   |        |       

The restructuring payable was classified as
follows:

|                              |  |              |       |           |  |   |       | 
|----------------------------- |  | ------------ | ----- | --------- |  | - | ----- | 
|                              |  | December 31, |       | March 31,
|                              |  | 2002         |       | 2003     
|                              |  |              |       |          
|Accrued restructuring current |  | $            | 3,937 |           |  | $ | 3,608 | 
|Accrued restructuring         |  |              | 5,786 |           |  |   | 5,153 | 
|                              |  |              |       |           |  |   |       | 
|Accrued restructuring total   |  | $            | 9,723 |           |  | $ | 8,761 | 
|                              |  |              |       |           |  |   |       | 

Note 6:  Other Comprehensive Income
(Loss)

Comprehensive income (loss) is defined as net
income (loss) plus the change in equity of a business enterprise
during a period from transactions and other events and
circumstances from non-owner sources. Other comprehensive income
(loss) refers to revenues, expenses, gains and losses that under
accounting principles generally accepted in the United States of
America are included in comprehensive income (loss), but
excluded from net income (loss). Other comprehensive income
(loss) consists solely of foreign currency translation
adjustments at March 31, 2002 and 2003. Comprehensive
income (loss) for the three months ended March 31 is as
follows (in thousands).

|                                                              |  |      |        |      |  |   |        |  
|------------------------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                                              |  | 2002 |        | 2003
|                                                              |  |      |        |     
|Net loss                                                      |  | $    | (5,061 | )    |  | $ | (2,162 | )
|                                                              |  |      |        |      |  |   |        |  
|Other comprehensive loss, before tax                          |  |      | (103   | )    |  |   | (619   | )
|Income tax benefit related to items of
    comprehensive loss |  |      | (25    | )    |  |   | (232   | )
|                                                              |  |      |        |      |  |   |        |  
|Other comprehensive loss, net of tax                          |  |      | (78    | )    |  |   | (387   | )
|                                                              |  |      |        |      |  |   |        |  
|Comprehensive loss                                            |  | $    | (5,139 | )    |  | $ | (2,549 | )
|                                                              |  |      |        |      |  |   |        |  

Note 7:  Related Party
Transactions

RF Investors, a subsidiary of Telcom Ventures,
indirectly owns the Class B Common Stock shares
outstanding, which have ten-to-one voting rights over the
Class A Common Stock shares and therefore represent
approximately 81.0% voting control.

8



---



##### 



During 2002 and the first quarter of 2003, the
Company continued to make certain payments on behalf of Telcom
Ventures consisting primarily of fringe and payroll-related
costs of $155,000 and $11,000, respectively and received
reimbursements of $464,000 in 2002 and $7,900 during the first
quarter of 2003. At December 31, 2002 and March 31,
2003, outstanding amounts associated with these payments,
totaling $9,000 and $6,000, respectively, are included in due
from related parties and affiliates within the accompanying
condensed balance sheets. During 2002, the Company also provided
an allowance of $100,000 for amounts in dispute. In April 2003,
the Company received $100,000 to resolve the dispute in its
entirety.

In September 1996, the Company lent
$3.5 million to Telcom Ventures to assist in the payment of
taxes due in connection with the assumption by the Company of
$30.0 million of convertible subordinated debt from Telcom
Ventures. The original note was payable over five years with
equal annual principal payments over the term. Interest accrued
at the rate of LIBOR, plus 1.75%. The Company received the final
payment of principal and accrued interest of approximately
$700,000 during the first quarter of 2002 in satisfaction of the
note.

In July 2002, the Company acquired
51 percent of the outstanding shares of Detron LCC Network
Services B.V. (Detron), a newly formed corporation
in the Netherlands. The Company acquired the shares from
Westminster Capital B.V. (Westminster). Detron has
certain ongoing transactions with Westminster. Under a five-year
lease agreement for office space, Detron recorded approximately
$17,000 of rent expense for the quarter ended March 31,
2003. During the first quarter of 2003, Detron seconded various
idle employees to Detron Telematics, Westminsters
wholly-owned subsidiary and recorded revenue of approximately
$100,000.

Advances to employees aggregating approximately
$33,000 and $36,000 at December 31, 2002 and March 31,
2003, respectively are included in due from related parties and
affiliates on the accompanying condensed balance sheets.

Note 8:  Commitments and
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.

In connection with the acquisition of
51 percent of Detron in July 2002, the purchase agreement
provided for the payment of an additional $0.5 million
should Detron achieve certain objectives by the end of the
calendar year as confirmed by its adopted accounts. These
objectives were achieved and the Company expects to pay the
additional amount in 2003.

Note 9:  Investments

In June 2001, the US Court of Appeals for the
District of Columbia (the DC Court of Appeals)
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 federal bankruptcy law prohibited the Federal
Communications Commission (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 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. In October 2001, the FCC
filed a petition for certiorari before the U.S. Supreme Court.
On March 6, 2002, the U.S. Supreme Court announced its
decision to hear the case. Substantive hearings in the
bankruptcy case were delayed pending the decision of the U.S.
Supreme Court. On January 27, 2003, the U.S. Supreme Court
announced its decision upholding the decision of the DC Court of
Appeals.

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

9



---



##### 



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) $14.0 million of radio frequency
engineering services and (b) $35.0 million of system
deployment services. These services were to be provided in
increments of twenty-percent (20%) each year during the
five-year period following the execution of the March Agreement.
NextWave Telecom filed for bankruptcy protection on
December 23, 1998. The March Agreement has not been assumed
or rejected by NextWave Telecom in the bankruptcy proceeding.
The Company did not carry any assets or liabilities on its books
relating to its equity investment in NextWave, any pre-petition
debts due the Company, or the March Agreement; these balances
were written off in previous years.


The total amount of pre-petition debt owed to the
Company by NextWave Telecom and certain of its subsidiaries
(collectively, NextWave) was approximately
$14.3 million, plus post-petition interest thereon. This
amount includes the Companys interest, amounting to
approximately $0.7 million 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 Koll Claim).

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 (excluding a 92.5%
interest in pre-petition interest that may be payable with
respect to the claims, the Pre-Petition Interest
Amount) against NextWave Telecom resulting in a gain of
$21.4 million, which equaled the proceeds from the sale.
The gain was recorded in other income in the accompanying
consolidated statement of operations. The September 2001 sale of
current pre-petition debt excluded (a) the Koll Claim,
(b) any claims resulting from the assumption or rejection
of the March Agreement, and (c) the Pre-Petition Interest
Amount.

In February 2003, the Company sold its interest
in the Pre-Petition Interest Amount for $1.0 million in
cash, which was paid in March 2003. The Company recorded the
receipt in other income (expense) on the accompanying
condensed consolidated statement of operations.

10



---



##### 



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

LCC International, Inc. and
Subsidiaries

For the Three Months Ended March 31, 2002
and 2003

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. 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, 2002.

Overview

The Company provides integrated end-to-end
solutions for wireless voice and data communication networks
with service offerings that include high level technical
consulting, system design and deployment and ongoing operations
and maintenance services. Since its inception in 1983, the
Company has delivered wireless network solutions to more than
350 customers in over 50 countries.

In the last several years, the Company has made
several strategic decisions that have enabled it to focus on its
core competency in providing end-to-end wireless services. In
October 1999, the Company disposed of its hardware and software
products businesses 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 strategic
acquisitions and 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 changes 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; (4) the increasing complexity of
wireless systems in operation; and (5) changes in wireless
infrastructure spending and deployment.

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

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

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

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

The Company has continued to see tightened
capital markets, which among other things have contributed to a
slowdown in wireless telecommunications infrastructure spending.
The Companys success depends upon continued growth in the
design and deployment and optimization of wireless networks.
Many wireless carriers are reliant upon the capital markets to
obtain funds to finance building and improving their wireless
networks. Most vulnerable are the customers that are new
licensees and operator/carriers who have limited sources of
funds from operations or have business plans that are dependent
on funding from the capital

11



---



##### 



markets. The slowdown in wireless
telecommunications infrastructure spending caused some of the
Companys customers or potential customers to slow,
postpone or reduce the scope of the deployment of new wireless
networks or expansion of existing networks, which has reduced
the demand for the Companys services. This industry
slowdown is occurring at the same time the Company is searching
for projects to replace the revenue received from XM Satellite,
the Companys largest client in 2001. The XM Satellite
contract was substantially completed in the first quarter of
2002, and no additional significant revenue is anticipated from
this customer in 2003.


The completion of the XM Satellite contract
coupled with the industry slowdown has caused revenue to decline
dramatically since 2001. Additionally, the need to replace
revenue derived from the XM Satellite contract and the difficult
marketplace has caused gross profit as a percentage of total
revenues to decline. Cost reduction measures taken by the
Company are not sufficient to return the Company to
profitability without additional growth in revenue. The Company
has recently seen renewed customer activity to upgrade or
enhance existing systems. Despite this renewed activity, it is
difficult to predict the impact, if any, and the related timing
of any such impact, upon the Companys future revenue
growth opportunities.

Europe is a promising area for revenue growth for
the Company. This optimism is caused by the need of the European
carriers to meet network-building obligations associated with
their 3G licenses, which represent a significant investment on
their part. With the recent availability of 3G equipment in
Europe, the Company expects that demand for the types of
services provided by the Company will increase. Revenue from 3G
networks constituted 13.4% and 33.4% of the Companys
revenues for the quarter ended March 31, 2002 and 2003,
respectively, and it is expected to continue to be an area of
business growth in the future. In anticipation of this growth,
and in order to complement its European Radio Frequency
Engineering capacity with local deployment capability necessary
to provide end-to-end services in key European markets, the
Company has recently acquired additional deployment capability
in Europe. In December 2001, the Company acquired LCC Italia
(formerly known as Transmast), a wireless infrastructure,
deployment, civil engineering and project management firm
located in Milan, Italy. In January 2002, the Company acquired
the assets of Smith Woolley Telecom, a telecommunications
consultancy company that specializes in the provision of search,
acquisition, design, build, and management and maintenance
services to the wireless industry in the United Kingdom. In July
2002, the Company acquired 51% of Detron LCC Network Services
B.V., a newly formed company specializing in the provision of
deployment, management and maintenance services to the wireless
industry in the Netherlands. The Company also anticipates that
its reliance upon fixed price contracts will continue to grow in
connection with these recent acquisitions. These newly acquired
international operations provide more support for network
deployment and construction management, where use of fixed price
contracts is more typical. These contracts typically contain
payment terms that are less favorable, and consequently require
greater working capital than has historically been required by
the Company, which is reflected as an increase in days sales
outstanding. Additionally, the work may provide lower gross
profit margins than engineering design services.

12



---



##### 



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                       
|                                         |                               | March 31,                   
|                                         |                               |                             
|                                         |                               | 2002                         |       | 2003
|                                         |                               |                              |       |     
|Revenues                                 |                               |                              | 100.0 | %    |      |  | 100.0 | %   
|Cost of revenues                         |                               |                              | 93.5  |      |      |  | 85.2  |     
|                                         |                               |                              |       |      |      |  |       |     
|Gross profit                             |                               |                              | 6.5   |      |      |  | 14.8  |     
|                                         |                               |                              |       |      |      |  |       |     
|Operating expenses:                      |                               |                              |       |      |      |  |       |     
|                                         | Sales and marketing           |                              |       | 13.2 |      |  |       | 11.5 |     
|                                         | General and administrative    |                              |       | 29.3 |      |  |       | 27.6 |     
|                                         | Restructuring charge          |                              |       |     |      |  |       | (0.9 | )   
|                                         | Depreciation and amortization |                              |       | 4.0  |      |  |       | 4.6  |     
|                                         |                               |                              |       |      |      |  |       |     
|                                         |                               | Total operating expenses     |       |      | 46.5 |  |       |      | 42.8 | 
|                                         |                               |                              |       |      |      |  |       |     
|Operating loss                           |                               |                              | (40.0 | )    |      |  | (28.0 | )   
|                                         |                               |                              |       |      |      |  |       |     
|Other income (expense):                  |                               |                              |       |      |      |  |       |     
|                                         | Interest income               |                              |       | 1.7  |      |  |       | 0.5  |     
|                                         | Other                         |                              |       |     |      |  |       | 7.3  |     
|                                         |                               |                              |       |      |      |  |       |     
|                                         |                               | Total other income (expense) |       |      | 1.7  |  |       |      | 7.8  | 
|                                         |                               |                              |       |      |      |  |       |     
|Loss from operations before income taxes |                               |                              | (38.3 | )    |      |  | (20.2 | )   
|Benefit for income taxes                 |                               |                              | (9.2  | )    |      |  | (7.6  | )   
|                                         |                               |                              |       |      |      |  |       |     
|Net loss                                 |                               |                              | (29.1 | )%   |      |  | (12.6 | )%  
|                                         |                               |                              |       |      |      |  |       |     

13



---



##### 



Three Months Ended March 31,
2003

Compared to


Three Months Ended March 31,
2002


Revenues.Revenues
for the three months ended March 31, 2003 were $17.1
million compared to $17.4 million for the prior year, a
decrease of $0.3 million or 1.7%. The net decrease
comprised a reduction in revenues in the Americas region of
approximately $3.3 million, offset by an increase in the
EMEA and Asia Pacific regions of $3.0 million. Of the
$3.3 million reduction in revenues in the Americas region,
about $3.0 million related to the completion of the XM
Satellite contract in 2002. The increase in the EMEA and Asia
Pacific regions of $3.0 million was mostly attributable to
the acquisition and subsequent growth in revenues of LCC Italia
of $3.7 million offset by the completion of a major network
deployment contract in 2002 of $0.9 million for a customer
in the Middle East.

Cost of Revenues.Cost of revenues for the three months
ended March 31, 2003 was $14.6 million compared to
$16.3 million for the prior year, a decrease of
$1.7 million or 10.4%. Consistent with the explanation for
the changes in revenue above, the net decrease of
$1.7 million comprised a decrease in cost in the Americas
region of $3.5 million, offset by an increase in costs in
the EMEA and Asia Pacific regions of $1.8 million. Of the
decrease in cost of revenues for the Americas region of
$3.5 million approximately $2.4 million was
attributable to the completion of the XM Satellite contract and
approximately $0.5 million was attributable to improvements
in the utilization of professional staff. The increase in cost
of revenues in the EMEA and Asia Pacific regions represent an
increase in cost for LCC Italia of $3.0 million and a
decrease in costs for the customer in the Middle East of
$1.3 million.

Gross Profit.Gross
profit for the three months ended March 31, 2003 was
$2.5 million or 14.8% of revenues compared to
$1.1 million or 6.5% of revenues for the prior year, an
increase of $1.4 million or 8.3%. Consistent with the
explanation for the changes in revenue above, the net increase
in gross profit of $1.4 million (8.3%) comprised an
increase in the Americas region of $0.2 million (1.3%) and an
increase in the EMEA and Asia Pacific regions of
$1.2 million (7.0%). The increase of $1.2 million
(7.0%) in the EMEA and Asia Pacific regions consisted of
$0.8 million (4.7%) related to LCC Italia and from the
recognition of $0.4 million (2.3%) in 2002 of costs in
excess of revenues on completion of the network deployment
contract for the customer in the Middle East.

Sales and Marketing.Sales and marketing expenses for the
three months ended March 31, 2003 were $2.0 million
compared to $2.3 million in the prior year, a decrease of
$0.3 million. Sales and marketing as a percentage of total
revenues was 11.4% and 13.2% for 2003 and 2002, respectively.
The decrease is largely attributable to the Americas region
efforts during the first quarter of 2002 to develop new projects
to replace the XM Radio contract that ended in the first quarter
of 2002.

General and Administrative.General and administrative expenses
for the three months ended March 31, 2003 were
$4.7 million compared to $5.1 million in the prior
year, a decrease of $0.4 million. Included in these figures
are provisions for bad debts net of benefits from recoveries of
$0.7 million (net benefit) in 2003 and $0.7 million
(net expense) in 2002 respectively, a net reduction in general
and administrative expenses of $1.4 million.

Excluding the effects of bad debts, general and
administrative expenses for 2003 was $5.4 million compared
to $4.4 million for the prior year. The increase of
$1.0 million was largely attributable to the acquisition of
Smith Woolley Telecom and Detron in the EMEA region in 2002,
offset by reductions from the Companys restructuring
efforts.

Restructuring Charge.There was a recovery of restructuring
charges of $0.2 million in the three months ended
March 31, 2003. There were no comparable recoveries or
charges during the first quarter of 2002. In March 2003, the
Company reversed the excess severance accruals remaining from
the initial restructuring charge taken in June 2002.

Depreciation and Amortization.Depreciation and amortization expense
for the three months ended March 31, 2003 was
$0.8 million compared to $0.7 million in the prior
year, an increase of $0.1 million. Reductions in
infrastructure spending in the Americas region of approximately
$0.2 million were offset by the

14



---



##### 



amortization of intangible assets resulting from
the acquisitions of Detron and Smith Woolley, and increases in
infrastructure spending in the EMEA region of $0.3 million.


Other Income and Expense.Other income and expense for the three
months ended March 31, 2003 was a net income of
$1.3 million compared to net income of $0.3 million in
the prior year. Other income increased in 2003 over 2002 by
approximately $1.0 million due to cash received from the
sale of NextWave Pre-Petition interest (see note 9 of the
condensed consolidated financial statements).

Benefit for Income Taxes.The benefit for income taxes was
recorded for the three months ended March 31, 2003 using an
effective income tax rate of 37.5% compared to 24.0% for the
first quarter of 2002. The increase in the effective income tax
rate in 2003 is the result of the decrease in foreign operating
losses relative to the total results of worldwide operations,
since no tax benefits are recorded on foreign operating losses.
The effective income tax rate would have been approximately
35.0% in 2002 if these benefits were recorded.

Net Loss.The net
loss for the first quarter of 2003 was $2.2 million
compared to a net loss of $5.1 million in the prior year.
The lower net loss for the first quarter of 2003 was due to the
improvement in gross profit described above, the net decrease in
general and administrative expenses and the sale of the NextWave
Pre-Petition interest.

Liquidity and Capital Resources

Cash combined with restricted cash and short-term
investments at March 31, 2003 provided total liquid assets
of $35.1 million, compared to $39.3 million at
December 31, 2002, a decrease of $4.2 million. This
decrease in liquidity largely related to cash used in operations
for the three months ended March 31, 2003.

Cash used by operations was $4.1 million for
the three months ended March 31, 2003, compared to
$3.8 million for the prior year.

Cash used by investing activities was
$0.2 million for the three months ended March 31,
2003, compared to $7.6 million for the prior year. Cash
used by investing activities in 2002 largely related to the
acquisition of Smith Woolley Telecom in the United Kingdom.

Cash used in financing activities was
$0.2 million for the three months ended March 31,
2003, compared to cash provided of $0.8 million for the
prior year. In 2003, the Company increased restricted cash by
$0.2 million, which related to the deposit of cash to
support the issue of certain advance and performance guarantees.
Cash provided in 2002 mostly related to the repayment to the
Company of the final installment of a loan by Telcom Ventures, a
shareholder.

Working capital was $47.6 million, compared
to $50.0 million at December 31, 2002, a decrease of
$2.4 million. The decrease in working capital in 2003 was
due to the use of cash to fund operating losses.

The Company had no debt and did not maintain a
line of credit as of March 31, 2003, since it had cash and
short-term investments that it considered sufficient to meet
liquidity requirements. Subsequent to March 31, 2003, the
Company has established a line of credit in The Netherlands to
fund the growth in working capital of its subsidiary, Detron LCC
Network Services B.V. The Company has not engaged in any
off-balance sheet financing as of March 31, 2003. The
Company believes it has sufficient assets and relationships with
financial institutions to obtain appropriate debt facilities
should the business need arise.

For the short term, the Company believes it has
adequate cash and short-term investments to satisfy cash
requirements for at least the next twelve months. The Company
also believes it will generate sufficient cash from operations
to meet its long-term liquidity needs.

15



---



##### 



Critical Accounting Policies

The Companys critical accounting policies
are as follows:



| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | Revenue recognition;                                                
|
| |  | Allowance for doubtful accounts and accrual of
    expatriate taxes;
|
| |  | Accounting for income taxes; and                                    
|
| |  | Restructuring charge.                                               

Revenue
recognition policy

The Companys principal source of revenues
consists of design 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. The portion of the
Companys revenue from fixed-price contracts was 80.9%
during the first quarter of 2003. The Company recognizes revenue
on fixed-price contracts using the percentage-of-completion
method. With the percentage-of-completion method, expenses on
each project are recognized as incurred, and revenues are
recognized based on the ratio of the current costs incurred for
the project to the then estimated total costs of the project.
Accordingly, revenue recognized in a given period depends on,
among other things, the costs incurred on each individual
project and its then current estimate of the total remaining
costs to complete individual projects. Considerable judgment on
the part of the Companys management may be required in
determining estimates to complete a project including the scope
of the work to be completed, and reliance on the customer or
other vendors to fulfill some task(s). If in any period the
Company significantly increases its estimate of the total costs
to complete a project, it may recognize very little or no
additional revenue with respect to that project. If total
contract cost estimates increase, gross profit for any single
project may be significantly reduced or eliminated. If the total
contract cost estimates indicate that there is a loss, the loss
is recognized in the period the determination is made.

Allowance for
doubtful accounts and accrual of expatriate taxes

The preparation of financial statements requires
the Companys management to make estimates and assumptions
that affect the reported amount of assets, liabilities,
contingent assets and liabilities and the reported amounts of
revenues and expenses during the reported period. Specifically,
the Companys management must make estimates of the
probability of collection of its accounts receivable. Management
specifically analyzes accounts receivable balances, customer
concentrations, customer credit-worthiness, current economic
trends and changes in its customer payment terms when evaluating
the adequacy of the valuation allowance for doubtful accounts.
For the quarter ended March 31, 2003, the Company derived
78.7% of its total revenues from its ten largest customers,
indicating significant customer concentration risk with the
Companys receivables. These ten largest customers
constituted 69.8% of the Companys net receivable balance
as of March 31, 2003. In addition, fixed-price contracts
with unfavorable milestone payments can cause unbilled
receivables to grow prior to achieving the applicable milestone
that permits billing. At March 31, 2003, the Company had
approximately $14.8 million of unbilled receivables,
compared to approximately $12.4 million at
December 31, 2002. Lastly, the Company frequently performs
services for development-stage customers, which carry a higher
degree of risk, particularly as to the collection of accounts
receivable. These customers may be particularly vulnerable to
current tightening of available credit and general economic
slowdown.

The Company estimates liabilities associated with
taxes relative to employees sent to assignments in foreign
countries. These expatriate employees are reimbursed for any
additional personal income tax burden that was derived as a
result of the assignment. Calculation of these obligations takes
considerable knowledge of payroll, social, and other taxes in
multiple countries, and the employees personal tax
situation. In addition, it requires interpretation of tax laws,
an assessment of potential audit risk from tax authorities, and
often the

16



---



##### 



resolution of the tax liabilities may not occur
for several years. The Company has $2.5 million accrued for
expatriate tax obligations as of March 31, 2003.


Accounting for
income taxes

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

Considerable management judgment may be required
in determining the Companys provision for income taxes,
its deferred tax assets and liabilities and any valuation
allowance recorded against its net deferred tax assets. The
Company has recorded a valuation allowance of $6.2 million
as of March 31, 2003, due to uncertainties related to its
ability to utilize some of its deferred tax assets before they
expire. These deferred tax assets primarily consist of foreign
net operating losses carried forward, foreign tax credits and
non-cash compensation accruals relating to stock options issued
under a phantom membership plan in effect prior to the
Companys initial public offering. The net deferred tax
assets, as of March 31, 2003 were $5.3 million.

Restructuring
charge

The Company recorded a restructuring charge
during the second quarter of 2002 and an additional charge
during the fourth quarter of 2002. Included in this
restructuring charge of $13.5 million was a charge for
excess facilities aggregating approximately $12.5 million.
This facility charge significantly relates to leased office
space, which the Company no longer occupies. The facility charge
takes the existing lease obligation less anticipated rental
receipts to be received from existing and potential subleases.
This requires significant judgments about the length of time
space will remain vacant, anticipated cost escalators and
operating costs associated with the leases, market rate the
space will be subleased at, and broker fees or other costs
necessary to market the space. These judgments were based upon
independent market analysis and assessment from experienced real
estate brokers. The restructuring charge calculation assumes
$10.1 million will be derived in sublease income, for which
the Company does not currently have a subtenant.

Related Party Transactions

During 2002 and the first quarter of 2003, the
Company continued to make certain payments on behalf of Telcom
Ventures consisting primarily of fringe and payroll-related
costs of $155,000 and $11,000, respectively and received
reimbursements of $464,000 in 2002 and $7,900 during the first
quarter of 2003. At December 31, 2002 and March 31,
2003, outstanding amounts associated with these payments,
totaling $9,000 and $6,000, respectively, are included in due
from related parties and affiliates within the accompanying
condensed balance sheets. During 2002, the Company also provided
an allowance of $100,000 for amounts in dispute. In April 2003,
the Company received $100,000 to resolve the dispute in its
entirety.

In July 2002, the Company acquired
51 percent of the outstanding shares of Detron LCC Network
Services B.V. (Detron), a newly formed corporation
in the Netherlands. The Company acquired the shares from
Westminster Capital B.V. (Westminster). Detron has
certain ongoing transactions with Westminster. Under a five-year
lease agreement for office space, Detron recorded approximately
$17,000 of rent expense for the quarter ended March 31,
2003. During the first quarter of 2003, Detron seconded various
idle employees to Detron Telematics, Westminsters
wholly-owned subsidiary and recorded revenue of approximately
$100,000.

17



---



##### 



Recent Accounting Pronouncements

In July 2002, FASB SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities, was issued. The statement provides specific
guidance for the recognition, measurement and reporting of costs
associated with exiting an activity or disposing of a long-lived
asset, including restructuring charges that the Company
currently accounts for under EITF Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs
Incurred in a Restructuring). The provisions are effective
after December 31, 2002. The Companys adoption of
SFAS No. 146 may have an effect on the timing of future
restructuring charges taken, if and when they occur.

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others(FIN 45). FIN 45
requires a guarantor to recognize a liability, at the inception
of the guarantee, for the fair value of obligations it has
undertaken in issuing the guarantee and also to include more
detailed disclosures in respect to those guarantees. FIN 45
is effective on a prospective basis for guarantees issued or
modified starting January 1, 2003 and requires the
additional disclosures for the interim and annual financial
statements for periods ending after December 15, 2002. The
Company does not anticipate issuing any guarantees which
would be required to be recognized as a liability under
FIN 45 and therefore, the Company does not expect the
adoption of this interpretation to have a material impact on the
Companys financial condition and results of operations.

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest
Entities(FIN 46). FIN 46 gives further
guidance to ARB No. 51, Consolidated Financial
Statements.ARB No. 51 requires companies to
consolidate their financial statements when one company has a
controlling financial interest, which is usually having a
majority of the voting interest. FIN 46 further defines a
controlling financial interest where the majority voting
interest requirement is not met, a variable interest entity, and
if the assets, liabilities and results of activities of the
variable interest entity should be included in the consolidated
statements of the company. FIN 46 is effective for all
arrangements entered into after January 31, 2003. As of
March 31, 2003, the Company had not entered into any such
arrangements.

Item 3:     Quantitative
and Qualitative Disclosures about Market Risk

The Company is exposed to the impact of foreign
currency fluctuations. The Companys exposure to exchange
rates relates primarily to its foreign subsidiaries.
Subsidiaries with material foreign currency exposure are in
Great Britain, the Netherlands, Italy and Brazil. For its
foreign subsidiaries, exchange rates can have an impact on the
U.S. dollar value of their reported earnings and the
intercompany transactions with the subsidiaries.

Approximately 63.7% the Companys revenues
were generated outside the United States for the three months
ended March 31, 2003, the majority of which were in Europe.
In connection with the Companys recent acquisitions and
the increased availability of 3G equipment in Europe, the
Company anticipates continued growth of its international
operations, particularly in Europe, the Middle East and Africa,
in 2003 and beyond. As a result, fluctuations in the value of
foreign currencies against the U.S. dollar may have a
significant impact on the reported results of the Company.
Revenues and expenses denominated in foreign currencies are
translated monthly into United States dollars at the weighted
average exchange rate. Consequently, as the value of the dollar
strengthens or weakens relative to other currencies in the
Companys major markets the resulting translated revenues,
expenses and operating profits become lower or higher,
respectively.

Fluctuations in currency exchange rates also can
have an impact on the U.S. dollar amount of shareholders
equity of the Company. The assets and liabilities of the
Companys non-U.S. subsidiaries are translated into United
States dollars at the exchange rate in effect at March 31,
2003. The resulting translation adjustments are recorded in
shareholders equity as accumulated other comprehensive
loss. The dollar was stronger relative to many of the foreign
currencies at March 31, 2002 compared to March 31,
2003. Consequently, the accumulated other comprehensive loss
component of shareholders equity increased
$0.4 million during the three months ended March 31,
2003. As of March 31, 2003, the total amount of long-

18



---



##### 



term intercompany receivable/payables in non-U.S.
subsidiaries subject to this equity adjustment, using the
exchange rate as of the same date, was approximately
$11.8 million.


The Company is exposed to the impact of foreign
currency fluctuations due to the operations of and short-term
intercompany transactions with its consolidated foreign
subsidiaries. While these intercompany balances are eliminated
in consolidation, exchange rate changes do affect consolidated
earnings. A hypothetical 10% adverse change would result in a
$0.1 million reduction to operating losses generated
outside the United States. This was estimated using a 10%
deterioration factor to the average monthly exchange rates
applied to net income or loss for each of the subsidiaries in
the respective period. Foreign exchange gains and losses
recognized on any transactions are included in the Consolidated
Statements of Operations.

Although currency fluctuations can have an impact
on the Companys reported results and shareholders
equity, such fluctuations generally do not affect the
Companys cash flow or result in actual economic gains or
losses. The Company currently does not hedge any of these risks
in its foreign subsidiaries because: (i) the Companys
Brazilian subsidiary derives revenues and incurs expenses within
a single country, and consequently, does not incur currency
risks in connection with the conduct of its normal operations,
(ii) the British pound sterling, U.S. dollar, and Euro are
relatively stable against each other, (iii) other foreign
operations are minimal, and (iv) the Company does not
believe that hedging transactions are justified by the current
exposure and cost at this time.

Item 4:     Controls
and Procedures

(a) Evaluation of disclosure controls and
procedures

Within 90 days prior to the date of this
report (the Evaluation Date), the Companys President and
Chief Executive Officer and Senior Vice President and Chief
Financial Officer, carried out an evaluation of the
effectiveness of the Companys disclosure controls
and procedures (as defined in the Securities Exchange Act
of 1934 Rules 13a-14(c) and 15(d)-14(c)). Based on that
evaluation, these officers have concluded that as of the
Evaluation Date, the Companys disclosure controls and
procedures were adequate and designed to ensure that material
information relating to the Company and the Companys
consolidated subsidiaries would be made known to them by others
within those entities.

(b) Changes in internal controls

There were no significant changes in the
Companys internal controls or other factors that could
significantly affect the Companys disclosure controls and
procedures subsequent to the Evaluation Date.

19



---



##### 



PART II  OTHER
INFORMATION

Item 1:     Legal
Proceedings

The Company is party to various non-material
legal proceedings and claims incidental to its business.

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



| |        |                                                                                                           
| | ------ | ----------------------------------------------------------------------------------------------------------
| | 99.1  | Written Statement of Chief Executive Officer
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
| | 99.2  | Written Statement of Chief Financial Officer
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

On February 10, 2003, the Company filed a
Current Report on Form 8-K, which reported that the Company
on February 10, 2003 issued a press release announcing its
fourth quarter and year-end financial results for 2002.

20



---



##### 



Signature

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



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

Date: May 14, 2003


21



---



##### 



CERTIFICATIONS

I, C. Thomas Faulders, III, certify that:

1. I have reviewed this quarterly report on
Form 10-Q of LCC International, Inc.;

2. Based on my knowledge, this quarterly
report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial
statements, and other financial information included in this
quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrants other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and
procedures to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the
registrants disclosure controls and procedures as of a
date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation Date;

5. The registrants other certifying
officers and I have disclosed, based on our most recent
evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or
persons performing the equivalent function):

a) all significant deficiencies in the
design or operation of internal controls which could adversely
affect the registrants ability to record, process,
summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that
involves management or other employees who have a significant
role in the registrants internal controls; and

6. The registrants other certifying
officers and I have indicated in this quarterly report whether
or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.

Date: May 14, 2003

/s/ C. THOMAS FAULDERS, III




C. Thomas Faulders, III


Chairman and Chief Executive Officer


22



---



##### 



I, Graham B. Perkins, certify that:

1. I have reviewed this quarterly report on
Form 10-Q of LCC International, Inc.;

2. Based on my knowledge, this quarterly
report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial
statements, and other financial information included in this
quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrants other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and
procedures to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the
registrants disclosure controls and procedures as of a
date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation Date;

5. The registrants other certifying
officers and I have disclosed, based on our most recent
evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or
persons performing the equivalent function):

a) all significant deficiencies in the
design or operation of internal controls which could adversely
affect the registrants ability to record, process,
summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that
involves management or other employees who have a significant
role in the registrants internal controls; and

6. The registrants other certifying
officers and I have indicated in this quarterly report whether
or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.

Date: May 14, 2003

/s/ GRAHAM B. PERKINS




Graham B. Perkins


Senior Vice President, Chief Financial


Officer and Treasurer


23