##### 



United States Securities and Exchange Commission
 Washington, DC 20549
 Form 10-Q/A
 (Amendment No.1)
 (Mark One)
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 For the quarterly period ended September 30, 2004
 Or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
 For the transition period from            to
             .
 Commission File Number: 0-21213
 LCC International, Inc.
  Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
    
    54-1807038
(I.R.S. Employer
Identification Number)7925 Jones Branch Drive, McLean, VA
(Address of Principal Executive
Offices)
    
    22102
(Zip Code)
 Registrants telephone number, including area code: (703) 873-2000
 Not Applicable
  þ o
 þ o
 o o
 
 o o
    *
    
    Due to the fact that the registrant is restating its financial statements for the quarters ended
September 30, 2004 and March 31, 2005 and for the year ended December 31, 2004, the registrant did
not file on a timely basis its Quarterly Report on a Form 10-Q for the quarters ended June 30,
2005, and September 30, 2005.




---



##### 



EXPLANATORY NOTE
(Dollars in thousands)
(Unaudited)
        
    
    Expanded the MD&A captions for operating expense and other income (expense) to include
segment information, so that the reader may reconcile segment profitability in MD&A to the
segment reporting footnote under SFAS 131.
    
    Revised the Statement of Operations to read Cost of
revenue (exclusive of depreciation shown separately below.)
    
    Disclosed in greater detail any events leading to changes in restructuring accruals.
 2




---



##### 



LCC International, Inc and Subsidiaries
 Quarterly Report on Form 10-Q/A
For the quarter ended September 30, 2004
 INDEX
 PageNumberPART I: FINANCIAL INFORMATION
    
    
    4ITEM 1: FINANCIAL STATEMENTS
    
    
    4Condensed
consolidated statements of operations for the three months and nine
months ended September 30, 2003 and 2004 (restated and
unaudited)
    
    
    4Condensed
consolidated balance sheets as of December 31, 2003 and
September 30, 2004 (restated and
unaudited)
    
    
    5Condensed
consolidated statements of cash flows for the nine months ended
September 30, 2003 and 2004 (restated and
unaudited)
    
    
    6Notes to
condensed consolidated financial statements as restated
(unaudited)
    
    
    7ITEM 2:
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    14ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    22ITEM 4: CONTROLS AND PROCEDURES
    
    
    23PART II: OTHER INFORMATION
    
    
    25ITEM
1: Legal
proceedings
    
    
    25ITEM 2: Unregistered sales of equity securities and use of proceeds
    
    
    25ITEM 3: Defaults upon senior securities
    
    
    25ITEM 4: Submission of matters to a vote of security holders
    
    
    25ITEM 5: Other information
    
    
    25ITEM 6:
Exhibits
    
    
    25
 3




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##### 



PART I: FINANCIAL INFORMATION
 Item 1: Financial Statements
 LCC International, Inc. and Subsidiaries
 Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2003
    
    
    2004
    
    
    2003
    
    
    2004(Restated)
    
    
    
    
    
    
    (Restated)REVENUES
    
    $
    29,350
    
    
    $
    50,006
    
    
    $
    64,677
    
    
    $
    147,673COST OF REVENUES (exclusive of depreciation shown separately below)
    
    
    23,756
    
    
    
    40,605
    
    
    
    53,215
    
    
    
    121,341GROSS PROFIT
    
    
    5,594
    
    
    
    9,401
    
    
    
    11,462
    
    
    
    26,332OPERATING (INCOME) EXPENSE:Sales and marketing
    
    
    1,302
    
    
    
    2,072
    
    
    
    4,739
    
    
    
    5,724General and administrative
    
    
    4,118
    
    
    
    5,929
    
    
    
    13,587
    
    
    
    18,762Restructuring charge (recovery)
    
    
    150
    
    
    
    
    
    
    
    (2
    )
    
    
    (924
    )Depreciation and amortization
    
    
    1,338
    
    
    
    728
    
    
    
    2,944
    
    
    
    2,0976,908
    
    
    
    8,729
    
    
    
    21,268
    
    
    
    25,659OPERATING INCOME (LOSS)
    
    
    (1,314
    )
    
    
    672
    
    
    
    (9,806
    )
    
    
    673OTHER INCOME (EXPENSE):Interest income
    
    
    49
    
    
    
    23
    
    
    
    246
    
    
    
    134Interest expense
    
    
    (49
    )
    
    
    (60
    )
    
    
    (98
    )
    
    
    (152
    )Other
    
    
    (137
    )
    
    
    83
    
    
    
    1,232
    
    
    
    604(137
    )
    
    
    46
    
    
    
    1,380
    
    
    
    586INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES
    
    
    (1,451
    )
    
    
    718
    
    
    
    (8,426
    )
    
    
    1,259PROVISION (BENEFIT) FOR INCOME TAXES
    
    
    (426
    )
    
    
    79
    
    
    
    (1,264
    )
    
    
    860NET INCOME (LOSS)
    
    $
    (1,025
    )
    
    $
    639
    
    
    $
    (7,162
    )
    
    $
    399NET INCOME (LOSS) PER SHARE:Basic
    
    $
    (0.05
    )
    
    $
    0.03
    
    
    $
    (0.34
    )
    
    $
    0.02Diluted
    
    $
    (0.05
    )
    
    $
    0.03
    
    
    $
    (0.34
    )
    
    $
    0.02WEIGHTED AVERAGE SHARES USED IN CALCULATION OF NET INCOME (LOSS)
PER SHARE:Basic
    
    
    21,002
    
    
    
    24,411
    
    
    
    20,977
    
    
    
    24,392Diluted
    
    
    21,002
    
    
    
    24,988
    
    
    
    20,977
    
    
    
    25,370
  4




---



##### 



LCC International, Inc. and Subsidiaries
 Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
 December 31,
    
    
    September 30,2003
    
    
    2004(Restated)ASSETS:Current assets:Cash and cash equivalents
    
    $
    28,943
    
    
    $
    18,418Restricted cash
    
    
    1,568
    
    
    
    1,194Short-term investments
    
    
    520
    
    
    
    Receivables, net of allowance for doubtful accounts of $466 and $634 at
December 31, 2003 and September 30, 2004, respectively:Trade accounts receivable
    
    
    27,456
    
    
    
    42,204Unbilled receivables
    
    
    35,007
    
    
    
    39,059Due from related parties and affiliates
    
    
    180
    
    
    
    259Deferred income taxes, net
    
    
    3,547
    
    
    
    3,706Prepaid expenses and other current assets
    
    
    1,726
    
    
    
    1,406Prepaid tax receivable and prepaid taxes
    
    
    662
    
    
    
    696Total current assets
    
    
    99,609
    
    
    
    106,942Property and equipment, net
    
    
    3,818
    
    
    
    4,408Investments in affiliates
    
    
    764
    
    
    
    670Deferred income taxes, net
    
    
    1,407
    
    
    
    683Goodwill
    
    
    11,115
    
    
    
    11,410Other intangibles
    
    
    843
    
    
    
    581Other assets
    
    
    1,035
    
    
    
    1,575$
    118,591
    
    
    $
    126,269LIABILITIES AND SHAREHOLDERS EQUITY:Current liabilities:Line of credit
    
    $
    1,840
    
    
    $
    1,291Accounts payable
    
    
    11,485
    
    
    
    18,775Accrued expenses
    
    
    21,152
    
    
    
    23,495Accrued employee compensation and benefits
    
    
    5,525
    
    
    
    5,124Deferred revenue
    
    
    471
    
    
    
    558Income taxes payable
    
    
    967
    
    
    
    1,078Accrued restructuring current
    
    
    2,903
    
    
    
    1,705Other current liabilities
    
    
    286
    
    
    
    214Total current liabilities
    
    
    44,629
    
    
    
    52,240Accrued restructuring non-current
    
    
    3,432
    
    
    
    2,029Other liabilities
    
    
    762
    
    
    
    752Total liabilities
    
    
    48,823
    
    
    
    55,021Shareholders equity:Preferred stock:10,000 shares authorized; 0 shares issued and outstanding
    
    
    
    
    
    
    Class A common stock, $0.01 par value:70,000 shares authorized; 19,549 and 19,889 shares issued and outstanding at
December 31, 2003 and September 30, 2004, respectively
    
    
    195
    
    
    
    199Class B common stock, $0.01 par value:20,000 shares authorized; 4,638 and 4,538 shares issued and outstanding at
December 31, 2003 and September 30, 2004, respectively
    
    
    46
    
    
    
    45Paid-in capital
    
    
    106,262
    
    
    
    107,229Accumulated deficit
    
    
    (36,602
    )
    
    
    (36,203
    )Note receivable from shareholder
    
    
    (1,557
    )
    
    
    (1,557
    )Subtotal
    
    
    68,344
    
    
    
    69,713Accumulated other comprehensive income  foreign currency translation adjustments
    
    
    1,424
    
    
    
    1,535Total shareholders equity
    
    
    69,768
    
    
    
    71,248$
    118,591
    
    
    $
    126,269
  5




---



##### 



LCC International, Inc. and Subsidiaries
 Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 Nine Months EndedSeptember 30,2003
    
    
    2004(Restated)Cash flows from operating activities:Net income (loss)
    
    $
    (7,162
    )
    
    
    399Adjustments to reconcile net income (loss) to net cash used in operating activities:Depreciation and amortization
    
    
    2,944
    
    
    
    2,097Provision (recovery) for doubtful accounts
    
    
    (2,073
    )
    
    
    136Loss on equity method investment
    
    
    52
    
    
    
    466Restructuring charge (recovery)
    
    
    (2
    )
    
    
    (924
    )Changes in operating assets and liabilities:Trade, unbilled, and other receivables
    
    
    (13,400
    )
    
    
    (19,034
    )Accounts payable and accrued expenses
    
    
    1,564
    
    
    
    9,232Other current assets and liabilities
    
    
    8,170
    
    
    
    (1,119
    )Other non-current assets and liabilities
    
    
    (957
    )
    
    
    (298
    )Net cash used in operating activities
    
    
    (10,864
    )
    
    
    (9,045
    )Cash flows from investing activities:Proceeds from sales of short-term investments
    
    
    (20
    )
    
    
    Purchases of property and equipment
    
    
    (848
    )
    
    
    (2,468
    )Proceeds from disposals of property and equipment
    
    
    56
    
    
    
    30Business acquisitions and investments
    
    
    (651
    )
    
    
    (360
    )Net cash used in investing activities
    
    
    (1,463
    )
    
    
    (2,798
    )Cash flows from financing activities:Borrowings on line of credit
    
    
    6,517
    
    
    
    15,652Payments on line of credit
    
    
    (5,425
    )
    
    
    (16,197
    )Proceeds from issuance of common stock, net
    
    
    58
    
    
    
    72Proceeds/purchases of short term investments
    
    
    
    
    
    
    520Proceeds from exercise of options
    
    
    170
    
    
    
    897Decrease (increase) in restricted cash
    
    
    195
    
    
    
    374Net cash provided by financing activities
    
    
    1,515
    
    
    
    1,318Net decrease in cash and cash equivalents
    
    
    (10,812
    )
    
    
    (10,525
    )Cash and cash equivalents at beginning of period
    
    
    37,507
    
    
    
    28,943Cash and cash equivalents at end of period
    
    $
    26,695
    
    
    
    18,418Supplemental disclosures of cash flow information:Cash paid during the period for:Income taxes
    
    $
    287
    
    
    $
    222Interest
    
    
    39
    
    
    
    40
  6




---



##### 



LCC International, Inc. and Subsidiaries
 Notes to Condensed Consolidated Financial Statements as Restated
(Unaudited)
 (1) Restatement
   Condensed
Consolidated Statement of Operations
 Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2004
    
    
    September 30, 2004Previously
    
    
    
    
    
    
    
    
    
    
    PreviouslyReported
    
    
    Adjustments
    
    
    Restated
    
    
    Reported
    
    
    Adjustments
    
    
    RestatedRevenue
    
    $
    56,345
    
    
    $
    (6,339
    )
    
    $
    50,006
    
    
    $
    154,012
    
    
    $
    (6,339
    )
    
    $
    147,673Cost of revenues
    
    
    46,015
    
    
    
    (5,410
    )
    
    
    40,605
    
    
    
    126,751
    
    
    
    (5,410
    )
    
    
    121,341Gross Profit
    
    
    10,330
    
    
    
    (929
    )
    
    
    9,401
    
    
    
    27,261
    
    
    
    (929
    )
    
    
    26,332Operating expenses:Sales and marketing
    
    
    2,072
    
    
    
    
    
    
    
    2,072
    
    
    
    5,724
    
    
    
    
    
    
    
    5,724General and administrative
    
    
    5,929
    
    
    
    
    
    
    
    5,929
    
    
    
    18,762
    
    
    
    
    
    
    
    18,762Restructuring charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (924
    )
    
    
    
    
    
    
    (924
    )Depreciation and amortization
    
    
    728
    
    
    
    
    
    
    
    728
    
    
    
    2,097
    
    
    
    
    
    
    
    2,097Total operating expenses
    
    
    8,729
    
    
    
    
    
    
    
    8,729
    
    
    
    25,659
    
    
    
    
    
    
    
    25,659Operating income (loss)
    
    
    1,601
    
    
    
    (929
    )
    
    
    672
    
    
    
    1,602
    
    
    
    (929
    )
    
    
    673Other income (expense)Interest income
    
    
    23
    
    
    
    
    
    
    
    23
    
    
    
    134
    
    
    
    
    
    
    
    134Interest expense
    
    
    (60
    )
    
    
    
    
    
    
    (60
    )
    
    
    (152
    )
    
    
    
    
    
    
    (152
    )Other
    
    
    83
    
    
    
    
    
    
    
    83
    
    
    
    604
    
    
    
    
    
    
    
    604Total other (income) expense
    
    
    46
    
    
    
    
    
    
    
    46
    
    
    
    586
    
    
    
    
    
    
    
    586Income (loss) before tax
    
    
    1,647
    
    
    
    (929
    )
    
    
    718
    
    
    
    2,188
    
    
    
    (929
    )
    
    
    1,259Provision (benefit) for taxes
    
    
    426
    
    
    
    (347
    )
    
    
    79
    
    
    
    1,207
    
    
    
    (347
    )
    
    
    860Net income (loss)
    
    $
    1,221
    
    
    $
    (582
    )
    
    $
    639
    
    
    $
    981
    
    
    $
    (582
    )
    
    $
    399
 7




---



##### 



Condensed Consolidated Balance Sheet
 Nine Months EndedSeptember 30, 2004PreviouslyReported
    
    Adjustments
    
    RestatedUnbilled receivables
    
    $
    45,321
    
    
    $
    (6,262
    )
    
    $
    39,059Due from related parties and affiliates
    
    
    251
    
    
    
    8
    
    
    
    259Deferred income taxes, net
    
    
    3,277
    
    
    
    429
    
    
    
    3,706Total current assets
    
    
    112,767
    
    
    
    (5,825
    )
    
    
    106,942Total assets
    
    
    132,094
    
    
    
    (5,825
    )
    
    
    126,269Accounts payable
    
    
    18,751
    
    
    
    24
    
    
    
    18,775Accrued expenses
    
    
    28,828
    
    
    
    (5,333
    )
    
    
    23,495Income taxes payable
    
    
    996
    
    
    
    82
    
    
    
    1,078Total current liabilities
    
    
    57,467
    
    
    
    (5,227
    )
    
    
    52,240Total liabilities
    
    
    60,248
    
    
    
    (5,227
    )
    
    
    55,021Accumulated deficit
    
    
    (35,621
    )
    
    
    (582
    )
    
    
    (36,203
    )Accumulated other comprehensive income
    
    
    1,551
    
    
    
    (16
    )
    
    
    1,535Total liabilities and shareholders equity
    
    $
    132,094
    
    
    $
    (5,825
    )
    
    $
    126,269
 Condensed
Consolidated Statement of Cash Flows
 Nine Months EndedSeptember 30, 2004Previously
    
    
    RestatementReported
    
    

Adjustments
    
    

RestatedCash flows from
operating
activities:Net income
(loss)
    
    $
    981
    
    
    
    (582
    )
    
    $
    399Adjustments to
reconcile net
income (loss) to
net cash used in
operating
activitiesDepreciations and
amortization
    
    
    2,097
    
    
    
    
    
    
    
    2,097Provision
(recovery) for
doubtful
accounts
    
    
    136
    
    
    
    
    
    
    
    136Loss on equity
method
investment
    
    
    466
    
    
    
    
    
    
    
    466Restructuring
charge
(recovery)
    
    
    (924
    )
    
    
    
    
    
    
    (924
    )Changes in
operating assets
and
liabilities:Trade, unbilled and
other receivables
    
    
    (25,288
    )
    
    
    6,254
    
    
    
    (19,034
    )Accounts payable
and accrued
expenses
    
    
    14,541
    
    
    
    (5,309
    )
    
    
    9,232Other current and
non-current assets
and liabilities
    
    
    (772
    )
    
    
    (347
    )
    
    
    (1,119
    )Other non-current
assets and
liabilities
    
    
    (282
    )
    
    
    (16
    )
    
    
    (298)
    )Net cash used in
operating activities
    
    $
    (9,045
    )
    
    
    
    
    
    $
    (9,045
    )
 (2) Description of Operations
   (3) Basis of Presentation
   8




---



##### 



(4) Equity-Based Compensation
 Accounting for Stock Issued to Employees, Accounting for Stock-Based Compensation.
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2003
    
    
    2004
    
    
    2003
    
    
    2004(Restated)
    
    
    
    
    
    
    (Restated)Net income (loss):Net income (loss) as reported
    
    $
    (1,025
    )
    
    $
    639
    
    
    $
    (7,162
    )
    
    $
    399Deduct total stock-based
employee compensation
expense determined under
fair value based method
    
    
    (528
    )
    
    
    (545
    )
    
    
    (1,962
    )
    
    
    (986
    )Pro forma net income (loss)
    
    $
    (1,553
    )
    
    $
    94
    
    
    $
    (9,124
    )
    
    $
    (587
    )Net income (loss) per shareAs reported:Basic
    
    $
    (0.05
    )
    
    $
    0.03
    
    
    $
    (0.34
    )
    
    $
    0.02Diluted
    
    $
    (0.05
    )
    
    $
    0.03
    
    
    $
    (0.34
    )
    
    $
    0.02Pro forma:Basic
    
    $
    (0.07
    )
    
    $
    0.00
    
    
    $
    (0.43
    )
    
    $
    0.02Diluted
    
    $
    (0.07
    )
    
    $
    0.00
    
    
    $
    (0.43
    )
    
    $
    0.02
 (5) Other Comprehensive Income (Loss)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2003
    
    
    2004
    
    
    2003
    
    
    2004(Restated)
    
    
    
    
    
    
    (Restated)Net income (loss)
    
    $
    (1,025
    )
    
    $
    639
    
    
    $
    (7,162
    )
    
    $
    399Other comprehensive income (loss), before tax
    
    
    154
    
    
    
    516
    
    
    
    1,255
    
    
    
    111Income tax provision related to items of comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income (loss), net of tax
    
    
    154
    
    
    
    516
    
    
    
    1,255
    
    
    
    111Comprehensive income (loss)
    
    $
    (871
    )
    
    $
    1,155
    
    
    $
    (5,907
    )
    
    $
    510
 (6) Related Party Transactions
  9




---



##### 



10




---



##### 



(7) Restructuring Charge
    Severance
    
    
    Facilities
    
    
    Total(in thousands)Restructuring payable as of December 31, 2002
    
    $
    152
    
    
    $
    9,571
    
    
    $
    9,723Reversal of excess severance
    
    
    (152
    )
    
    
    
    
    
    
    (152
    )Reversal for reoccupied space
    
    
    
    
    
    
    (385
    )
    
    
    (385
    )Additional charge for reduction of expected sublease income
    
    
    
    
    
    
    535
    
    
    
    535Restructuring charge (recovery)
    
    
    (152
    )
    
    
    150
    
    
    
    (2
    )Charges against the provision:Payments for excess office space, net of sublease income
    
    
    
    
    
    
    (2,971
    )
    
    
    (2,971
    )Leasehold improvements and other assets written-off
    
    
    
    
    
    
    (564
    )
    
    
    (564
    )Other
    
    
    
    
    
    
    149
    
    
    
    149Restructuring payable as of December 31, 2003
    
    
    
    
    
    $
    6,335
    
    
    $
    6,335Reversal for reoccupied space
    
    
    
    
    
    
    (228
    )
    
    
    (228
    )Increases in expected sublease income
    
    
    
    
    
    
    (684
    )
    
    
    (684
    )Reduction of deferred rent for reoccupied space
    
    
    
    
    
    
    (12
    )
    
    
    (12
    )Restructuring charge (recovery)
    
    
    
    
    
    
    (924
    )
    
    
    (924
    )Charges against the provision:Payments for excess office space, net of sublease income
    
    
    
    
    
    
    (1,726
    )
    
    
    (1,726
    )Other
    
    
    
    
    
    
    49
    
    
    
    49Restructuring payable as of September 30, 2004
    
    
    
    
    
    $
    3,734
    
    
    $
    3,734
  December 31,
    
    
    September 30,2003
    
    
    2004Accrued restructuring current
    
    $
    2,903
    
    
    $
    1,705Accrued restructuring
    
    
    3,432
    
    
    
    2,029Accrued restructuring total
    
    $
    6,335
    
    
    $
    3,734
 11




---



##### 



(8) Investments
      (9) Line of Credit
  (10) Commitments and Contingencies
  12




---



##### 



(11) Segment reporting
 Disclosures about Segments of an Enterprise and Related Information
   Americas
    
    
    EMEA
    
    
    Segment Total2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004(Restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Restated)Three Months Ended September 30,Revenues:From external customers
    
    $
    13,488
    
    
    $
    28,946
    
    
    $
    15,143
    
    
    $
    19,494
    
    
    $
    28,631
    
    
    $
    48,440Inter-segment revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    $
    13,488
    
    
    $
    28,946
    
    
    $
    15,143
    
    
    $
    19,494
    
    
    $
    28,631
    
    
    $
    48,440Income (loss) before taxes
    
    
    493
    
    
    
    3,188
    
    
    
    685
    
    
    
    478
    
    
    
    1,178
    
    
    
    3,666Total assets
    
    
    18,319
    
    
    
    44,883
    
    
    
    42,675
    
    
    
    58,010
    
    
    
    60,994
    
    
    
    102,893
 Americas
    
    
    EMEA
    
    
    Segment Total2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004(Restated)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Restated)Nine Months Ended September 30,Revenues:From external customers
    
    $
    27,020
    
    
    $
    88,683
    
    
    $
    35,908
    
    
    $
    54,549
    
    
    $
    62,928
    
    
    $
    143,232Inter-segment revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    $
    27,020
    
    
    $
    88,863
    
    
    $
    35,908
    
    
    $
    54,549
    
    
    $
    62,928
    
    
    $
    143,232Income (loss) before taxes
    
    
    (616
    )
    
    
    9,023
    
    
    
    (598
    )
    
    
    (254
    )
    
    
    (1,214
    )
    
    
    8,769
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2003
    
    
    2004
    
    
    2003
    
    
    2004(Restated)
    
    
    
    
    
    
    (Restated)Revenues:Revenues for reportable segments
    
    $
    28,631
    
    
    $
    48,440
    
    
    $
    62,928
    
    
    $
    143,232Revenues for nonreportable segments
    
    
    719
    
    
    
    1,566
    
    
    
    1,749
    
    
    
    4,441Total consolidated revenues
    
    $
    29,350
    
    
    $
    50,006
    
    
    $
    64,677
    
    
    $
    147,673Assets:Assets for reportable segments
    
    
    
    
    
    
    
    
    
    $
    60,994
    
    
    $
    102,893Assets not attributable to reportable segments:Cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    23,413
    
    
    
    13,811Restricted cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    222Short-term investments
    
    
    
    
    
    
    
    
    
    
    534
    
    
    
    Receivables
    
    
    
    
    
    
    
    
    
    
    916
    
    
    
    2,355Deferred and prepaid taxes
    
    
    
    
    
    
    
    
    
    
    5,672
    
    
    
    5,085Property and equipment
    
    
    
    
    
    
    
    
    
    
    1,151
    
    
    
    868Investments
    
    
    
    
    
    
    
    
    
    
    462
    
    
    
    643Prepaid and other
    
    
    
    
    
    
    
    
    
    
    179
    
    
    
    39232,327
    
    
    
    23,376Total consolidated assets
    
    
    
    
    
    
    
    
    
    $
    93,321
    
    
    $
    126,269
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2003
    
    
    2004
    
    
    2003
    
    
    2004(Restated)
    
    
    
    
    
    
    (Restated)Income (loss) before income taxes for reportable segments
    
    $
    1,178
    
    
    $
    3,666
    
    
    $
    (1,214
    )
    
    $
    8,769Restructuring charge
    
    
    (150
    )
    
    
    
    
    
    
    2
    
    
    
    924Income (loss) before income taxes for non-reportable segments
    
    
    (2,479
    )
    
    
    (2,948
    )
    
    
    (7,214
    )
    
    
    (8,434
    )Income (loss) from operations before income taxes
    
    $
    (1,451
    )
    
    $
    718
    
    
    
    (8,426
    )
    
    $
    1,259
 13




---



##### 



Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations as
Restated
   Restatement
  Overview
   Americas:
    
    Headquartered near Los Angeles,
California, the Americas region
provides the full range of service
offerings to wireless operators and
equipment vendors through a network
of project offices in North America
and South America. In the third
quarter of 2004, Americas generated
approximately 58% of our total
revenue.EMEA:
    
    Based in London, the Europe, Middle
East and Africa region is
responsible for operations in the
U.K., Italy, the Netherlands,
Algeria, Germany, Spain, Greece and
the Middle East. In the third
quarter of 2004, EMEA generated
approximately 39% of our total
revenue.Nonreportable segments:
    
    This includes our operations in
Asia, the Wireless Institute and LCC
Wireline. In the third quarter of
2004, these combined operations
generated approximately 3% of our
total revenues. Our operations in
Asia comprise a marketing office in
Sydney and representative offices in
Beijing, Singapore and New Delhi,
India. We provide training to our
engineers and customers through our
Wireless Institute, which covers the
latest technologies developed and
employed throughout the world.
   14




---



##### 



Trends That Have Affected or May Affect Results of Operations and Financial Condition
  
    
    project related revenues derived from a limited set of customers in each market where we
do business;
    
    our customers have faced difficulties in obtaining financing to fund the development,
expansion and upgrade of their networks;
    
    the acceleration or the delay associated with the introduction of new technologies and services by our customers;
    
    the management and the services composition of our fixed price contracts;
    
    the impact of the percentage of subcontracted work (versus self perform work) on our
large programs and the associated margin degradation; and
    
    increased spending by wireless service providers in the areas of network design,
deployment and optimization.
   15




---



##### 



Results of Operations
  Revenues, Cost of Revenues and Gross Margins
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2003
    
    
    2004
    
    
    2003
    
    
    2004(in thousands)
    
    
    (in thousands)
    
    
    (in thousands)
    
    
    (in thousands)(Restated)
    
    
    
    
    
    
    
    
    
    
    (Restated)Revenues:Americas
    
    $
    13,488
    
    
    
    
    
    
    $
    28,946
    
    
    
    
    
    
    $
    27,020
    
    
    
    
    
    
    $
    88,683EMEA
    
    
    15,143
    
    
    
    
    
    
    
    19,494
    
    
    
    
    
    
    
    35,908
    
    
    
    
    
    
    
    54,549Nonreportable segments
    
    
    719
    
    
    
    
    
    
    
    1,566
    
    
    
    
    
    
    
    1,749
    
    
    
    
    
    
    
    4,441$
    29,350
    
    
    
    
    
    
    $
    50,006
    
    
    
    
    
    
    $
    64,677
    
    
    
    
    
    
    $
    147,673(% of
    
    
    
    
    
    (% of
    
    
    
    
    
    (% of
    
    
    
    
    
    (% ofrevenue)
    
    
    
    
    
    revenue)
    
    
    
    
    
    revenue)
    
    
    
    
    
    revenue)Cost of revenues:Americas
    
    $
    11,575
    
    
    
    85.8
    %
    
    $
    24,243
    
    
    
    83.8
    %
    
    $
    23,334
    
    
    
    86.4
    %
    
    $
    75,139
    
    
    
    84.7
    %EMEA
    
    
    11,922
    
    
    
    78.7
    
    
    
    15,109
    
    
    
    77.5
    
    
    
    28,783
    
    
    
    80.2
    
    
    
    42,943
    
    
    
    78.7Nonreportable segments
    
    
    259
    
    
    
    36.0
    
    
    
    1,253
    
    
    
    80.0
    
    
    
    1,098
    
    
    
    62.8
    
    
    
    3,259
    
    
    
    73.4$
    23,756
    
    
    
    80.9
    %
    
    $
    40,605
    
    
    
    81.2
    %
    
    $
    53,215
    
    
    
    82.3
    %
    
    $
    121,341
    
    
    
    82.2
    %Gross margins:Americas
    
    $
    1,913
    
    
    
    14.2
    %
    
    $
    4,703
    
    
    
    16.2
    %
    
    $
    3,686
    
    
    
    13.6
    %
    
    $
    13,544
    
    
    
    15.3
    %EMEA
    
    
    3,221
    
    
    
    21.3
    
    
    
    4,385
    
    
    
    22.5
    
    
    
    7,125
    
    
    
    19.8
    
    
    
    11,606
    
    
    
    21.3Nonreportable segments
    
    
    460
    
    
    
    64.0
    
    
    
    313
    
    
    
    20.0
    
    
    
    651
    
    
    
    37.2
    
    
    
    1,182
    
    
    
    26.6$
    5,594
    
    
    
    19.1
    %
    
    $
    9,401
    
    
    
    18.8
    %
    
    $
    11,462
    
    
    
    17.7
    %
    
    $
    26,332
    
    
    
    17.8
    %
 16




---



##### 



Americas
     EMEA
     17




---



##### 



Nonreportable Segments
  Operating Expense
 Three Months Ended
    
    
    Nine-Months EndedSeptember 30,
    
    
    September 30,2003
    
    
    2004
    
    
    2003
    
    
    2004(in thousands)
    
    
    (in thousands)Sales and marketingAmericas
    
    $
    852
    
    
    $
    945
    
    
    $
    2,635
    
    
    $
    2,600EMEA
    
    
    204
    
    
    
    905
    
    
    
    1,142
    
    
    
    2,430Nonreportable
segments
    
    
    246
    
    
    
    222
    
    
    
    962
    
    
    
    6941,302
    
    
    
    2,072
    
    
    
    4,739
    
    
    
    5,724Bad debt expense (recovery)Americas
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    100EMEA
    
    
    (816
    )
    
    
    35
    
    
    
    (1704
    )
    
    
    35Nonreportable
segments
    
    
    
    
    
    
    
    
    
    
    (390
    )
    
    
    (816
    )
    
    
    35
    
    
    
    (2,071
    )
    
    
    135General and administrativeAmericas
    
    
    455
    
    
    
    437
    
    
    
    1,374
    
    
    
    1,448EMEA
    
    
    2,052
    
    
    
    2,486
    
    
    
    6,415
    
    
    
    8,021Nonreportable
segments
    
    
    2,427
    
    
    
    2,971
    
    
    
    7,869
    
    
    
    9,1584,934
    
    
    
    5,894
    
    
    
    15,658
    
    
    
    18,627Restructuring chargeAmericas
    
    
    (385
    )
    
    
    
    
    
    
    (460
    )
    
    
    (29
    )EMEA
    
    
    535
    
    
    
    
    
    
    
    458
    
    
    
    (567
    )Nonreportable
segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (328
    )150
    
    
    
    
    
    
    
    (2
    )
    
    
    (924
    )Depreciation and amortizationAmericas
    
    
    97
    
    
    
    128
    
    
    
    286
    
    
    
    363EMEA
    
    
    1,099
    
    
    
    504
    
    
    
    2,186
    
    
    
    1,425Nonreportable
segments
    
    
    142
    
    
    
    96
    
    
    
    472
    
    
    
    3091,338
    
    
    
    728
    
    
    
    2,944
    
    
    
    2,097TotalAmericas
    
    
    1,019
    
    
    
    1,510
    
    
    
    3,858
    
    
    
    4,482EMEA
    
    
    3,074
    
    
    
    3,930
    
    
    
    8,497
    
    
    
    11,344Nonreportable
segments
    
    
    2,815
    
    
    
    3,289
    
    
    
    8,913
    
    
    
    9,833$
    6,908
    
    
    $
    8,729
    
    
    $
    21,268
    
    
    $
    25,659
     18




---



##### 



Other Income and Expense
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    

September
30,2003
    
    
    2004
    
    
    2003
    
    
    2004(in thousands)
    
    
    (in thousands)Interest incomeAmericas
    
    $
    
    
    
    $
    3
    
    
    $
    16
    
    
    $
    22EMEA
    
    
    
    
    
    
    6
    
    
    
    5
    
    
    
    19Nonreportable
segments
    
    
    49
    
    
    
    14
    
    
    
    225
    
    
    
    9349
    
    
    
    23
    
    
    
    246
    
    
    
    134Interest expenseAmericas
    
    
    
    
    
    
    (2
    )
    
    
    (1
    )
    
    
    (3
    )EMEA
    
    
    (49
    )
    
    
    (54
    )
    
    
    (97
    )
    
    
    (144
    )Nonreportable
segments
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (5
    )(49
    )
    
    
    (60
    )
    
    
    (98
    )
    
    
    (152
    )Gain (loss) on equity investmentAmericas
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    EMEA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Nonreportable
segments
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    766
    
    
    
    
    
    
    
    1,000
    
    
    
    766Impairment of assetsAmericas
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    EMEA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Nonreportable
segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (181
    )
    
    
    
    
    
    
    
    
    
    
    
    (181
    )OtherAmericas
    
    
    (16
    )
    
    
    (6
    )
    
    
    1
    
    
    
    (29
    )EMEA
    
    
    52
    
    
    
    71
    
    
    
    408
    
    
    
    176Nonreportable
segments
    
    
    (173
    )
    
    
    18
    
    
    
    (177
    )
    
    
    (128
    )(137
    )
    
    
    83
    
    
    
    232
    
    
    
    19TotalAmericas
    
    
    (16
    )
    
    
    (5
    )
    
    
    16
    
    
    
    (10
    )EMEA
    
    
    3
    
    
    
    23
    
    
    
    316
    
    
    
    51Nonreportable
segments
    
    
    (124
    )
    
    
    28
    
    
    
    1,048
    
    
    
    545$
    (137
    )
    
    $
    46
    
    
    $
    1,380
    
    
    $
    586
    Income (Loss) Before Taxes
 Three Months Ended
    
    
    Nine-Months EndedSeptember 30,
    
    
    September 30,2003
    
    
    2004
    
    
    2003
    
    
    2004Segment Income Before TaxesAmericas
    
    $
    493
    
    
    $
    3,188
    
    
    $
    (616
    )
    
    $
    9,023EMEA
    
    
    685
    
    
    
    478
    
    
    
    (598
    )
    
    
    (254
    )Nonreportable
segments
    
    
    (2,479
    )
    
    
    (2,948
    )
    
    
    (7,214
    )
    
    
    (8,434
    )(1,301
    )
    
    
    718
    
    
    
    (8,428
    )
    
    
    335Restructuring Charge (Recovery)Americas
    
    
    (385
    )
    
    
    
    
    
    
    (460
    )
    
    
    (29
    )EMEA
    
    
    535
    
    
    
    
    
    
    
    458
    
    
    
    (567
    )Nonreportable
segments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (328
    )150
    
    
    
    
    
    
    
    (2
    )
    
    
    (924
    )Income (Loss) Before TaxesAmericas
    
    
    878
    
    
    
    3,188
    
    
    
    (156
    )
    
    
    9,052EMEA
    
    
    150
    
    
    
    478
    
    
    
    (1,056
    )
    
    
    313Nonreportable
segments
    
    
    (2,479
    )
    
    
    (2,948
    )
    
    
    (7,214
    )
    
    
    (8,106
    )$
    (1,451
    )
    
    $
    718
    
    
    $
    (8,426
    )
    
    $
    1,259
 19




---



##### 



Tax Benefit or (Expense)
  Net Income (Loss)
   Liquidity and Capital Resources
  Sources and Uses of Cash
 Nine Months EndedSeptember 30,2003
    
    
    2004(in thousands)Net cash used in operating activities
    
    $
    (10,864
    )
    
    $
    (9,045
    )Net cash used in investing activities
    
    
    (1,463
    )
    
    
    (2,798
    )Net cash provided by (used in) financing activities
    
    
    1,515
    
    
    
    1,318Net decrease in cash and cash equivalents
    
    $
    (10,812
    )
    
    $
    (10,525
    )
   20




---



##### 



Cash Requirements
 December 31, 2003
    
    
    September 30, 2004(thousands)Cash and cash equivalents
    
    $
    28,943
    
    
    $
    18,418Restricted cash
    
    
    1,568
    
    
    
    1,194Short-term investments
    
    
    520
    
    
    
    Total cash and short-term investments
    
    $
    31,031
    
    
    $
    19,612Line of credit
    
    $
    1,840
    
    
    $
    1,291Working capital
    
    $
    54,980
    
    
    $
    54,702
    Critical Accounting Policies
 Our critical accounting policies are as follows:
 
    
    revenue recognition;
    
    allowance for doubtful accounts;
    
    accounting for income taxes; and
    
    restructuring charge.
 Revenue recognition
  21




---



##### 



Allowance for doubtful accounts
  Accounting for income taxes
   Restructuring charge
  Item 3: Quantitative and Qualitative Disclosures about Market Risk
   22




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Item 4: Controls and Procedures (as restated)
   23




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
    
    We have instituted a requirement that Company personnel responsible for preparing an
estimate of the percentage-of-completion of the Companys fixed price contracts for
financial reporting purposes confirm in writing to the Chief Financial Officer on a
monthly basis that such personnel has confirmed the accuracy of such estimate with the
project managers with firsthand knowledge of the performance status of the contracts.
    
    We have reassigned responsibility within the accounting department for preparation
and review of the calculation of the percentage of completion for large fixed price
contracts. The person to whom the responsibility has now been assigned is more
experienced in accounting for large fixed price contracts. This person will be
supervised by the new VP Finance for the Americas who will review the calculations
monthly with the preparer and with the project manager responsible for the project.
    
    We have consolidated all contract administration functions under the Chief Financial
Officer.
    
    We have increased the required scrutiny of revenue and cost recognition calculations
made with respect to all customer contracts. Monthly contract reviews for the Americas
region will be attended by the CEO, the CFO and the senior executive responsible for the
Americas. More detailed contract reporting is being developed which will allow for more
detailed review.
    
    During the second quarter of 2005, we realigned the reporting relationships of all
regional financial management such that they now report directly to the Chief Financial
Officer.
  24




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PART II: OTHER INFORMATION
 Item 1: Legal Proceedings
  Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
  Item 3: Defaults Upon Senior Securities
  Item 4: Submission of Matters to a Vote of Security Holders
  Item 5: Other Information
  Item 6: Exhibits
 3.1
    
    
    
    
    Restated Certificate of Incorporation of the LCC
International, Inc. (incorporated by reference to
exhibit 3.1 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration
No. 333-6067, filed with the SEC on September 20,
1996).3.2
    
    
    
    
    Amended and Restated Bylaws of the Company
(incorporated by reference to Exhibit 3.2 to
Amendment No. 2 to the Companys Registration
Statement on Form S-1, Registration No. 333-6067,
filed with the SEC on September 20, 1996).4.1
    
    
    
    
    Form of Class A and Class B Common Stock
certificates (incorporated by reference to Exhibit
4.1 to Amendment No. 2 to the Companys
Registration Statement on Form S-1, Registration
No. 333-6067, filed with the SEC on September 20,
1996).10.35
    
    
    
    
    Form of Terms and Conditions and Option Grant
Letter under the LLC International, Inc. Amended
and Restated Equity Incentive Plan (incorporated by reference to
Exhibit 10.35 to the Companys Form 10-Q, filed with the SEC on
November 12, 2004).11
    
    
    
    
    Calculation of Net Income Per Share31.1
    
    
    
    
    Certification of Chief Executive Officer pursuant
to Exchange Act Rules 13a-14(a)/15d-14(a), as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    
    
    
    Certification of Chief Financial Officer pursuant
to Exchange Act Rules 13a-14(a)/ 15d-14(a), as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    
    
    
    Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    
    
    Certification of Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
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Signature
  LCC International, Inc. and Subsidiaries/s/ CHARLES R. WALDRONCharles R. WaldronSenior Vice President, Chief FinancialOfficer and Treasurer(Principal Financial Officer andDate:
November 23, 2005
    
    Principal Accounting Officer)
 26