##### Table of Contents






United States Securities and Exchange
Commission

Washington, DC 20549




---

Form 10-Q

(Mark One)

|     |  |                                                                                                                                                                     
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|[X]  |  | Quarterly report pursuant to Section 13
    or 15(d) of the Securities
    Exchange Act of 1934
    For the quarterly period ended September 30, 2002               
|     |  | or                                                                                                                                                                  
|[  ] |  | Transition Report Pursuant to Section 13
    or 15(d) of the Securities
    Exchange Act of 1934
    For the transition period
    from             to             .

Commission file number: 0-21213


LCC International, Inc.

(Exact name of registrant as specified in its
charter)




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|                                         |  |                                     
|---------------------------------------- |  | ------------------------------------
|Delaware                                 |  | 54-1807038                          
|(State of Incorporation)                 |  | (IRS Employer Identification Number)
|                                        
|7925 Jones Branch Drive, McLean, VA      |  | 22102                               
|(Address of principal executive offices) |  | (Zip Code)                          

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

Not Applicable




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

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days.

Yes X          No

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

As of October 31, 2002, the registrant had
outstanding 14,622,767 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).









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TABLE OF CONTENTS



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



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##### Table of Contents



LCC International, Inc. and
Subsidiaries

Quarterly Report on Form 10-Q

For the quarter ended September 30,
2002


INDEX

|         |  |                                                                                                                                      |  |        |    | 
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  | ------ | -- | 
|         |  |                                                                                                                                      |  | Page  
|         |  |                                                                                                                                      |  | Number
|         |  |                                                                                                                                      |  |       
|PART I:  |  | FINANCIAL INFORMATION                                                                                                                |  |        |    | 
|ITEM 1:  |  | FINANCIAL STATEMENTS                                                                                                                 |  |        |    | 
|         |  | Condensed consolidated statements of operations
    for the three and nine months ended September 30, 2001 and
    2002, (unaudited) |  |        | 3  | 
|         |  | Condensed consolidated balance sheets as of
    December 31, 2001 (audited) and September 30,
    2002 (unaudited)                   |  |        | 4  | 
|         |  | Condensed consolidated statements of cash flows
    for the nine months ended September 30, 2001 and 2002
    (unaudited)            |  |        | 5  | 
|         |  | Notes to condensed consolidated financial
    statements                                                                             |  |        | 6  | 
|ITEM 2:  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                            |  |        | 12 | 
|ITEM 3:  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
    MARKET RISK                                                                        |  |        | 22 | 
|ITEM 4:  |  | CONTROLS AND PROCEDURES                                                                                                              |  |        | 23 | 
|PART II: |  | OTHER INFORMATION                                                                                                                    |  |        |    | 
|ITEM 1:  |  | Legal Proceedings                                                                                                                    |  |        | 24 | 
|ITEM 2:  |  | Changes in Securities                                                                                                                |  |        | 24 | 
|ITEM 3:  |  | Defaults Upon Senior Securities                                                                                                      |  |        | 24 | 
|ITEM 4:  |  | Submission of Matters to a Vote of Security
    Holders                                                                              |  |        | 24 | 
|ITEM 5:  |  | Other Information                                                                                                                    |  |        | 24 | 
|ITEM 6:  |  | Exhibits and Reports on Form 8K                                                                                                      |  |        | 24 | 

2



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##### Table of Contents






PART I. FINANCIAL INFORMATION






ITEM 1. Financial Statements


LCC International, Inc. and
Subsidiaries






Condensed Consolidated Statements of
Operations


(In thousands, except per share
data)


(Unaudited)


|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |        |  
|----------------------------------------------------------------------------------- | ----------------------------------------------------------- | ------------------ | ------ | ----------------- |  | ---- | ------ | ------ | - | - | ------- | ------ | - | - | ------- | ------ | -
|                                                                                    |                                                             |                    |        |                  
|                                                                                    |                                                             | Three Months Ended |        | Nine Months Ended
|                                                                                    |                                                             | September 30,      |        | September 30,    
|                                                                                    |                                                             |                    |        |                  
|                                                                                    |                                                             | 2001               |        | 2002              |  | 2001 |        | 2002  
|                                                                                    |                                                             |                    |        |                   |  |      |        |       
|REVENUES                                                                            |                                                             | $                  | 34,347 |                   |  | $    | 17,425 |        |   | $ | 106,534 |        |   | $ | 47,042  |       
|COST OF REVENUES                                                                    |                                                             |                    | 26,099 |                   |  |      | 15,189 |        |   |   | 83,500  |        |   |   | 42,183  |       
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|GROSS PROFIT                                                                        |                                                             |                    | 8,248  |                   |  |      | 2,236  |        |   |   | 23,034  |        |   |   | 4,859   |       
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|OPERATING (INCOME) EXPENSE:                                                         |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|                                                                                    | Sales and marketing                                         |                    |        | 1,758             |  |      |        | 2,186  |   |   |         | 5,376  |   |   |         | 6,432  |  
|                                                                                    | General and administrative                                  |                    |        | 5,170             |  |      |        | 7,941  |   |   |         | 11,806 |   |   |         | 15,130 |  
|                                                                                    | Restructuring charge                                        |                    |        |                  |  |      |        |       |   |   |         |       |   |   |         | 10,030 |  
|                                                                                    | Gain on sale of tower portfolio and
    administration, net |                    |        |                  |  |      |        |       |   |   |         | (2,323 | ) |   |         | (2,000 | )
|                                                                                    | Depreciation and amortization                               |                    |        | 752               |  |      |        | 610    |   |   |         | 2,217  |   |   |         | 2,057  |  
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|                                                                                    |                                                             |                    | 7,680  |                   |  |      | 10,737 |        |   |   | 17,076  |        |   |   | 31,649  |       
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|OPERATING INCOME (LOSS)                                                             |                                                             |                    | 568    |                   |  |      | (8,501 | )      |   |   | 5,958   |        |   |   | (26,790 | )     
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|OTHER INCOME (EXPENSE):                                                             |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|                                                                                    | Interest income                                             |                    |        | 418               |  |      |        | 147    |   |   |         | 1,504  |   |   |         | 657    |  
|                                                                                    | Other                                                       |                    |        | 22,372            |  |      |        | 238    |   |   |         | 22,184 |   |   |         | (4,961 | )
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|                                                                                    |                                                             |                    | 22,790 |                   |  |      | 385    |        |   |   | 23,688  |        |   |   | (4,304  | )     
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|INCOME (LOSS) FROM OPERATIONS BEFORE INCOME
    TAXES                               |                                                             |                    | 23,358 |                   |  |      | (8,116 | )      |   |   | 29,646  |        |   |   | (31,094 | )     
|PROVISION (BENEFIT) FOR INCOME TAXES                                                |                                                             |                    | 9,343  |                   |  |      | (1,100 | )      |   |   | 11,858  |        |   |   | (7,773  | )     
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|NET INCOME (LOSS)                                                                   |                                                             | $                  | 14,015 |                   |  | $    | (7,016 | )      |   | $ | 17,788  |        |   | $ | (23,321 | )     
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|NET INCOME (LOSS) PER SHARE:                                                        |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|                                                                                    | Basic                                                       |                    | $      | 0.68              |  |      | $      | (0.34  | ) |   | $       | 0.87   |   |   | $       | (1.12  | )
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|                                                                                    | Diluted                                                     |                    | $      | 0.68              |  |      | $      | (0.34  | ) |   | $       | 0.85   |   |   | $       | (1.12  | )
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|WEIGHTED AVERAGE SHARES USED IN
    CALCULATION OF NET
    INCOME (LOSS) PER SHARE: |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|                                                                                    | Basic                                                       |                    |        | 20,552            |  |      |        | 20,900 |   |   |         | 20,491 |   |   |         | 20,889 |  
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       
|                                                                                    | Diluted                                                     |                    |        | 20,654            |  |      |        | 20,900 |   |   |         | 20,873 |   |   |         | 20,889 |  
|                                                                                    |                                                             |                    |        |                   |  |      |        |        |   |   |         |        |   |   |         |       

See accompanying notes to condensed consolidated
financial statements.

3



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##### Table of Contents



LCC International, Inc. and
Subsidiaries






Condensed Consolidated Balance
Sheets


(In thousands)


|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |        |        | 
|----------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------------- | ------ | - | ------- | ------ | ------ | 
|                                                                                    |                                                                                                                                             | December 31,               |         | September 30,
|                                                                                    |                                                                                                                                             | 2001                       |         | 2002         
|                                                                                    |                                                                                                                                             |                            |         |              
|                                                                                    |                                                                                                                                             | (Audited)                  |         | (Unaudited)  
|ASSETS:                                                                             |                                                                                                                                             |                            |         |               |        |   |         |       
|Current assets:                                                                     |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    | Cash and cash equivalents                                                                                                                   |                            | $       | 52,658        |        |   | $       | 38,641 |       
|                                                                                    | Short-term investments                                                                                                                      |                            |         | 484           |        |   |         | 511    |       
|                                                                                    | Receivables, net of allowance for doubtful
    accounts of $2,048 and $2,782 at December 31, 2001 and
    September 30, 2002, respectively: |                            |         |               |        |   |         |        |       
|                                                                                    |                                                                                                                                             | Accounts receivable        |         |               | 27,367 |   |         |        | 10,059 | 
|                                                                                    |                                                                                                                                             | Unbilled receivables       |         |               | 10,240 |   |         |        | 10,873 | 
|                                                                                    | Deferred income taxes, net                                                                                                                  |                            |         | 2,724         |        |   |         | 9,707  |       
|                                                                                    | Prepaid expenses and other current assets                                                                                                   |                            |         | 1,607         |        |   |         | 1,170  |       
|                                                                                    | Income tax receivable and prepaid taxes                                                                                                     |                            |         | 2,632         |        |   |         | 6,026  |       
|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    |                                                                                                                                             | Total current assets       |         |               | 97,712 |   |         |        | 76,987 | 
|Property and equipment, net                                                         |                                                                                                                                             |                            | 5,730   |               |        |   | 3,783   |       
|Investments                                                                         |                                                                                                                                             |                            | 5,162   |               |        |   |        |       
|Deferred income taxes, net                                                          |                                                                                                                                             |                            | 2,038   |               |        |   | 786     |       
|Goodwill and other intangibles                                                      |                                                                                                                                             |                            | 637     |               |        |   | 11,211  |       
|Other assets                                                                        |                                                                                                                                             |                            | 952     |               |        |   | 1,006   |       
|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    |                                                                                                                                             | $                          | 112,231 |               |        | $ | 93,773  |       
|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       
|LIABILITIES AND SHAREHOLDERS
    EQUITY:                                           |                                                                                                                                             |                            |         |               |        |   |         |       
|Current liabilities:                                                                |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    | Accounts payable                                                                                                                            |                            | $       | 3,840         |        |   | $       | 3,352  |       
|                                                                                    | Accrued expenses                                                                                                                            |                            |         | 5,791         |        |   |         | 7,745  |       
|                                                                                    | Accrued employee compensation and benefits                                                                                                  |                            |         | 10,323        |        |   |         | 5,881  |       
|                                                                                    | Deferred revenue                                                                                                                            |                            |         | 640           |        |   |         | 166    |       
|                                                                                    | Income taxes payable                                                                                                                        |                            |         | 2,788         |        |   |         | 2,663  |       
|                                                                                    | Other current liabilities                                                                                                                   |                            |         | 2,196         |        |   |         | 3,119  |       
|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    |                                                                                                                                             | Total current liabilities  |         |               | 25,578 |   |         |        | 22,926 | 
|Other liabilities                                                                   |                                                                                                                                             |                            | 849     |               |        |   | 5,062   |       
|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    |                                                                                                                                             | Total liabilities          |         |               | 26,427 |   |         |        | 27,988 | 
|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       
|Preferred stock:                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    | 10,000 shares authorized; 0 shares issued and
    outstanding                                                                               |                            |         |              |        |   |         |       |       
|Class A common stock, $0.01 par value:                                              |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    | 70,000 shares authorized; 12,271 and 14,619
    shares issued and outstanding at December 31, 2001 and
    September 30, 2002, respectively |                            |         | 123           |        |   |         | 146    |       
|Class B common stock, $0.01 par value:                                              |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    | 20,000 shares authorized; 8,407 and 6,319 shares
    issued and outstanding at December 31, 2001 and
    September 30, 2002, respectively   |                            |         | 84            |        |   |         | 63     |       
|Paid-in capital                                                                     |                                                                                                                                             |                            | 92,428  |               |        |   | 94,089  |       
|Accumulated deficit                                                                 |                                                                                                                                             |                            | (1,409  | )             |        |   | (24,730 | )     
|Notes receivable from shareholders                                                  |                                                                                                                                             |                            | (2,325  | )             |        |   | (1,625  | )     
|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    | Subtotal                                                                                                                                    |                            |         | 88,901        |        |   |         | 67,943 |       
|Accumulated other comprehensive loss 
    foreign currency translation adjustments |                                                                                                                                             |                            | (3,097  | )             |        |   | (2,158  | )     
|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    |                                                                                                                                             | Total shareholders equity |         |               | 85,804 |   |         |        | 65,785 | 
|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       
|                                                                                    |                                                                                                                                             | $                          | 112,231 |               |        | $ | 93,773  |       
|                                                                                    |                                                                                                                                             |                            |         |               |        |   |         |       

See accompanying notes to condensed consolidated
financial statements.

4



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##### Table of Contents



LCC International, Inc. and
Subsidiaries






Condensed Consolidated Statements of Cash
Flows


(In thousands)


(Unaudited)


|                                                        |                                                                                                            |                                   |                                                 |                                          |   |         |         |         |   |        |        |  
|------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | --------------------------------- | ----------------------------------------------- | ---------------------------------------- | - | ------- | ------- | ------- | - | ------ | ------ | -
|                                                        |                                                                                                            |                                  
|                                                        |                                                                                                            | Nine Months Ended                
|                                                        |                                                                                                            | September 30,                    
|                                                        |                                                                                                            |                                  
|                                                        |                                                                                                            | 2001                              |                                                 | 2002                                    
|                                                        |                                                                                                            |                                   |                                                 |                                         
|Cash flows from operating activities:                   |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|                                                        | Net income (loss)                                                                                          |                                   | $                                               | 17,788                                   |   |         | $       | (23,321 | )
|                                                        | Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating
    activities: |                                   |                                                 |                                          |   |         |         |         |  
|                                                        |                                                                                                            |                                   | Depreciation and amortization                   |                                          |   | 2,217   |         |         |   | 2,057  |       
|                                                        |                                                                                                            |                                   | Provision for doubtful accounts                 |                                          |   | 1,964   |         |         |   | 3,780  |       
|                                                        |                                                                                                            |                                   | Realized gain on sale of investments and assets |                                          |   | (22,395 | )       |         |   |       |       
|                                                        |                                                                                                            |                                   | Impairment of assets                            |                                          |   |        |         |         |   | 5,140  |       
|                                                        |                                                                                                            |                                   | Restructuring charge                            |                                          |   |        |         |         |   | 10,030 |       
|                                                        |                                                                                                            |                                   | Gain on sale of tower portfolio                 |                                          |   | (2,323  | )       |         |   | (2,000 | )     
|                                                        |                                                                                                            |                                   | Changes in operating assets and liabilities:    |                                          |   |         |         |         |   |        |       
|                                                        |                                                                                                            |                                   |                                                 | Trade, unbilled, and other receivables   |   |         | 2,756   |         |   |        | 16,084 |  
|                                                        |                                                                                                            |                                   |                                                 | Accounts payable and accrued expenses    |   |         | (5,862  | )       |   |        | (6,251 | )
|                                                        |                                                                                                            |                                   |                                                 | Other current assets and liabilities     |   |         | 9,308   |         |   |        | (9,314 | )
|                                                        |                                                                                                            |                                   |                                                 | Other non-current assets and liabilities |   |         | (1,909  | )       |   |        | (1,004 | )
|                                                        |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|Net cash provided by (used in) operating
    activities |                                                                                                            |                                   | 1,544                                           |                                          |   |         | (4,799  | )      
|                                                        |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|Cash flows from investing activities:                   |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|                                                        | Purchases of short term investments, net                                                                   |                                   |                                                 | (27,242                                  | ) |         |         | (27     | )
|                                                        | Purchases of property and equipment                                                                        |                                   |                                                 | (2,523                                   | ) |         |         | (1,040  | )
|                                                        | Proceeds from sale of property and equipment                                                               |                                   |                                                 | 29                                       |   |         |         | 31      |  
|                                                        | Investments                                                                                                |                                   |                                                 | (1,755                                   | ) |         |         |        |  
|                                                        | Proceeds from sale of investments and assets                                                               |                                   |                                                 | 22,624                                   |   |         |         |        |  
|                                                        | Business acquisitions                                                                                      |                                   |                                                 |                                         |   |         |         | (9,021  | )
|                                                        |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|Net cash used in investing activities                   |                                                                                                            |                                   | (8,867                                          | )                                        |   |         | (10,057 | )      
|                                                        |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|Cash flows from financing activities:                   |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|                                                        | Proceeds from issuance of common stock, net                                                                |                                   |                                                 | 420                                      |   |         |         | 109     |  
|                                                        | Proceeds from exercise of options                                                                          |                                   |                                                 | 371                                      |   |         |         | 30      |  
|                                                        | Repayment of loan from shareholder                                                                         |                                   |                                                 |                                         |   |         |         | 700     |  
|                                                        |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|Net cash provided by financing activities               |                                                                                                            |                                   | 791                                             |                                          |   |         | 839     |        
|                                                        |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|Net decrease in cash and cash equivalents               |                                                                                                            |                                   | (6,532                                          | )                                        |   |         | (14,017 | )      
|Cash and cash equivalents at beginning of period        |                                                                                                            |                                   | 22,271                                          |                                          |   |         | 52,658  |        
|                                                        |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|Cash and cash equivalents at end of period              |                                                                                                            | $                                 | 15,739                                          |                                          |   | $       | 38,641  |        
|                                                        |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|Supplemental disclosures of cash flow information:      |                                                                                                            |                                   |                                                 |                                          |   |         |         |        
|                                                        |                                                                                                            | Cash paid during the quarter for: |                                                 |                                          |   |         |         |         |   |       
|                                                        |                                                                                                            |                                   | Income taxes                                    |                                          | $ | 3,943   |         |         | $ | 1,545  |       

See accompanying notes to condensed consolidated
financial statements.

5



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##### Table of Contents



LCC International, Inc. and
Subsidiaries






Notes to Condensed Consolidated Financial
Statements


(Unaudited)


Note 1:  Description of
Operations

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. Telcom Ventures owns the Class B
Common Stock shares outstanding, which have ten-to-one voting
rights over the Class A Common Stock shares and therefore
represent approximately 81% of the voting control.

The Company operates in a highly competitive
environment subject to rapid technological change and emergence
of new technologies. Historically, the key drivers of growth in
the Companys wireless services business have been
(1) the issuance of new or additional licenses to wireless
operators; (2) the introduction of new services or
technologies; (3) increases in the number of subscribers
served by wireless operators; and (4) the increasing
complexity of wireless systems in operation. Although the
Company believes that its services are transferable to emerging
technologies, rapid changes in technology could have an adverse
financial impact on the Company.

Note 2:  Basis of
Presentation

The condensed consolidated financial statements
of the Company included herein have been prepared by the Company
without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission and reflect all adjustments
which are, in the opinion of management, necessary for a fair
presentation of the results for the interim period.

Certain information and footnote disclosure
normally included in the consolidated financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or
omitted. The interim financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2001.
Operating results for the interim periods are not necessarily
indicative of results for an entire year.

Certain reclassifications of prior year amounts
have been made to conform to the current year presentation.

Note 3:  Recent Accounting
Pronouncements

On January 1, 2002, the Company adopted FASB
SFAS No. 142, Goodwill and Other Intangible Assets.
SFAS No. 142 requires that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead
be tested for impairment at least annually in accordance with
the provisions of SFAS No. 142. SFAS No. 142 also
requires that intangible assets with estimable useful lives be
amortized over their estimated useful lives to their residual
values, and be reviewed for impairment in accordance with SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. The adoption of SFAS No. 142 did not
have a significant impact on the Companys financial
condition and results of operations.

On January 1, 2002, the Company adopted FASB
SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assetswhich supersedes FASB SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of, and APB Opinion
No. 30, Reporting the Results of Operations 
Reporting Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual, and Infrequently Occurring Events and
Transactions. The statement addresses the accounting and
reporting of a disposal of a segment and resolves significant
implementation issues related to SFAS No. 121. The adoption
of SFAS No. 144 did not have a significant impact on the
Companys financial condition and results of operations.

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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 Company plans to adopt
SFAS No. 146 in January 2003 and is evaluating the impact
of the new standard.

Note 4:  Other Comprehensive Income
(Loss)

Comprehensive income (loss) is defined as
net income (loss) plus the change in equity of a business
enterprise during a period from transactions and other events
and circumstances from non-owner sources. Other comprehensive
income (loss) refers to revenues, expenses, gains and
losses that under accounting principles generally accepted in
the United States of America are included in comprehensive
income (loss), but excluded from net income (loss). Other
comprehensive income (loss) consists solely of foreign
currency translation adjustments at September 30, 2001 and
2002. Comprehensive income (loss) for the three and nine
months ended September 30, 2001 and 2002 is as follows (in
thousands).

|                                                                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |         |  
|---------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------- | -
|                                                                                   |  |                    |        |                  
|                                                                                   |  | Three Months Ended |        | Nine Months Ended
|                                                                                   |  | September 30,      |        | September 30,    
|                                                                                   |  |                    |        |                  
|                                                                                   |  | 2001               |        | 2002              |  | 2001 |        | 2002
|                                                                                   |  |                    |        |                   |  |      |        |     
|Net income (loss)                                                                  |  | $                  | 14,015 |                   |  | $    | (7,016 | )    |  | $ | 17,788 |   |  | $ | (23,321 | )
|                                                                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |         |  
|Other comprehensive income (loss), before tax                                      |  |                    | 30     |                   |  |      | 151    |      |  |   | (840   | ) |  |   | 1,252   |  
|Income tax provision (benefit) related to
    items of comprehensive income (loss) |  |                    | 12     |                   |  |      | (6     | )    |  |   | (336   | ) |  |   | 313     |  
|                                                                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |         |  
|Other comprehensive income (loss), net of tax                                      |  |                    | 18     |                   |  |      | 157    |      |  |   | (504   | ) |  |   | 939     |  
|                                                                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |         |  
|Comprehensive income (loss)                                                        |  | $                  | 14,033 |                   |  | $    | (6,859 | )    |  | $ | 17,284 |   |  | $ | (22,382 | )
|                                                                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |         |  

Note 5:  Accounts
Receivable

|                                |                                |              |        |               |  |   |        |    | 
|------------------------------- | ------------------------------ | ------------ | ------ | ------------- |  | - | ------ | -- | 
|                                |                                | December 31, |        | September 30,
|                                |                                | 2001         |        | 2002         
|                                |                                |              |        |              
|Trade accounts receivable       |                                | $            | 28,315 |               |  | $ | 12,772 |   
|Due from related parties:       |                                |              |        |               |  |   |        |   
|                                | Telcom Ventures                |              |        | 437           |  |   |        |   | 
|                                | Employee and other receivables |              |        | 663           |  |   |        | 69 | 
|Allowance for doubtful accounts |                                |              | (2,048 | )             |  |   | (2,782 | ) 
|                                |                                |              |        |               |  |   |        |   
|                                |                                | $            | 27,367 |               |  | $ | 10,059 |   
|                                |                                |              |        |               |  |   |        |   

The Companys ten largest customers
constituted 83.3% and 58.1% of the Companys net
receivables balance as of December 31, 2001 and
September 30, 2002, respectively. The Company frequently
performs work 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 considers three of the
Companys ten largest customers to be development stage
customers. These customers, XM Satellite, Orascom Telecom in
Algeria, and NorthCoast Communications, had outstanding
receivable balances net of the allowance for doubtful accounts,
in the aggregate at December 31, 2001 and
September 30, 2002 of $20.8 million and
$1.2 million, respectively.

Note 6:  Restructuring
Charge

During the second quarter of 2002, the Company
adopted a restructuring plan and recorded a restructuring charge
of $10.0 million. The restructuring plan was in response to
the low utilization of professional employees caused by the
recent 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.

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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 $9.0 million, which included
$1.5 million in written-off leasehold improvements related
to the excess space. The Company has paid out approximately
$2.2 million and written-off leasehold improvements
aggregating $1.5 million as of September 30, 2002. The
Company anticipates $2.9 million of the restructuring
charge to be paid out in the next twelve months and therefore,
it is included in other current liabilities. The balance of the
restructuring charge of $3.4 million is recorded in other
liabilities, as a long-term liability on the accompanying
condensed consolidated balance sheet.


Note 7:  Impairment of
Assets

In June 2000, the Company acquired 18.2% of
Mobilocity, Inc. (Mobilocity), which had been
diluted to less than 3 percent as Mobilocity continued to
raise additional capital. During the second quarter of 2002, the
Company evaluated its investment in Mobilocity to determine if
an impairment loss had occurred. Mobilocity has implemented a
voluntary liquidation plan, leading the Company to determine the
investment is likely not recoverable and to record a
$0.5 million impairment charge.

The Company invested a total of $4.6 million
($2.9 million in August 2000 and $1.7 million in
February 2001) to maintain its 15.0% interest in Plan +
Design Netcare AG (PDN). The Company used the cost
method to account for this investment. PDN, and its operating
subsidiary, have filed for insolvency protection. During the
second quarter of 2002, the Company evaluated this investment
and determined that the investment is likely not recoverable and
recorded a $4.6 million impairment charge.

Note 8:  Business
Combinations

On January 31, 2002, the Company acquired
all of the assets of Smith Woolley Telecom (Smith
Woolley). Smith Woolley is a telecommunications
consultancy company that specializes in the provision of search,
acquisition, design, build, management and maintenance services
to the wireless industry in the United Kingdom. Smith Woolley is
based in Cambridge, England, with several regional offices. The
purchase price of the acquisition was approximately
$8.6 million consisting of $7.1 million in cash and
approximately 215,000 shares of LCC Class A common
stock, par value $0.01 per share. The value of the LCC
Class A common stock was approximately $1.5 million
and was based on the closing price on January 31, 2002 of
$7.08 per share. The acquisition was accounted for using the
purchase method of accounting and therefore, Smith
Woolleys results have been included in the condensed
consolidated financial statements since the date of acquisition.

Allocation of the purchase price to the assets
acquired and liabilities assumed for this acquisition was
finalized by the Company with the assistance of an outside
valuation firm during the second quarter of 2002. The net assets
acquired and liabilities assumed amounted to $0.7 million.
Goodwill recognized in the acquisition amounted to
$5.9 million. Other intangible assets acquired amounted to
$2.0 million. Other intangible assets, including contract
backlog, customer relationships, and the Smith Woolley trade
name, are amortized over two to five years depending on the
estimated remaining useful lives. The Company recognized
$0.4 million in amortization expense for the intangible
assets from the date of purchase through September 30,
2002. The Company expects amortization expense on the acquired
intangible assets to be $0.1 million for the remainder of
2002 and $0.6 million for 2003, $0.3 million for 2004
through 2006, and $0.02 million in 2007.

On July 9, 2002, the Companys
subsidiary, LCC United Kingdom Limited (LCC UK)
acquired 51 percent of the outstanding shares of Detron LCC
Network Services B.V. (Detron), a newly formed
corporation organized under the laws of the Netherlands. Detron
specializes in the provision of deployment, management and
maintenance services to the wireless industry in the
Netherlands. LCC acquired the shares from Westminster Capital
B.V. (Westminster) for an initial purchase price of
$1.5 million. An additional purchase price up to
$0.5 million may be recorded, should Detron achieve certain
revenue and EBITDA

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objectives by the end of the calendar year as
confirmed by its adopted annual accounts. Also included in the
acquisition cost were legal and transaction costs of
$0.4 million. The acquisition has been recorded under the
purchase method of accounting, and therefore Detrons
results have been included in the condensed consolidated
financial statements since the date of acquisition. Allocation
of the purchase price for this acquisition is preliminary. The
excess of the purchase price over the estimated fair values of
the net assets was approximately $1.8 million and was
recorded as goodwill and other intangibles. Final determination
of the fair values to be assigned will result in adjustments to
the preliminary values assigned at the date of acquisition.


Goodwill and other intangibles will be evaluated
annually for possible impairment under the provisions of SFAS
No. 142.

Note 9:  Tower Portfolio Sale and
Administration

During 2000, Microcell Management, Inc.
(Microcell), a subsidiary of the Company, completed
the closing of the sale of its telecommunication tower portfolio
to Pinnacle Towers Inc. (Pinnacle) pursuant to an
Asset Purchase Agreement between Pinnacle and Microcell. As part
of the tower sale transaction, Microcell and Pinnacle entered
into a Master Antenna Site Lease pursuant to which Microcell
agreed to lease, until December 31, 2002, the unoccupied
space on each telecommunication tower sold to Pinnacle. As of
December 31, 2001, the Company had deferred
$2.0 million of the gain and included it in other current
liabilities. Microcell and Pinnacle also entered into a Tower
Services Agreement to provide Pinnacle with audit, maintenance,
and program management services. The Tower Services Agreement,
which expired in August 2001, provided for minimum annual
payments to Microcell of $10.0 million for the contemplated
services.

On January 25, 2002, the Company entered
into a settlement agreement with Pinnacle. Pursuant to the
agreement, the Company received $2.0 million in cash to
satisfy Pinnacles obligations under the Tower Services
Agreement. This gain was recognized in the second quarter of
2002, when all uncertainties related to any potential claims
against the payment received were resolved. In addition, the
Company paid Pinnacle $2.0 million to satisfy all remaining
obligations under the Master Antenna Site Lease. This payment
reduced the $2.0 million deferred gain the Company included
in other current liabilities on the December 31, 2001
consolidated balance sheet.

Note 10:  Related Party
Transactions

During 2001 and the first half of 2002, the
Company provided services to Telcom Ventures and various other
companies majority owned, or controlled by, Telcom Ventures or
its members. Revenues from Telcom Ventures or its related
companies are not significant, comprising 0.1% of 2001 revenues
and none in the first nine months of 2002. Receivables from
these related parties were $19,000 at December 31, 2001 and
none at September 30, 2002 and are included in accounts
receivable in the accompanying consolidated balance sheets. Also
included in accounts receivable are employee and travel advances
aggregating approximately $89,000 and $69,000 at
December 31, 2001 and September 30, 2002, respectively.

During 2001 and the first nine months of 2002,
the Company made certain payments on behalf of Telcom Ventures
that consisted primarily of fringe benefit and payroll
service-related payments. The outstanding amounts associated
with these payments totaled $0.4 million at
December 31, 2001 and none at September 30, 2002.
These amounts were included in accounts receivable within the
accompanying condensed consolidated balance sheets.

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
$0.8 million during the first quarter of 2002 in
satisfaction of the note.

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During 2001 and the first nine months of 2002,
the Company provided services to XM Satellite. Telcom Ventures
has a minority investment in XM Satellite, and Dr. Rajendra
Singh, a director of Telcom Ventures, is a member of the board
of directors of the Company. Dr. Singh is also a former
member of the XM Satellite board of directors. Revenues earned
for services provided to XM Satellite were $15.0 million
and $0.1 million for the third quarter of 2001 and 2002,
respectively. For the nine months ended September 30, 2001
and 2002, revenues earned from XM Satellite were
$50.0 million and $3.4 million, respectively.
Receivables due from XM Satellite were $13.0 million and
none at December 31, 2001 and September 30, 2002,
respectively.

Detron has certain ongoing transactions with
Westminster. Under a five-year lease agreement for office space,
Detron recorded approximately $20,000 of rent expense from the
date of acquisition. During the third quarter, Detron seconded
various idle employees to Detron Telematics, Westminsters
wholly owned subsidiary and recorded revenue of approximately
$29,000.

Note 11:  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 effect on the consolidated results of
operations or financial condition of the Company.

Note 12:  Segment
Information

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

Segment detail is summarized as follows (in
thousands):

|                                |                         |                |        |                 |         |               |         |        |        |      |       |      |   |   |   |   |   |   |        |         |         |   |         |        |        | 
|------------------------------- | ----------------------- | -------------- | ------ | --------------- | ------- | ------------- | ------- | ------ | ------ | ---- | ----- | ---- | - | - | - | - | - | - | ------ | ------- | ------- | - | ------- | ------ | ------ | 
|                                |                         |                |        |                 |         |               |         |        |        |     
|                                |                         |                |        | Tower Ownership |         |              
|                                |                         | Services       |        | and Management  |         | Segment Total
|                                |                         |                |        |                 |         |              
|                                |                         | 2001           |        | 2002            |         | 2001          |         | 2002   |        | 2001 |       | 2002
|                                |                         |                |        |                 |         |               |         |        |        |      |       |     
|Nine Months Ended September 30, |                         |                |        |                 |         |               |         |        |        |      |       |      |   |   |   |   |   |   |        |         |         |   |         |       
|Revenues:                       |                         |                |        |                 |         |               |         |        |        |      |       |      |   |   |   |   |   |   |        |         |         |   |         |       
|                                | From external customers |                | $      | 106,534         |         |               | $       | 47,042 |        |      | $     |     |   |   | $ |  |   |   | $      | 106,534 |         |   | $       | 47,042 |       
|                                | Inter-segment revenues  |                |        |                |         |               |         |       |        |      |       |     |   |   |   |  |   |   |        |        |         |   |         |       |       
|                                |                         |                |        |                 |         |               |         |        |        |      |       |      |   |   |   |   |   |   |        |         |         |   |         |       
|                                |                         | Total revenues |        | $               | 106,534 |               |         | $      | 47,042 |      |       | $    |  |   |   | $ |  |   |        | $       | 106,534 |   |         | $      | 47,042 | 
|                                |                         |                |        |                 |         |               |         |        |        |      |       |      |   |   |   |   |   |   |        |         |         |   |         |       
|Net income (loss)               |                         | $              | 20,710 |                 |         | $             | (17,485 | )      |        | $    | 1,396 |      |   | $ |  |   |   | $ | 22,106 |         |         | $ | (17,485 | )     
|                                |                         |                |        |                 |         |               |         |        |        |      |       |      |   |   |   |   |   |   |        |         |         |   |         |       
|Total assets                    |                         | $              | 58,650 |                 |         | $             | 37,165  |        |        | $    | 166   |      |   | $ |  |   |   | $ | 58,816 |         |         | $ | 37,165  |       
|                                |                         |                |        |                 |         |               |         |        |        |      |       |      |   |   |   |   |   |   |        |         |         |   |         |       

|                                     |                         |               |        |                 |        |               |        |        |        |      |   |      |   |   |   |   |   |   |        |        |        |   |        |        |        | 
|------------------------------------ | ----------------------- | ------------- | ------ | --------------- | ------ | ------------- | ------ | ------ | ------ | ---- | - | ---- | - | - | - | - | - | - | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                     |                         |               |        |                 |        |               |        |        |        |     
|                                     |                         |               |        | Tower Ownership |        |              
|                                     |                         | Services      |        | and Management  |        | Segment Total
|                                     |                         |               |        |                 |        |              
|                                     |                         | 2001          |        | 2002            |        | 2001          |        | 2002   |        | 2001 |   | 2002
|                                     |                         |               |        |                 |        |               |        |        |        |      |   |     
|Three Months Ended
    September 30, |                         |               |        |                 |        |               |        |        |        |      |   |      |   |   |   |   |   |   |        |        |        |   |        |       
|Revenues:                            |                         |               |        |                 |        |               |        |        |        |      |   |      |   |   |   |   |   |   |        |        |        |   |        |       
|                                     | From external customers |               | $      | 34,347          |        |               | $      | 17,425 |        |      | $ |     |   |   | $ |  |   |   | $      | 34,347 |        |   | $      | 17,425 |       
|                                     | Inter-segment revenue   |               |        |                |        |               |        |       |        |      |   |     |   |   |   |  |   |   |        |       |        |   |        |       |       
|                                     |                         |               |        |                 |        |               |        |        |        |      |   |      |   |   |   |   |   |   |        |        |        |   |        |       
|                                     |                         | Total revenue |        | $               | 34,347 |               |        | $      | 17,425 |      |   | $    |  |   |   | $ |  |   |        | $      | 34,347 |   |        | $      | 17,425 | 
|                                     |                         |               |        |                 |        |               |        |        |        |      |   |      |   |   |   |   |   |   |        |        |        |   |        |       
|Net income (loss)                    |                         | $             | 15,441 |                 |        | $             | (5,057 | )      |        | $    |  |      |   | $ |  |   |   | $ | 15,441 |        |        | $ | (5,057 | )     
|                                     |                         |               |        |                 |        |               |        |        |        |      |   |      |   |   |   |   |   |   |        |        |        |   |        |       

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

|                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |         |  
|---------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------- | -
|                                   |  |                    |        |                  
|                                   |  | Three Months Ended |        | Nine Months Ended
|                                   |  | September 30,      |        | September 30,    
|                                   |  |                    |        |                  
|                                   |  | 2001               |        | 2002              |  | 2001 |        | 2002
|                                   |  |                    |        |                   |  |      |        |     
|Segment total                      |  | $                  | 15,441 |                   |  | $    | (5,057 | )    |  | $ | 22,106 |   |  | $ | (17,485 | )
|Unallocated corporate expenditures |  |                    | (1,426 | )                 |  |      | (1,959 | )    |  |   | (4,593 | ) |  |   | (5,836  | )
|Eliminations                       |  |                    |       |                   |  |      |       |      |  |   | 275    |   |  |   |        |  
|                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |         |  
|Consolidated net income (loss)     |  | $                  | 14,015 |                   |  | $    | (7,016 | )    |  | $ | 17,788 |   |  | $ | (23,321 | )
|                                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |         |  

Note 13:  Recovery of
Receivables

On March 28, 2001, the United States
Bankruptcy Court, District of Maryland, Northern Division,
entered an order confirming the Amended Joint Plan of
Reorganization Under Chapter 11 (the Plan) for
DCR PCS, Inc. (DCR) and Pocket Communications, Inc.
(Pocket). The Plan provides that the Companys
claim against DCR will be allowed in the amount of
$5.0 million. The Company received payment of
$5.0 million on April 11, 2001 which has been
recognized as a recovery of a bad debt during the quarter ended
June 30, 2001 and was recorded as a reduction in general
and administrative expense. The Plan also provided that the
Companys general unsecured claim against Pocket would be
allowed. The Company received $1.6 million as final
settlement for the Pocket claim during the second quarter of
2002. The Company recorded the receipt as a recovery of bad debt
and as a reduction in general and administrative expense during
the quarter.

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

Note 14:  Subsequent
Events

On October 23, 2002 the Company entered into
a sale agreement to convey 82% of its ownership interest in its
Egyptian subsidiary, LCC Egypt Ltd., with put options to convey
the remaining 18% ownership interest upon the resolution of
certain items. This subsidiary was established to execute a
contract for a customer, which is substantially complete. The
sale agreement anticipates that the new owner will collect
receivable balances and resolve vendor, tax, and other
obligations of the subsidiary, during the four-week period from
the agreement date. As part of the agreement the Company assumed
specific payroll and other obligations requiring payments of
approximately $0.3 million, and may be obligated to pay an
additional $0.2 million, contingent upon the final
resolution of the new owners negotiations with respect to
the subsidiarys obligations. The Company has maintained a
liability relative to the anticipated costs to complete this
contract by satisfying these obligations, which are now being
resolved by the sale of the subsidiary. The sale of the
subsidiary is subject to completion of local registrations,
which the Company expects to complete in late 2002. The Company
may realize a gain of up to $1.0 million, as a result of
this transaction, net of obligations assumed as part of the sale
agreement.

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

LCC International, Inc. and
Subsidiaries

For the Three and Nine Months Ended
September 30, 2001 and 2002

This quarterly report on Form 10-Q contains
forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1934. The
Managements Discussion and Analysis of Financial Condition
and Results of Operations includes, without limitation,
forward-looking statements regarding the Companys ability
to pursue and secure new business opportunities and its working
capital. A more complete discussion of business risks is
included in the Companys Annual Report on Form 10-K
for the year ended December 31, 2001.

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
300 customers in over 50 countries.

In the last two 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
March 2000, the Company sold its telecommunication tower
business. The Company expanded its international presence with
the acquisitions of Transmast Italia in Italy and Smith Woolley
in the United Kingdom. In addition, the Company acquired
51 percent of Detron LCC Network Services B.V. in the
Netherlands in July 2002. The Company operates in a highly
competitive environment subject to rapid technological change
and emergence of new technologies. Historically, the key drivers
of growth in the Companys wireless services business have
been (1) the issuance of new or additional licenses to
wireless operators; (2) the introduction of new services or
technologies; (3) increases in the number of subscribers
served by wireless operators; and (4) the increasing
complexity of wireless systems in operation.

The Companys primary sources of revenues
are from engineering design and system deployment services.
Revenues from services are derived 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 markets. The slowdown in wireless
telecommunications infrastructure spending caused some of the
Com-

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pany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 as the Company needs to replace
the revenue provided by the Companys largest client XM
Satellite. This contract was substantially completed in the
first quarter of 2002, and significant revenue is not
anticipated from this customer for the remainder of the year.


The completion of the XM Satellite contract
coupled with the industry slowdown caused revenue to decline in
2002. Additionally, the need to replace revenue 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 seen renewed customer activity lately to upgrade or enhance
existing systems. Despite this renewed activity, it remains
uncertain the impact, if any, and the related timing of any such
impact, upon the Companys future revenue growth
opportunities.

The most promising area for revenue growth is in
Europe. 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. While revenue
from 3G networks only constituted 15.4% of the Companys
revenues for the nine months ended September 30, 2002, it
is expected 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 Transmast Italia, 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, 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. Additionally, the work may provide lower gross profit
margins than engineering design services.

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Results of Operations

The following table and discussion provide
information which management believes is relevant to an
assessment and understanding of the Companys consolidated
results of operations and financial condition. The discussion
should be read in conjunction with the condensed consolidated
financial statements and accompanying notes thereto included
elsewhere herein.

|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |       |      |  
|----------------------------------------------------- | -------------------------------------------- | -------------------------------- | ----- | ----------------- | ---- | ---- | ----- | ---- | ---- |  | ----- | ---- | ---- |  | ----- | ----- | ---- | -
|                                                      |                                              |                                 
|                                                      |                                              | Percentage of Revenues          
|                                                      |                                              |                                 
|                                                      |                                              |                                  |       |                  
|                                                      |                                              | Three Months Ended               |       | Nine Months Ended
|                                                      |                                              | September 30,                    |       | September 30,    
|                                                      |                                              |                                  |       |                  
|                                                      |                                              | 2001                             |       | 2002              |      | 2001 |       | 2002
|                                                      |                                              |                                  |       |                   |      |      |       |     
|Revenues                                              |                                              |                                  | 100.0 | %                 |      |      | 100.0 | %    |      |  | 100.0 | %    |      |  | 100.0 | %    
|Cost of revenues                                      |                                              |                                  | 76.0  |                   |      |      | 87.2  |      |      |  | 78.4  |      |      |  | 89.7  |      
|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|Gross profit                                          |                                              |                                  | 24.0  |                   |      |      | 12.8  |      |      |  | 21.6  |      |      |  | 10.3  |      
|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|Operating (income) expense:                           |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|                                                      | Sales and marketing                          |                                  |       | 5.1               |      |      |       | 12.5 |      |  |       | 5.0  |      |  |       | 13.7  |     
|                                                      | General and administrative                   |                                  |       | 15.1              |      |      |       | 45.6 |      |  |       | 11.1 |      |  |       | 32.2  |     
|                                                      | Restructuring charge                         |                                  |       |                  |      |      |       |     |      |  |       |     |      |  |       | 21.3  |     
|                                                      | Tower portfolio sale and administration, net |                                  |       |                  |      |      |       |     |      |  |       | (2.2 | )    |  |       | (4.3  | )   
|                                                      | Depreciation and amortization                |                                  |       | 2.2               |      |      |       | 3.5  |      |  |       | 2.1  |      |  |       | 4.4   |     
|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|                                                      |                                              | Total operating (income) expense |       |                   | 22.4 |      |       |      | 61.6 |  |       |      | 16.0 |  |       |       | 67.3 |  
|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|Operating income (loss)                               |                                              |                                  | 1.6   |                   |      |      | (48.8 | )    |      |  | 5.6   |      |      |  | (57.0 | )    
|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|Other income (expense):                               |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|                                                      | Interest income                              |                                  |       | 1.2               |      |      |       | 0.8  |      |  |       | 1.4  |      |  |       | 1.4   |     
|                                                      | Other                                        |                                  |       | 65.2              |      |      |       | 1.4  |      |  |       | 20.8 |      |  |       | (10.5 | )   
|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|                                                      |                                              | Total other income (expense)     |       |                   | 66.4 |      |       |      | 2.2  |  |       |      | 22.2 |  |       |       | (9.1 | )
|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|Income (loss) from operations before income
    taxes |                                              |                                  | 68.0  |                   |      |      | (46.6 | )    |      |  | 27.8  |      |      |  | (66.1 | )    
|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|Provision (benefit) for income taxes                  |                                              |                                  | 27.2  |                   |      |      | (6.3  | )    |      |  | 11.1  |      |      |  | (16.5 | )    
|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      
|Net income (loss)                                     |                                              |                                  | 40.8  | %                 |      |      | (40.3 | )%   |      |  | 16.7  | %    |      |  | (49.6 | )%   
|                                                      |                                              |                                  |       |                   |      |      |       |      |      |  |       |      |      |  |       |      

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Three Months Ended September 30,
2001

Compared to


Three Months Ended September 30,
2002


Revenues.Revenues
for the three months ended September 30, 2002 were
$17.4 million compared to $34.3 million for the prior
year, a decrease of $16.9 million or 49.3%. The substantial
completion of the XM Satellite Radio, Inc. contract (XM
Satellite Contract) in 2001 contributed to
$14.9 million of the revenue reduction. Excluding the
XM Satellite Contract, the slowdown in telecommunications
infrastructure spending has also caused revenue reductions in
the Americas (North America and Latin America) of
$4.2 million and the Asia-Pacific region of
$1.2 million. Revenue in the EMEA (Europe, Middle East, and
Africa) region increased $3.4 million. This growth can
largely be attributed to the acquisition in July of 2002 of
Detron, a newly formed company specializing in providing
deployment and maintenance services to the wireless industry in
the Netherlands, and growth elsewhere in the region.

Cost of Revenues.Cost of revenues for the three months
ended September 30, 2002 was $15.2 million compared to
$26.1 million for the prior year, a decrease of
$10.9 million. As a percentage of total revenues, cost of
revenues was 87.2% and 76.0% for the three months ended
September 30, 2002 and 2001, respectively. Costs of
revenues have increased as a percentage of revenues because of
price reductions caused by increased competition as a result of
the slowdown in wireless telecommunications spending. The
Company has also increased the percentage of deployment related
services it provides, particularly in Europe, where several
recent acquisitions have increased this capability. These
deployment services generally generate a lower gross profit
margin than engineering and consulting services, therefore, cost
of revenues are higher as a percent of revenues. In addition,
since some management and operational cost of revenues are
relatively fixed they have not been reduced in the same ratio as
revenues have declined.

Gross Profit.Gross
profit for the three months ended September 30, 2002 was
$2.2 million compared to $8.2 million for the prior
year, a decrease of $6.0 million. Approximately
$4.1 million of the decline can be attributed to the
$16.9 million reduction in revenue for the three months
ended September 30, 2002 compared to the same three months
in the prior year. The balance of the gross profit decline can
be attributed to the reduced gross profit margin. Gross profit
margins have decreased because of price reductions caused by
competition, difficulty in reducing relatively fixed costs at
the same rate as revenues have declined, and the increase in
demand for lower margin services.

Sales and Marketing.Sales and marketing expenses were $2.2 million for the
three months ended September 30, 2002 compared to
$1.8 million for the prior year, an increase of
$0.4 million. The increase in sales and marketing is
largely related to a large expenditure of $0.3 million as
part of a promotional campaign in the United States. As a
percentage of total revenues, sales and marketing was 12.5% and
5.1% for 2002 and 2001, respectively. The slowdown in wireless
telecommunications infrastructure spending has increased
competition. To respond to competitive pressures, the Company
has maintained a higher level of sales and marketing
expenditures despite the decline in revenues.

General and Administrative.General and administrative expenses
were $7.9 million for the three months ended
September 30, 2002 compared to $5.2 million for the
prior year. General and administrative expenses for the three
months ended September 30, 2002 include a provision for bad
debt of $3.2 million, which represents an increase of
$3.0 million compared to the prior year. The provision for
bad debt was increased to reflect uncertainty of payment from
development stage clients and concessions provided as part of
collection efforts. General and administrative expense,
excluding the bad debt provision, declined $0.3 million
compared to the prior year, and as a percent of revenues was
27.5% and 14.4% for the three months ended September 30,
2002 and 2001, respectively. The higher general and
administrative costs as a percent of revenues reflects an
inability to reduce costs at the same rate as revenues have
declined relative to the prior year.

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Depreciation and
Amortization.Depreciation and
amortization expense was $0.6 million for the three months
ended September 30, 2002 compared to $0.8 million for
the prior year, a decline of $0.2 million. The decline was
attributed to a decrease in depreciation expense of
$0.2 million.

Interest Income.Interest income was $0.1 million for the three months ended
September 30, 2002 compared to $0.4 million for the
prior year. Interest income in 2002 declined over 2001
reflecting a decline in yields available for short-term
investments.

Other Income (Expense).Other income was $0.2 million for
the three months ended September 30, 2002 and consists of
foreign currency gains of $0.3 million, offset by minority
interest earnings of $0.1 million related to the
acquisition of Detron during the quarter. The Company acquired
51% of Detron in July 2002 and includes their financial
results on a consolidated basis. The minority shareholders
pro-rata share of the earnings, net of tax, is reflected as part
of other expense. Other income was $22.4 million for the
three months ended September 30, 2001 and was related to
gains from the sale of the Companys investments and assets
held in Nextwave ($21.4 million) and Tecnosistemi
($1.0 million).

Provision (Benefit) for Income Taxes.The provision for income taxes was
recorded for the three months ended September 30, 2002
using an effective income tax rate of 13.6%. The effective tax
rate in the current quarter reflects a change in the anticipated
annual rate from 29% to 25%. The annual effective tax rate was
changed to reflect increased losses in foreign subsidiaries. The
effective tax rate is less favorable than the statutory federal
rate of 35% because the Company anticipates losses in its
foreign subsidiaries. The Company will record the tax benefit
associated with these foreign tax losses when these subsidiaries
have taxable earnings and it is reasonably certain the losses
can be utilized. The provision for income taxes for the three
months ended September 30, 2001 was recorded using an
effective tax rate of 40%. The effective tax rate in 2001 is
higher than the statutory federal rate largely because of
foreign subsidiary losses, in which any associated tax benefit
was deferred.

Net Income (Loss).The net loss was $7.0 million for the three months ended
September 30, 2002 compared to net income of
$14.0 million in the prior year. The unusual gain from the
sale of investments and other assets held, discussed in other
income, is the major driver for 2001 earnings. The loss in 2002
reflects a large provision for bad debt in general and
administrative expenses as well as the inability to reduce
operating costs and maintain profit margins as revenues declined
from the prior year.

Nine Months Ended September 30,
2001

Compared to


Nine Months Ended September 30,
2002


Revenues.Revenues
for the nine months ended September 30, 2002 were
$47.0 million compared to $106.5 million for the prior
year, a decrease of $59.5 million or 55.9%. The substantial
completion of the XM Satellite Contract in 2001 contributed
to $46.6 million of the revenue reduction. Excluding the
XM Satellite Contract, the slowdown in telecommunications
infrastructure spending has also caused revenue reductions in
the Americas (North America and Latin America) of
$15.4 million and the Asia-Pacific region of
$1.4 million. Revenue in the EMEA (Europe, Middle East, and
Africa) region increased $3.9 million. This growth can
largely be attributed to the acquisitions of Detron in
July 2002 and Smith Woolley in January 2002.

Cost of Revenues.Cost of revenues for the nine months
ended September 30, 2002 was $42.2 million compared to
$83.5 million for the prior year, a decrease of
$41.3 million. As a percentage of total revenues, cost of
revenues was 89.7% and 78.4% for the nine months ended
September 30, 2002 and 2001, respectively. Cost of revenues
in both 2002 and 2001 were unusually high for selected costs.
These charges include an increase in costs to complete fixed
price contracts of $0.5 million in 2002 and
$3.1 million in 2001; lower utilization of professional
staff of $2.5 million in 2002 and $0.6 million in
2001; and increased health care and employee reimbursed tax
costs in 2001 of $2.3 million. As a percentage of revenues,
excluding these unusual charges, cost of revenues was 83.3% and
72.8% in 2002 and 2001, respectively. Cost of revenues in 2002
are higher than the prior year because of increased competition
as a result of the slowdown in wireless

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telecommunications spending. The Company has also
increased the percentage of deployment related services it
provides, particularly in Europe, where several recent
acquisitions have increased this capability. These deployment
services generally generate a lower gross profit margin than
engineering and consulting services, therefore, cost of revenues
are higher as a percent of revenues. In addition, since some
management and operational cost of revenues are relatively fixed
they have not been reduced in the same ratio as revenues have
declined.


Gross Profit.Gross
profit for the nine months ended September 30, 2002 was
$4.9 million compared to $23.0 million for the prior
year, a decrease of $18.1 million. Approximately,
$12.9 million of the decline can be attributed to the
$59.5 million reduction in revenue for the nine months
ended September 30, 2002 compared to the same nine months
in the prior year. The balance of the gross profit decline can
be attributed to the reduced gross profit margin. Gross profit
margins have decreased because of price reductions caused by
competition, difficulty in reducing relatively fixed costs at
the same rate as revenues have declined, and the mix of services
currently in demand.

Sales and Marketing.Sales and marketing expenses were $6.4 million for the nine
months ended September 30, 2002 compared to
$5.4 million for the prior year, an increase of
$1.0 million. The increase in sales and marketing is
largely related to increased business development activity in
the Asia Pacific region. As a percentage of total revenues,
sales and marketing was 13.7% and 5.0% for 2002 and 2001,
respectively. The slowdown in wireless telecommunications
infrastructure spending has increased competition. To respond to
competitive pressures, the Company has maintained a higher level
of sales and marketing expenditures despite the decline in
revenues.

General and Administrative.General and administrative expenses
were $15.1 million for the nine months ended
September 30, 2002 compared to $11.8 million for the
prior year. General and administrative expenditures for the
first half of both 2001 and 2002 received an unusual benefit
relative to recoveries of receivables from bankrupt clients. The
benefit recognized from bankruptcy recoveries was
$1.6 million and $7.5 million for the nine months
ended September 30, 2002 and 2001, respectively. Offsetting
these receivable recoveries was an increase to the provision for
doubtful accounts of $3.8 million in 2002 and
$1.9 million in 2001. The provision for bad debts in 2002
was increased to reflect uncertainty of payment from development
stage clients and concessions provided as part of collection
efforts. Excluding the receivable recoveries and provision for
bad debt, general and administrative expenditures decreased
$4.5 million or 25.9% for the nine months ended
September 30, 2002 compared to the prior year. This cost
reduction reflects cost saving initiatives and reduced
administrative support requirements, but administrative costs
are not declining at the same rate that revenues decreased
compared to the prior year.

Restructuring Charge.A restructuring charge of
$10.0 million was recorded during the second quarter of
2002 pursuant to a restructuring plan adopted by the Company.
The plan was formulated to respond to the low utilization of
professional employees caused by successful completion of
several large fixed price contracts and difficulty in obtaining
new contracts as a result of a slowdown in wireless
telecommunications infrastructure spending. The cost of employee
severance and associated costs was approximately
$1.0 million and resulted in a work force reduction of
approximately 140 people. Additionally, the Company had excess
facility costs relative to the space occupied by the employees
affected by the reduction in force 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 $9.0 million.

Gain on Sale of Tower Portfolio and
Administration, Net.During February
2000, the Company entered into an agreement for the sale of
telecommunications towers that it owned. As part of the sale
agreement, the Company agreed to lease unoccupied space on the
towers, effectively guaranteeing a minimum rent level of a fixed
amount on the towers sold. The gain from the tower portfolio
sale deferred an amount corresponding to this rent commitment,
until the space was leased to another tenant or otherwise
satisfied. The Company recognized $2.0 million and
$2.3 million of this previously deferred gain, for the nine
months ended September 30, 2002 and 2001, respectively.

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Depreciation and
Amortization.Depreciation and
amortization expense was $2.1 million for the nine months
ended September 30, 2002 a decrease of $0.1 million
compared to the prior year. The decline was attributed to a
decrease in depreciation expense of $0.5 million, offset by
amortization expense of $0.4 million relative to
capitalized intangibles incurred in connection with the purchase
of Smith Woolley in January 2002.

Interest Income.Interest income was $0.7 million for the nine months ended
September 30, 2002 compared to $1.5 million for the
prior year. Interest income in 2002 declined over 2001
reflecting a decline in yields available for short-term
investments.

Other Income (Expense).Other expense for the nine months
ended September 30, 2002 contained an impairment charge of
$5.1 million. This impairment charge relates to the entire
investment the Company made in 2000 relative to investments in
two separate companies, Plan + Design Netcare AG
($4.6 million) and Mobilocity, Inc. ($0.5 million).
Both firms have entered into statutory or voluntary liquidation
plans during the second quarter of 2002. In both cases, no
proceeds are anticipated to be returned to shareholders. Other
income was $22.2 million for the nine months ended
September 30, 2001 and was largely related to gains from
the sale of the Companys investments and assets held in
Nextwave ($21.4 million) and Tecnosistemi
($1.0 million).

Provision (Benefit) for Income Taxes.The provision for income taxes was
recorded for the nine months ended September 30, 2002 using
an effective income tax rate of 25.0% compared to 40.0% for the
comparable period in 2001. The effective tax rate is less
favorable than the statutory federal rate of 35% because the
Company anticipates losses in its foreign subsidiaries. The
Company will record the tax benefit associated with these
foreign tax losses when these subsidiaries have taxable earnings
and it is reasonably certain the losses can be utilized. The
provision for income taxes for the nine months ended
September 30, 2001 was recorded using an effective tax rate
of 40%. The effective tax rate in 2001 is higher than the
statutory federal rate largely because of foreign subsidiary
losses, in which any associated tax benefit was deferred until
they can be utilized.

Net Income (Loss).The net loss was $23.3 million for the nine months ended
September 30, 2002 compared to net income of
$17.8 million in the prior year. Excluding the unusual
items discussed above: tower gains, restructuring charge,
impairment charge (included in other expense), sale of the
Nextwave and Tecnosistemi assets (included in Other Income), and
receivable recoveries (included in General and Administrative)
the loss was $14.7 million and $1.6 million, for the
nine months ended September 30, 2002 and 2001,
respectively. The decline in revenue and associated gross profit
and the inability to reduce costs at the same rate as revenues
declined in 2002, are the largest contributing factors to the
increased loss in 2002.

Liquidity and Capital Resources

Cash combined with short-term investments at
September 30, 2002 provides total liquid assets of
$39.2 million compared to $53.1 million at
December 31, 2001, a decrease of $13.9 million. The
decrease in liquidity largely relates to $9.0 million used
to acquire businesses (Smith Woolley in January 2002 and Detron
in July 2002) and cash used in operations of $4.8 million.

Cash used in operating activities was
$4.8 million for the nine months ended September 30,
2002, compared to $1.5 million in net cash provided from
operations in the prior year. The cash used in operating
activities in 2002 is considerably smaller than the net loss of
$23.3 million since approximately $15.0 million of the
loss does not require a current outlay of cash. In addition, the
Company has generated cash flow from reducing receivable
balances. Expenditures that did not include cash during the nine
months ended September 30, 2002 include an impaired asset
charge ($5.1 million), written-off leasehold improvements
included in the restructuring charge ($1.5 million),
depreciation and amortization expense ($2.1 million) and a
portion of the restructuring charge in which payment was
deferred ($6.3 million). Cash provided by operations in
2001 was largely attributable to the collection of operating
income earned during the year.

Cash used by investing activities totaled
$10.1 million for the nine months ended September 30,
2002. The largest use of cash by investing activities was
$7.1 million to acquire Smith Woolley in January 2002, and
$1.9 million to acquire Detron in July 2002. The Company
also made purchases of property and equipment of
$1.0 million in 2002. Cash used in investing activity in
2001 totaled $8.9 million, driven by $22.6 million in

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proceeds related to the sale of assets and
investments discussed with Other Income, offset by purchases of
short-term investments of $27.2 million, investments of
$1.8 million, and purchases of property and equipment of
$2.5 million.


Working capital was $54.1 million at
September 30, 2002 compared to $72.1 million at
December 31, 2001, a decrease of $18.0 million. The
decrease in working capital was largely related to the purchase
of Smith Woolley and Detron for cash of $9.0 million,
purchases of property and equipment of $1.0 million, and
net cash used in operating activities of $4.8 million. The
Companys primary requirement for working capital is to
fund receivables relative to services performed. With the
substantial completion of the XM Satellite Contract, the Company
expects to generate an operating loss in the current year, which
will also require working capital. The Company has no material
cash commitments other than obligations under its operating
leases, which are primarily office space. Future capital
requirements will depend upon many factors, including the timing
of payments under contracts and increases in personnel in
advance of new contracts.

The Company had no debt and did not maintain a
line of credit as of September 30, 2002, since it had cash
and short-term investments that it considered sufficient to meet
liquidity requirements. The Company has not engaged in any
off-balance sheet financing as of September 30, 2002. The
Company believes it will generate sufficient cash from
operations to meet both its short-term and long-term liquidity
needs.

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;                                          
|
| |  | Impairment of long-lived assets and investments
    in affiliates; 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 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. For example, in
2001, the Companys gross profits were decreased by
$3.3 million because of increased costs to complete a
project performed in the Middle East. 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

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management must make estimates on the
uncollectability 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.
The Company derived 70.1% of its total revenues during the
quarter ended September 30, 2002, from its ten largest
customers, indicating significant customer concentration risk
with the Companys receivables. These ten largest customers
constituted 58.1% of the Companys net receivable balance
as of September 30, 2002, respectively. In addition, fixed
price contracts with extended milestone payments can cause
unbilled receivables to grow prior to achieving the applicable
milestone that permits billing. 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 considers three of the
Companys ten largest customers to be development stage
customers. The customers, XM Satellite, Orascom Telecom in
Algeria, and NorthCoast Communications, had outstanding
receivable balances in the aggregate, net of reserves, at
December 31, 2001 and September 30, 2002 of
$20.8 million and $1.2 million, respectively.


The Company estimates liabilities associated with
taxes relative to employees sent to assignments in foreign
countries. These expatriate employees are reimbursed for
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 resolution of the tax liabilities may not occur for
several years. For example, in 2001, the Companys gross
profits were decreased by $1.3 million because of an
additional provision for expatriate employees reimbursed taxes.
The Company had $3.5 million and $2.8 million accrued
for expatriate tax obligations as of December 31, 2001 and
September 30, 2002, respectively.

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. To the extent
the Company establishes a valuation allowance or increases this
allowance in a period, it must include an expense within the tax
provision in the statement of operations.

Significant management judgment is 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
excluded from the 2002 tax provision $3.8 million for the
nine months ended September 30, 2002, due to uncertainties
related to its ability to utilize some of its deferred tax
assets, primarily consisting of foreign net operating losses
carried forward and foreign tax credits, before they expire. 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 impact its financial position
and results of operations. The net deferred tax assets, as of
September 30, 2002 was $10.5 million.

Impairment of
investments in affiliates

The Company maintained investments in affiliates
of $5.1 million as of December 31, 2001. These
investments were made in 2000 relative to two separate
companies, Plan + Design Netcare AG ($4.6 million) and
Mobilocity, Inc. ($0.5 million). Both investments were
accounted for at cost. Mobilocity has implemented a voluntary
liquidation plan. Plan + Design Netcare AG and its
operating subsidiary have filed for

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insolvency protection. Based upon the voluntary
liquidation plans and insolvency filings, the Company has
determined these investments are probably not recoverable and
recorded an impairment charge of $5.1 million in the second
quarter of 2002.


Restructuring
charge

The Company recorded a restructuring charge
during the second quarter of 2002. Included in this
restructuring charge of $10.0 million was a charge for
excess facilities aggregating $9.0 million. This facility
charge significantly relates to leased office space, which the
Company believes it will no longer occupy. 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
$9.8 million will be derived in sublease income, for which
the Company does not currently have a subtenant.

Related Party Transactions

The Company has provided services to Telcom
Ventures and various other companies that are majority owned, or
controlled by, Telcom Ventures or its members. Revenues from
Telcom Ventures or its related companies are not material
comprising 0.1% of 2001 revenues and none in 2002.

During 2001 and 2002, the Company provided
services to XM Satellite. Telcom Ventures has a minority
investment in XM Satellite, and Dr. Rajendra Singh, a
director of Telcom Ventures, is a member of the board of
directors of the Company. Dr. Singh also is a former member
of the XM Satellite board of directors. Revenues earned for
services provided to XM Satellite were $15.0 million and
$0.1 million for the third quarter of 2001 and 2002,
respectively. Revenues earned during the first nine months of
2001 and 2002 for services provided to XM Satellite were
$50.0 million and $3.4 million, respectively.
Receivables from XM Satellite were $13.0 million at
December 31, 2001. The Company had no receivables
outstanding with XM Satellite as of September 30, 2002.

Recent Accounting Pronouncements

On January 1, 2002, the Company adopted FASB
SFAS No. 142, Goodwill and Other Intangible Assets.
SFAS No. 142 requires that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead
be tested for impairment at least annually in accordance with
the provisions of SFAS No. 142. SFAS No. 142 also
requires that intangible assets with estimable useful lives be
amortized over their estimated useful lives to their residual
values, and be reviewed for impairment in accordance with SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. The adoption of SFAS No. 142 did not
have a significant impact on the Companys financial
condition and results of operations.

On January 1, 2002, the Company adopted FASB
SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets which supersedes FASB SFAS
No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of, and APB
Opinion No. 30, Reporting the Results of
Operations  Reporting Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual, and
Infrequently Occurring Events and Transactions. The
statement addresses the accounting and reporting of a disposal
of a segment and resolves significant implementation issues
related to SFAS No. 121. The adoption of SFAS No. 144
did not have a significant impact on the Companys
financial condition and results of operations.

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 Restructur-

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ing) . The Company
plans to adopt SFAS No. 146 in January 2003 and is
evaluating the impact of the new standard.


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
England, Italy, Brazil, and Egypt. Additionally, the
Companys subsidiary in England maintains branches in
Europe and Africa in which the Company receives payment in
Euros. Exchange rates can have an impact on the U.S. dollar
value of the subsidiaries reported earnings and the intercompany
transactions with the subsidiaries.

Approximately 53.8% and 61.1% of the
Companys revenues were generated outside the United States
for the nine and three months ended September 30, 2002,
respectively. The majority of the revenues generated outside the
United States was 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 2002 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 relative to other currencies in the Companys
major markets the resulting translated revenues, expenses and
operating profits are lower.

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 were
translated into United States dollars at the exchange rate in
effect at September 30, 2002. The resulting translation
adjustments are recorded in shareholders equity as
accumulated other comprehensive loss. The dollar was weaker
relative to many of the foreign currencies at September 30,
2002 compared to December 31, 2001. Consequently, the
accumulated other comprehensive loss component of
shareholders equity decreased $0.9 million during the
nine months ended September 30, 2002. As of
September 30, 2002, the total amount of long-term
intercompany receivable/payables in non-U.S. subsidiaries
subject to this equity adjustment, using the exchange rate as of
the same date, was approximately $12.5 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. Foreign subsidiaries with amounts owed at
September 30, 2002 include Detron in the amount of
$0.5 million. The potential foreign currency transaction
losses from a hypothetical 10% adverse change relative to this
intercompany balance would not be material. In addition, a
hypothetical 10% adverse change would result in a
$0.9 million decline relative 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 impact 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 and Egyptian subsidiaries derive revenues and incur
expenses within a single country and consequently, do not incur
currency risks in connection with the conduct of their normal
operations, (ii) 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.

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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.

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PART II  OTHER
INFORMATION




Item 1:  Legal
Proceedings

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




Item 2:  Changes in
Securities

Not Applicable




Item 3:  Defaults Upon Senior
Securities

Not Applicable




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

Not Applicable




Item 5:  Other
Information

Not Applicable




Item 6:  Exhibits and Reports
on Form 8-K

(a) Exhibits

11  Calculation of Net Income (Loss)
Per Share



| |      |                                                                                                                                           
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------
| | 99  | Written Statement of Chief Executive Officer and
    Chief Financial Officer Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

On July 10, 2002, the Company filed a
Current Report on Form 8-K, which reported that the Company
issued a press release on July 9, 2002 announcing that its
subsidiary, LCC United Kingdom Ltd., acquired 51% of the
outstanding shares of Detron LCC Network Service B.V., a
corporation formed under the laws of the Netherlands.

On August 6, 2002, the Company filed a
Current Report on Form 8-K, which reported that the Company
issued a press release on August 5, 2002 announcing its
financial and operating results for the second quarter 2002.

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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/ DAVID N. WALKER                     
| |                                         
| | David N. Walker                         
| | Senior Vice President, Treasurer        
| | and Chief Financial Officer             
| | (Principal Accounting Officer and       
| | Chief Financial Officer)                

Date: November 13, 2002


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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 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: November 13, 2002

/s/ C. THOMAS FAULDERS, III




C. Thomas Faulders, III


Chairman and Chief Executive Officer


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I, David N. Walker, 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 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: November 13, 2002

/s/ DAVID N. WALKER




David N. Walker


Senior Vice President, Treasurer


and Chief Financial Officer


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LCC International, Inc. and
Subsidiaries

Exhibit Index

|               |    |                     |  |                                                                                                                                           
|-------------- | -- | ------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |    | Exhibit Description
|               |    |                    
|               | 11 |                     |  | Calculation of Net Income (Loss) Per Share                                                                                                
|               | 99 |                     |  | Written statement of Chief Executive Officer and
    Chief Financial Officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002