##### 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 June 30, 2001                   
|     |  | or                                                                                                                                                        
|[  ] |  | Transition Report Pursuant to Section 13
	or 15(d) of the Securities
	Exchange Act of 1934
	For the transition period from
	            to

	            .

Commission file number: 0-21213

LCC International, Inc.

(Exact name of registrant as specified in its
charter)




---

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

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

Not Applicable




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

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

Yes  X
          No

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

As of August 9, 2001, the registrant had
outstanding 12,171,357 shares of Class A Common Stock,
par value $0.01 per share (the Class A Common
Stock) and 8,446,833 shares of Class B Common
Stock, par value $0.01 per share (the Class B
Common Stock).



---






---

TABLE OF CONTENTS



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



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##### Table of Contents



LCC International, Inc. and
Subsidiaries

Quarterly Report on Form 10-Q

For the quarter ended June 30,
2001


INDEX

|          |  |                                                                                                                         |  |        |    | 
|--------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | ------ | -- | 
|          |  |                                                                                                                         |  | Page  
|          |  |                                                                                                                         |  | Number
|          |  |                                                                                                                         |  |       
|PART  I:  |  | FINANCIAL INFORMATION                                                                                                   |  |        |    | 
|         
|         
|         
|         
|ITEM 1:   |  | FINANCIAL STATEMENTS                                                                                                    |  |        |    | 
|         
|         
|         
|         
|          |  | Condensed consolidated statements of operations
	for the three and six months ended June 30, 2000 and 2001
	(unaudited) |  |        | 3  | 
|          |  | Condensed consolidated balance sheets as of
	December 31,                                                               |  |        |    | 
|         
|         
|         
|         
|          |  | 2000 and June 30, 2001 (unaudited)                                                                                      |  |        | 4  | 
|         
|         
|         
|         
|          |  | Condensed consolidated statements of cash flows
	for the six months ended June 30, 2000 and 2001 (unaudited)            |  |        | 5  | 
|         
|         
|         
|         
|          |  | Notes to condensed consolidated financial
	statements                                                                   |  |        | 6  | 
|         
|         
|         
|         
|ITEM 2:   |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF
	FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                  |  |        | 10 | 
|         
|         
|         
|         
|PART  II: |  | OTHER INFORMATION                                                                                                       |  |        |    | 
|         
|         
|         
|         
|ITEM 1:   |  | Legal Proceedings                                                                                                       |  |        | 15 | 
|         
|         
|         
|         
|ITEM 2:   |  | Changes in Securities                                                                                                   |  |        | 15 | 
|         
|         
|         
|         
|ITEM 3:   |  | Defaults Upon Senior Securities                                                                                         |  |        | 15 | 
|         
|         
|         
|         
|ITEM 4:   |  | Submission of Matters to a Vote of Security
	Holders                                                                    |  |        | 15 | 
|         
|         
|         
|         
|ITEM 5:   |  | Other Information                                                                                                       |  |        | 15 | 
|         
|         
|         
|         
|ITEM 6:   |  | Exhibits and Reports on Form 8K                                                                                         |  |        | 15 | 

2



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##### Table of Contents






PART I. FINANCIAL INFORMATION






ITEM 1.  Financial
Statements


LCC International, Inc. and
Subsidiaries

Condensed Consolidated Statements of
Operations

(In thousands, except per share
data)


(Unaudited)


|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |        |  
|--------------------------------------------------------------------- | -------------------------------------------------------- | ------------------ | ------ | ---------------- | - | ---- | ------ | ------ | - | - | ------- | ------- | - | - | ------ | ------ | -
|                                                                      |                                                          |                    |        |                 
|                                                                      |                                                          | Three Months Ended |        | Six Months Ended
|                                                                      |                                                          | June 30,           |        | June 30,        
|                                                                      |                                                          |                    |        |                 
|                                                                      |                                                          | 2000               |        | 2001             |   | 2000 |        | 2001  
|                                                                      |                                                          |                    |        |                  |   |      |        |       
|REVENUES:                                                             |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Service                                                  |                    | $      | 34,150           |   |      | $      | 29,532 |   |   | $       | 63,447  |   |   | $      | 72,187 |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Tower ownership and management                           |                    |        | 134              |   |      |        |       |   |   |         | 983     |   |   |        |       |  
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                      |                                                          |                    | 34,284 |                  |   |      | 29,532 |        |   |   | 64,430  |         |   |   | 72,187 |       
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|COST OF REVENUES:                                                     |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Service                                                  |                    |        | 24,719           |   |      |        | 24,654 |   |   |         | 46,440  |   |   |        | 57,401 |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Tower ownership and management                           |                    |        | 61               |   |      |        |       |   |   |         | 323     |   |   |        |       |  
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                      |                                                          |                    | 24,780 |                  |   |      | 24,654 |        |   |   | 46,763  |         |   |   | 57,401 |       
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|GROSS PROFIT                                                          |                                                          |                    | 9,504  |                  |   |      | 4,878  |        |   |   | 17,667  |         |   |   | 14,786 |       
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|OPERATING (INCOME) EXPENSE:                                           |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Sales and marketing                                      |                    |        | 2,274            |   |      |        | 1,612  |   |   |         | 4,147   |   |   |        | 3,618  |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | General and administrative                               |                    |        | 4,807            |   |      |        | 2,449  |   |   |         | 8,853   |   |   |        | 6,636  |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Gain on sale of tower portfolio and
	administration, net |                    |        | (4,088           | ) |      |        | (718   | ) |   |         | (25,306 | ) |   |        | (2,323 | )
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Depreciation and amortization                            |                    |        | 641              |   |      |        | 745    |   |   |         | 1,593   |   |   |        | 1,465  |  
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                      |                                                          |                    | 3,634  |                  |   |      | 4,088  |        |   |   | (10,713 | )       |   |   | 9,396  |       
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|OPERATING INCOME                                                      |                                                          |                    | 5,870  |                  |   |      | 790    |        |   |   | 28,380  |         |   |   | 5,390  |       
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|OTHER INCOME (EXPENSE):                                               |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Interest income                                          |                    |        | 588              |   |      |        | 497    |   |   |         | 818     |   |   |        | 1,086  |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Interest expense                                         |                    |        | (27              | ) |      |        |       |   |   |         | (255    | ) |   |        |       |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Other                                                    |                    |        | (169             | ) |      |        | (139   | ) |   |         | (563    | ) |   |        | (188   | )
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                      |                                                          |                    | 392    |                  |   |      | 358    |        |   |   |        |         |   |   | 898    |       
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|INCOME FROM OPERATIONS BEFORE INCOME TAXES                            |                                                          |                    | 6,262  |                  |   |      | 1,148  |        |   |   | 28,380  |         |   |   | 6,288  |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|PROVISION FOR INCOME TAXES                                            |                                                          |                    | 2,630  |                  |   |      | 459    |        |   |   | 11,920  |         |   |   | 2,515  |       
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|NET INCOME                                                            |                                                          | $                  | 3,632  |                  |   | $    | 689    |        |   | $ | 16,460  |         |   | $ | 3,773  |       
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|NET INCOME PER SHARE:                                                 |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Basic                                                    |                    | $      | 0.18             |   |      | $      | 0.03   |   |   | $       | 0.81    |   |   | $      | 0.18   |  
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                      | Diluted                                                  |                    | $      | 0.16             |   |      | $      | 0.03   |   |   | $       | 0.72    |   |   | $      | 0.18   |  
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|WEIGHTED AVERAGE SHARES USED IN CALCULATION OF
	NET INCOME PER SHARE: |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Basic                                                    |                    |        | 20,384           |   |      |        | 20,516 |   |   |         | 20,272  |   |   |        | 20,469 |  
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       
|                                                                      | Diluted                                                  |                    |        | 22,730           |   |      |        | 20,595 |   |   |         | 22,744  |   |   |        | 20,929 |  
|                                                                      |                                                          |                    |        |                  |   |      |        |        |   |   |         |         |   |   |        |       

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,                            |         | June 30,   
|                                                                                 |                                                                                                                                  | 2000                                    |         | 2001       
|                                                                                 |                                                                                                                                  |                                         |         |            
|                                                                                 |                                                                                                                                  |                                         |         | (Unaudited)
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|ASSETS:                                                                          |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Current assets:                                                                  |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Cash and cash equivalents                                                                                                        |                                         | $       | 22,271      |        |   | $       | 18,219 |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Short-term investments                                                                                                           |                                         |         | 20,064      |        |   |         | 20,013 |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Receivables, net of allowance for doubtful
	accounts of $1,829 and $3,221 at December 31, 2000 and
	June 30, 2001, respectively: |                                         |         |             |        |   |         |        |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 |                                                                                                                                  | Trade accounts receivable               |         |             | 31,306 |   |         |        | 28,620 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 |                                                                                                                                  | Due from related parties and affiliates |         |             | 746    |   |         |        | 689    | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 |                                                                                                                                  | Unbilled receivables                    |         |             | 17,050 |   |         |        | 15,212 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Deferred income taxes, net                                                                                                       |                                         |         | 1,850       |        |   |         | 3,443  |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Prepaid expenses and other current assets                                                                                        |                                         |         | 1,858       |        |   |         | 1,571  |       
|                                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                 |                                                                                                                                  | Total current assets                    |         |             | 95,145 |   |         |        | 87,767 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Property and equipment, net                                                      |                                                                                                                                  |                                         | 5,638   |             |        |   | 5,705   |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Investments                                                                      |                                                                                                                                  |                                         | 3,650   |             |        |   | 5,369   |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Deferred income taxes, net                                                       |                                                                                                                                  |                                         | 5,066   |             |        |   | 3,175   |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Other assets                                                                     |                                                                                                                                  |                                         | 546     |             |        |   | 484     |       
|                                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                 |                                                                                                                                  | $                                       | 110,045 |             |        | $ | 102,500 |       
|                                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       
|LIABILITIES AND SHAREHOLDERS
	EQUITY:                                           |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Current liabilities:                                                             |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Accounts payable                                                                                                                 |                                         | $       | 5,926       |        |   | $       | 3,203  |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Accrued expenses                                                                                                                 |                                         |         | 10,465      |        |   |         | 5,845  |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Accrued employee compensation and benefits                                                                                       |                                         |         | 12,420      |        |   |         | 12,878 |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Deferred revenue                                                                                                                 |                                         |         | 332         |        |   |         | 570    |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Income taxes payable                                                                                                             |                                         |         | 5,725       |        |   |         | 4,036  |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Other current liabilities                                                                                                        |                                         |         | 817         |        |   |         | 1,513  |       
|                                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                 |                                                                                                                                  | Total current liabilities               |         |             | 35,685 |   |         |        | 28,045 | 
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Other liabilities                                                                |                                                                                                                                  |                                         | 5,944   |             |        |   | 2,183   |       
|                                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                 |                                                                                                                                  | Total liabilities                       |         |             | 41,629 |   |         |        | 30,228 | 
|                                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       
|Preferred stock:                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | 10,000 shares authorized; 0 shares
	issued and outstanding                                                                       |                                         |         |            |        |   |         |       |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Class A common stock, $0.01 par value:                                           |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | 70,000 shares authorized; 12,040 and
	12,151 shares issued and outstanding at December 31,
	2000 and June 30, 2001, respectively |                                         |         | 120         |        |   |         | 121    |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Class B common stock, $0.01 par value:                                           |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | 20,000 shares authorized; 8,450 and
	8,447 shares issued and outstanding at December 31,
	2000 and June 30, 2001, respectively   |                                         |         | 85          |        |   |         | 84     |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Paid-in capital                                                                  |                                                                                                                                  |                                         | 91,407  |             |        |   | 92,012  |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Accumulated deficit                                                              |                                                                                                                                  |                                         | (18,381 | )           |        |   | (14,608 | )     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Notes receivable from shareholders                                               |                                                                                                                                  |                                         | (2,325  | )           |        |   | (2,325  | )     
|                                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                 | Subtotal                                                                                                                         |                                         |         | 70,906      |        |   |         | 75,284 |       
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Accumulated other comprehensive loss 
	foreign currency translation adjustments |                                                                                                                                  |                                         | (2,490  | )           |        |   | (3,012  | )     
|                                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                 |                                                                                                                                  | Total shareholders equity              |         |             | 68,416 |   |         |        | 72,272 | 
|                                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       
|                                                                                 |                                                                                                                                  | $                                       | 110,045 |             |        | $ | 102,500 |       
|                                                                                 |                                                                                                                                  |                                         |         |             |        |   |         |       

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)


|                                                      |                                                                                |                                             |                                          |         |         |         |        |        |        |        |  
|----------------------------------------------------- | ------------------------------------------------------------------------------ | ------------------------------------------- | ---------------------------------------- | ------- | ------- | ------- | ------ | ------ | ------ | ------ | -
|                                                      |                                                                                |                                            
|                                                      |                                                                                | Six Months Ended                           
|                                                      |                                                                                | June 30,                                   
|                                                      |                                                                                |                                            
|                                                      |                                                                                | 2000                                        |                                          | 2001   
|                                                      |                                                                                |                                             |                                          |        
|Cash flows from operating activities:                 |                                                                                |                                             |                                          |         |         |         |        |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Net income                                                                     |                                             | $                                        | 16,460  |         |         | $      | 3,773  |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Adjustments to reconcile net income to net cash
	used in operating activities: |                                             |                                          |         |         |         |        |        |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                | Depreciation and amortization               |                                          |         | 1,593   |         |        |        | 1,465  |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                | Provision (recovery) for doubtful accounts  |                                          |         | (546    | )       |        |        | 1,733  |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                | Deferred income taxes                       |                                          |         | 11,347  |         |        |        | 298    |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                | Gain on sale of tower portfolio             |                                          |         | (25,306 | )       |        |        | (2,323 | )     
|                                                      |                                                                                | Changes in operating assets and liabilities |                                          |         |         |         |        |        |        |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                |                                             | Trade, unbilled, and other receivables   |         |         | (20,182 | )      |        |        | 2,865  |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                |                                             | Accounts payable and accrued expenses    |         |         | (5,820  | )      |        |        | (6,865 | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                |                                             | Other current assets and liabilities     |         |         | 81      |        |        |        | (509   | )
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                |                                             | Other non-current assets and liabilities |         |         | (369    | )      |        |        | (1,672 | )
|                                                      |                                                                                |                                             |                                          |         |         |         |        |       
|Net cash used in operating activities                 |                                                                                |                                             | (22,742                                  | )       |         |         | (1,235 | )     
|                                                      |                                                                                |                                             |                                          |         |         |         |        |       
|Cash flows from investing activities:                 |                                                                                |                                             |                                          |         |         |         |        |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | (Purchases) sales of short term investments                                    |                                             |                                          | (23,340 | )       |         |        | 51     |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Purchases of property and equipment                                            |                                             |                                          | (2,620  | )       |         |        | (1,604 | )     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from sale of property and equipment                                   |                                             |                                          | 209     |         |         |        | (93    | )     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Investments                                                                    |                                             |                                          |        |         |         |        | (1,732 | )     
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from tower portfolio sale, net                                        |                                             |                                          | 69,938  |         |         |        |       |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Redemption of minority shareholders                                            |                                             |                                          | (7,174  | )       |         |        |       |       
|                                                      |                                                                                |                                             |                                          |         |         |         |        |       
|Net cash provided by (used in) investing
	activities  |                                                                                |                                             | 37,013                                   |         |         |         | (3,378 | )     
|                                                      |                                                                                |                                             |                                          |         |         |         |        |       
|Cash flows from financing activities:                 |                                                                                |                                             |                                          |         |         |         |        |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from issuance of common stock, net                                    |                                             |                                          | 270     |         |         |        | 298    |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from exercise of options                                              |                                             |                                          | 1,278   |         |         |        | 263    |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Proceeds from line of credit                                                   |                                             |                                          | (14,235 | )       |         |        |       |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Payments on line of credit                                                     |                                             |                                          | 9,700   |         |         |        |       |       
|                                                      |                                                                                |                                             |                                          |         |         |         |        |       
|Net cash provided by (used in) financing
	activities  |                                                                                |                                             | (2,987                                   | )       |         |         | 561    |       
|                                                      |                                                                                |                                             |                                          |         |         |         |        |       
|Net increase (decrease) in cash and cash
	equivalents |                                                                                |                                             | 11,284                                   |         |         |         | (4,052 | )     
|                                                     
|                                                     
|                                                     
|                                                     
|Cash and cash equivalents at beginning of period      |                                                                                |                                             | 1,951                                    |         |         |         | 22,271 |       
|                                                      |                                                                                |                                             |                                          |         |         |         |        |       
|Cash and cash equivalents at end of period            |                                                                                | $                                           | 13,235                                   |         |         | $       | 18,219 |       
|                                                      |                                                                                |                                             |                                          |         |         |         |        |       
|Supplemental disclosures of cash flow information:    |                                                                                |                                             |                                          |         |         |         |        |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Cash paid during the quarter for:                                              |                                             |                                          |         |         |         |        |        |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                | Interest                                    |                                          | $       | 148     |         |        | $      |       |       
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                                                                | Income taxes                                |                                          |         | 887     |         |        |        | 3,698  |       

See accompanying notes to condensed consolidated
financial statements.

5



---



##### Table of Contents



LCC International, Inc. and
Subsidiaries




Notes to Condensed Consolidated Financial
Statements

(Unaudited)


Note 1: Description of
Operations

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

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

Note 2: Basis of Presentation

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

Certain information and footnote disclosure
normally included in the consolidated financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or
omitted. The interim financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2000.
Operating results for the interim periods are not necessarily
indicative of results for an entire year.

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

Note 3: Other Comprehensive
Income

Comprehensive income is defined as net income
plus the change in equity of a business enterprise during a
period from transactions and other events and circumstances from
non-owner sources. Other comprehensive income refers to
revenues, expenses, gains and losses that under accounting
principles generally accepted in the United States of America
are included in comprehensive income, but excluded from net
income. Other comprehensive income consists solely of foreign
currency translation adjustments at June 30, 2000 and 2001.
Comprehensive income, for the three and six months ended
June 30, 2000 and 2001 is as follows (in thousands).

|                                                             |  |                    |       |                  |  |      |      |      |  |   |        |   |  |   |       |  
|------------------------------------------------------------ |  | ------------------ | ----- | ---------------- |  | ---- | ---- | ---- |  | - | ------ | - |  | - | ----- | -
|                                                             |  |                    |       |                 
|                                                             |  | Three Months Ended |       | Six Months Ended
|                                                             |  | June 30,           |       | June 30,        
|                                                             |  |                    |       |                 
|                                                             |  | 2000               |       | 2001             |  | 2000 |      | 2001
|                                                             |  |                    |       |                  |  |      |      |     
|Net income                                                   |  | $                  | 3,632 |                  |  | $    | 689  |      |  | $ | 16,460 |   |  | $ | 3,773 |  
|                                                             |  |                    |       |                  |  |      |      |      |  |   |        |   |  |   |       |  
|Other comprehensive loss, before tax                         |  |                    | (540  | )                |  |      | (170 | )    |  |   | (327   | ) |  |   | (870  | )
|                                                            
|                                                            
|                                                            
|                                                            
|Income tax benefit related to items of
	comprehensive income |  |                    | (227  | )                |  |      | (68  | )    |  |   | (137   | ) |  |   | (348  | )
|                                                             |  |                    |       |                  |  |      |      |      |  |   |        |   |  |   |       |  
|Other comprehensive loss, net of tax                         |  |                    | (313  | )                |  |      | (102 | )    |  |   | (190   | ) |  |   | (522  | )
|                                                             |  |                    |       |                  |  |      |      |      |  |   |        |   |  |   |       |  
|Comprehensive income                                         |  | $                  | 3,319 |                  |  | $    | 587  |      |  | $ | 16,270 |   |  | $ | 3,251 |  
|                                                             |  |                    |       |                  |  |      |      |      |  |   |        |   |  |   |       |  

Note 4: Investments

In February 2001, the Company invested an
additional $1.7 million to maintain its 15.0% interest in
Plan + Design Netcare AG (PDN). In
addition to the initial investment, in August 2000, the Company
entered into a five-year joint marketing agreement with PDN. The
Company uses the cost method to account for this investment.

6



---



##### Table of Contents



In June 2001, the US Court of Appeals for the
District of Columbia issued its decision in the case
captionedNextWave Personal Communications Inc. and
NextWave Power Partners Inc. v. Federal Communications
Commission and United States of America, et. al, Case Nos.
00-1402 and 00-1403. The US Court of Appeals ruled that a
provision in federal bankruptcy law prohibited the Federal
Communications Commission (the FCC) from canceling
certain broadband personal communications services licenses that
it had granted to NextWave Personal Communications Inc.
(NPCI). The FCC revoked these licenses after NPCI
filed for bankruptcy protection on June 8, 1998. On
July 19, 2001, Alaska Native Wireless, L.L.C., Verizon
Wireless and Voicestream Wireless filed a petition to initiate
an investigation and audit with the FCC requesting an
investigation of whether NextWave is eligible to hold C and F
Block licenses, whether it complies with the foreign ownership
requirements, and whether NextWave has the ability to meets its
future regulatory responsibilities. NextWave filed a response on
July 30, 2001 and the matter is pending. On August 6,
2001, the FCC filed a motion with the US Court of Appeals
seeking to stay execution of the decision and indicating that
the Acting Solicitor General has authorized the filing of a
petition for certiorari before the United States Supreme Court,
which the FCC plans to file on or before September 22, 2001.

Also on August 6, 2001, NextWave filed its
Second Plan of Reorganization under Chapter 11 with the US
Bankruptcy Court for the Southern District of New York (the
NextWave Plan).

The Company currently holds 1,666,666 shares
of Class B Common Stock of NextWave Telecom, Inc.
(NextWave Telecom). NextWave Telecom is the parent
corporation of NPCI. The Company acquired the shares of NextWave
Telecom in May 1996 for a purchase price of $5.0 million in
connection with a series of transactions entered into between
the Company and NextWave Telecom under an agreement dated
March 12, 1996 (the March Agreement). The
Company also acquired warrants to purchase an additional
123,356 shares of Class B Common Stock at
$3.00 per share. Under the March Agreement, NextWave
Telecom agreed to use the Company to provide not less than (a)
$14 million of radio frequency engineering services and (b)
$35 million of system deployment services. These services
were to be provided in increments of twenty-percent (20%) each
year during the five-year period following the execution of the
March Agreement. NextWave Telecom filed for bankruptcy
protection on December 23, 1998. The March Agreement has
not been assumed or rejected by NextWave Telecom in the
bankruptcy proceeding. Shares of Class B Common Stock of
NextWave Telecom have traded on the OTC Bulletin Board under the
symbol NXLC.

The total amount owed to the Company by NextWave
Telecom and certain of its subsidiaries (collectively,
NextWave) is approximately $14.25 million, plus
post-petition interest thereon. This amount includes the
Companys interest, amounting to approximately $650,000
plus post-petition interest thereon, in a general unsecured
claim against NextWave that was acquired by the Company in
connection with its acquisition of Koll
Telecommunications LLC in 1997. The total amount owed by
NextWave to the Company is reflected in the Companys
general unsecured claims filed in bankruptcy court. These
unsecured claims will be amended and increased if the March
Agreement is rejected in the bankruptcy proceedings.

As of June 30, 2001, the Company did not
carry any assets or liabilities on its books or records relating
to its equity investment in NextWave or the March Agreement;
these balances were written off in previous years.

In September 1999, the Company, through its
wholly-owned subsidiary, LCC, United Kingdom, Limited, acquired
19.9% of Tecnosistemi S.p.A. (Tecnosistemi)
(formerly, Italtel Sistemi, S.p.A.) for $1.1 million. The
Company, until September 2000, applied the equity method to
account for its investment in Tecnosistemi. During
September 2000, Tecnosistemi merged into Tecneudosia S.p.A.
As a result of the merger, the Companys ownership
percentage was decreased to 9.4% and the Company discontinued
application of the equity method. In July 2001, the Company sold
all of its shares in Tecnosistemi in consideration for a cash
purchase price of Euro 1,410,193 ($1.2 million USD).

Note 5: Tower Portfolio Sale and
Administration

During March 2000, Microcell
Management, Inc. (Microcell), a subsidiary of
the Company, completed the initial closing of the sale of its
telecommunication tower portfolio to Pinnacle Towers Inc.
(Pinnacle) pursuant to an Asset Purchase Agreement
between Pinnacle and Microcell. Pursuant to the Asset Purchase
Agreement, Microcell agreed to sell up to 197 tower sites owned
or to be constructed by Microcell for a total purchase price of
up to $80 million in cash payable as the sites are conveyed
to Pinnacle.

7



---



##### Table of Contents



As of August 2001, 177 tower sites were conveyed
to Pinnacle for net proceeds of $72.2 million. All of the
towers that will convey have been conveyed to Pinnacle.


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

During 2000, Microcell and Pinnacle have also
entered into a Tower Services Agreement pursuant to which
Microcell will provide Pinnacle with audit, maintenance, and
program management services regarding site improvement and
capacity upgrades for an initial 204 sites and additional sites
that may be added by mutual agreement. The Services Agreement
provides for minimum annual payments to Microcell of
$10 million for project management and audit services, of
which $2.2 million has been executed to date. The Services
Agreement also provides for approximately $1.0 million per
year for maintenance services based on the current number of
sites as to which Microcell has been engaged. In each case, the
pricing and scope of services are subject to annual review and
re-negotiation on or around June 1 of each year. The
Company is engaged in negotiations with Pinnacle with respect to
the renewal of the Tower Services Agreement. It is unlikely that
the $10.0 million annual commitment will be renewed into
the current contract year.

Note 6: Contingencies

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

Note 7: Segment Information

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

Segment detail is summarized as follows (in
thousands):

|                          |                         |               |       |                 |        |               |       |        |         |      |        |      |       |   |       |   |     |   |        |        |        |   |       |        |         | 
|------------------------- | ----------------------- | ------------- | ----- | --------------- | ------ | ------------- | ----- | ------ | ------- | ---- | ------ | ---- | ----- | - | ----- | - | --- | - | ------ | ------ | ------ | - | ----- | ------ | ------- | 
|                          |                         |               |       |                 |        |               |       |        |         |     
|                          |                         |               |       | Tower Ownership |        |              
|                          |                         | Services      |       | and Management  |        | Segment Total
|                          |                         |               |       |                 |        |              
|                          |                         | 2000          |       | 2001            |        | 2000          |       | 2001   |         | 2000 |        | 2001
|                          |                         |               |       |                 |        |               |       |        |         |      |        |     
|Six Months Ended June 30, |                         |               |       |                 |        |               |       |        |         |      |        |      |       |   |       |   |     |   |        |        |        |   |       |       
|                         
|                         
|                         
|                         
|Revenues:                 |                         |               |       |                 |        |               |       |        |         |      |        |      |       |   |       |   |     |   |        |        |        |   |       |       
|                         
|                         
|                         
|                         
|                          | From external customers |               | $     | 63,447          |        |               | $     | 72,187 |         |      | $      | 983  |       |   | $     |  |     |   | $      | 64,430 |        |   | $     | 72,187 |        
|                         
|                         
|                         
|                         
|                          | Inter-segment revenue   |               |       |                |        |               |       |       |         |      |        |     |       |   |       |  |     |   |        |       |        |   |       |       |        
|                          |                         |               |       |                 |        |               |       |        |         |      |        |      |       |   |       |   |     |   |        |        |        |   |       |       
|                          |                         | Total revenue |       | $               | 63,447 |               |       | $      | 72,187  |      |        | $    | 983   |   |       | $ |    |   |        | $      | 64,430 |   |       | $      | 72,187  | 
|                          |                         |               |       |                 |        |               |       |        |         |      |        |      |       |   |       |   |     |   |        |        |        |   |       |       
|Net income                |                         | $             | 6,902 |                 |        | $             | 5,270 |        |         | $    | 15,023 |      |       | $ | 1,395 |   |     | $ | 21,925 |        |        | $ | 6,625 |       
|                          |                         |               |       |                 |        |               |       |        |         |      |        |      |       |   |       |   |     |   |        |        |        |   |       |       
|                          |                         | Total assets  |       | $               | 95,783 |               |       | $      | 101,930 |      |        | $    | 2,264 |   |       | $ | 570 |   |        | $      | 98,047 |   |       | $      | 102,500 | 
|                          |                         |               |       |                 |        |               |       |        |         |      |        |      |       |   |       |   |     |   |        |        |        |   |       |       

|                            |                         |               |       |                 |        |               |       |        |        |      |       |      |     |   |     |   |   |   |       |        |        |   |       |        |        | 
|--------------------------- | ----------------------- | ------------- | ----- | --------------- | ------ | ------------- | ----- | ------ | ------ | ---- | ----- | ---- | --- | - | --- | - | - | - | ----- | ------ | ------ | - | ----- | ------ | ------ | 
|                            |                         |               |       |                 |        |               |       |        |        |     
|                            |                         |               |       | Tower Ownership |        |              
|                            |                         | Services      |       | and Management  |        | Segment Total
|                            |                         |               |       |                 |        |              
|                            |                         | 2000          |       | 2001            |        | 2000          |       | 2001   |        | 2000 |       | 2001
|                            |                         |               |       |                 |        |               |       |        |        |      |       |     
|Three Months Ended June 30, |                         |               |       |                 |        |               |       |        |        |      |       |      |     |   |     |   |   |   |       |        |        |   |       |       
|                           
|                           
|                           
|                           
|Revenues:                   |                         |               |       |                 |        |               |       |        |        |      |       |      |     |   |     |   |   |   |       |        |        |   |       |       
|                           
|                           
|                           
|                           
|                            | From external customers |               | $     | 34,150          |        |               | $     | 29,532 |        |      | $     | 134  |     |   | $   |  |   |   | $     | 34,284 |        |   | $     | 29,532 |       
|                           
|                           
|                           
|                           
|                            | Inter-segment revenue   |               |       |                |        |               |       |       |        |      |       |     |     |   |     |  |   |   |       |       |        |   |       |       |       
|                            |                         |               |       |                 |        |               |       |        |        |      |       |      |     |   |     |   |   |   |       |        |        |   |       |       
|                            |                         | Total revenue |       | $               | 34,150 |               |       | $      | 29,532 |      |       | $    | 134 |   |     | $ |  |   |       | $      | 34,284 |   |       | $      | 29,532 | 
|                            |                         |               |       |                 |        |               |       |        |        |      |       |      |     |   |     |   |   |   |       |        |        |   |       |       
|Net income                  |                         | $             | 4,667 |                 |        | $             | 1,629 |        |        | $    | 2,413 |      |     | $ | 472 |   |   | $ | 7,080 |        |        | $ | 2,101 |       
|                            |                         |               |       |                 |        |               |       |        |        |      |       |      |     |   |     |   |   |   |       |        |        |   |       |       

8



---



##### Table of Contents



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

|                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|---------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                   |  |                    |        |                 
|                                   |  | Three Months Ended |        | Six Months Ended
|                                   |  | June 30,           |        | June 30,        
|                                   |  |                    |        |                 
|                                   |  | 2000               |        | 2001             |  | 2000 |        | 2001
|                                   |  |                    |        |                  |  |      |        |     
|Segment total                      |  | $                  | 7,080  |                  |  | $    | 2,101  |      |  | $ | 21,925 |   |  | $ | 6,665  |  
|                                  
|                                  
|                                  
|                                  
|Unallocated corporate expenditures |  |                    | (3,448 | )                |  |      | (1,412 | )    |  |   | (5,465 | ) |  |   | (3,167 | )
|                                  
|                                  
|                                  
|                                  
|Eliminations                       |  |                    |       |                  |  |      |       |      |  |   |       |   |  |   | 275    |  
|                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|Consolidated net income            |  | $                  | 3,632  |                  |  | $    | 689    |      |  | $ | 16,460 |   |  | $ | 3,773  |  
|                                   |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  

Note 8:  Recovery of
Receivables

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

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

9



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##### Table of Contents



LCC International, Inc. and
Subsidiaries






Managements Discussion and Analysis
of

Financial Condition and Results of
Operations


For the Three and Six Months Ended
June 30, 2000 and 2001

This quarterly report on Form 10-Q contains
forward-looking statements within the meaning of
Section 27A of the Securities Exchange Act of 1934. The
Managements Discussion and Analysis of Financial Condition
and Results of Operations includes, without limitation,
forward-looking statements regarding the Companys ability
to pursue and secure new business opportunities, its tower
business, and its working capital. A more complete discussion of
business risks is included in the Companys Annual Report
on Form 10-K for the year ended December 31, 2000.

Overview

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

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

The Company operates in a highly competitive
environment subject to rapid technological change and emergence
of new technologies. Historically, the key drivers of growth in
the companys wireless services business have been
(1) the issuance of new or additional licenses to wireless
operators; (2) the introduction of new services or
technologies; (3) increases in the number of subscribers
served by wireless operators; and (4) the increasing
complexity of wireless systems in operation.

The Companys principal sources of revenues
are design services and system deployment services. The Company
provides design services on a contract basis, usually in a
customized plan for each client and generally charges for
engineering services on a time and materials or fixed price
basis. The Company generally offers its deployment services on a
fixed-price, time-certain basis. Revenues are recognized for
such contracts using the percentage-of-completion method. Under
the percentage-of-completion method, expenses on each project
are recognized as incurred, and revenues are recognized based on
the ratio of the current costs incurred for the project to the
then estimated total costs of the project. Accordingly, revenue
recognized in a given period depends on, among other things, the
costs incurred on each individual project and the current
estimate of the total costs to complete a project. If cost
estimates increase, gross profit for any single project may be
significantly reduced or eliminated. If the total contract cost
estimates indicate that there is a loss, such loss is recognized
in the period such determination is made.

Cost of revenues consists of costs associated
with engineering design and program management services. Sales
and marketing expenses consist of salaries, sales commissions,
bonuses, travel and other expenses required to implement the
Companys marketing, sales and customer support plans.
General and administrative expenses consist of the compensation,
benefits, office and occupancy, and other costs required for the
finance, human resources, information systems and executive
office functions.

10



---



##### Table of Contents



Results of Operations

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

|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |       |       | 
|------------------------------------------ | ---------------------------------------- | ---------------------------- | ---- | ---------------- | ----- | ---- | --- | ----- | ----- |  | ---- | ----- | ----- | - | --- | ----- | ----- | 
|                                           |                                          |                             
|                                           |                                          | Percentage of Revenues      
|                                           |                                          |                             
|                                           |                                          |                              |      |                 
|                                           |                                          | Three Months Ended           |      | Six Months Ended
|                                           |                                          | June 30,                     |      | June 30,        
|                                           |                                          |                              |      |                 
|                                           |                                          | 2000                         |      | 2001             |       | 2000 |     | 2001 
|                                           |                                          |                              |      |                  |       |      |     |      
|Revenues:                                  |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|                                          
|                                          
|                                          
|                                          
|                                           | Services                                 |                              |      | 99.6             | %     |      |     | 100.0 | %     |  |      | 98.5  | %     |   |     | 100.0 | %    
|                                          
|                                          
|                                          
|                                          
|                                           | Tower ownership and management           |                              |      | 0.4              |       |      |     | 0.0   |       |  |      | 1.5   |       |   |     | 0.0   |      
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|                                           |                                          | Total revenues               |      |                  | 100.0 |      |     |       | 100.0 |  |      |       | 100.0 |   |     |       | 100.0 | 
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|Cost of revenues:                          |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|                                          
|                                          
|                                          
|                                          
|                                           | Services                                 |                              |      | 72.1             |       |      |     | 83.5  |       |  |      | 72.1  |       |   |     | 79.5  |      
|                                          
|                                          
|                                          
|                                          
|                                           | Tower ownership and management           |                              |      | 0.2              |       |      |     | 0.0   |       |  |      | 0.5   |       |   |     | 0.0   |      
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|                                           |                                          | Total cost of revenues       |      |                  | 72.3  |      |     |       | 83.5  |  |      |       | 72.6  |   |     |       | 79.5  | 
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|Gross profit:                              |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|                                          
|                                          
|                                          
|                                          
|                                           | Services                                 |                              |      | 27.5             |       |      |     | 16.5  |       |  |      | 26.4  |       |   |     | 20.5  |      
|                                          
|                                          
|                                          
|                                          
|                                           | Tower ownership and management           |                              |      | 0.2              |       |      |     | 0.0   |       |  |      | 1.0   |       |   |     | 0.0   |      
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|                                           |                                          | Total gross profit           |      |                  | 27.7  |      |     |       | 16.5  |  |      |       | 27.4  |   |     |       | 20.5  | 
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|Operating expenses:                        |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|                                          
|                                          
|                                          
|                                          
|                                           | Sales and marketing                      |                              |      | 6.6              |       |      |     | 5.5   |       |  |      | 6.4   |       |   |     | 5.0   |      
|                                          
|                                          
|                                          
|                                          
|                                           | General and administrative               |                              |      | 14.0             |       |      |     | 8.3   |       |  |      | 13.7  |       |   |     | 9.2   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Tower portfolio sale and operations, net |                              |      | (11.9            | )     |      |     | (2.4  | )     |  |      | (39.3 | )     |   |     | (3.2  | )    
|                                          
|                                          
|                                          
|                                          
|                                           | Depreciation and amortization            |                              |      | 1.9              |       |      |     | 2.5   |       |  |      | 2.5   |       |   |     | 2.0   |      
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|                                           |                                          | Total operating expenses     |      |                  | 10.6  |      |     |       | 13.9  |  |      |       | (16.7 | ) |     |       | 13.0  | 
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|Operating income                           |                                          |                              | 17.1 |                  |       |      | 2.6 |       |       |  | 44.1 |       |       |   | 7.5 |      
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|Other income (expense):                    |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|                                          
|                                          
|                                          
|                                          
|                                           | Interest income                          |                              |      | 1.7              |       |      |     | 1.7   |       |  |      | 1.3   |       |   |     | 1.5   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Interest expense                         |                              |      | 0.0              |       |      |     | 0.0   |       |  |      | (0.4  | )     |   |     | 0.0   |      
|                                          
|                                          
|                                          
|                                          
|                                           | Other                                    |                              |      | (0.5             | )     |      |     | (0.5  | )     |  |      | (0.9  | )     |   |     | (0.3  | )    
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|                                           |                                          | Total other income (expense) |      |                  | 1.2   |      |     |       | 1.2   |  |      |       | 0.0   |   |     |       | 1.2   | 
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|Income from operations before income taxes |                                          |                              | 18.3 |                  |       |      | 3.8 |       |       |  | 44.1 |       |       |   | 8.7 |      
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|Provision for income taxes                 |                                          |                              | 7.7  |                  |       |      | 1.6 |       |       |  | 18.5 |       |       |   | 3.5 |      
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      
|Net income                                 |                                          |                              | 10.6 | %                |       |      | 2.2 | %     |       |  | 25.6 | %     |       |   | 5.2 | %    
|                                           |                                          |                              |      |                  |       |      |     |       |       |  |      |       |       |   |     |      

11



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##### Table of Contents



Three Months Ended June 30,
2000

Compared to


Three Months Ended June 30,
2001


Revenues.Revenues
for the three months ended June 30, 2001 were
$29.5 million compared to $34.3 million for the prior
year, a decrease of $4.8 million or 13.9%. The decrease is
largely related to international operations primarily in the
Middle East, which is attributable to a slowdown in a large
network deployment contract. In addition, approximately 21% of
the overall revenue decline can be attributed to the strength of
the dollar to those international currencies in which the
Company conducts business compared to the same quarter in the
prior year.

Cost of Revenues.Cost of revenues for the three months ended June 30, 2001
was $24.7 million compared to $24.8 million for the
prior year, a decrease of $0.1 million. As a percentage of
total revenues, cost of revenues was 83.5% and 72.3% for 2001
and 2000, respectively. Cost of revenues was higher as a percent
of revenue in 2001 because of an increase in contract costs
estimated to complete a large, fixed price contract in the
Middle East of $2.2 million, and an additional provision
for expatriate employee reimbursed taxes of $1.3 million.

Gross Profit.Gross
profit for the three months ended June 30, 2001 was
$4.9 million compared to $9.5 million for the prior
year, a decrease of $4.6 million or 48.7%. As a percentage
of total revenues, gross profit was 16.5% and 27.7% for 2001 and
2000, respectively. The decline in gross profit as a percentage
of revenues in 2001 is largely attributable to the additional
costs as discussed in Cost of Revenues.

Sales and Marketing.Sales and marketing expenses were $1.6 million for the
three months ended June 30, 2001 compared to
$2.3 million for the prior year, a decrease of
$0.7 million. As a percentage of total revenues, sales and
marketing was 5.5% and 6.6% for 2001 and 2000, respectively. The
decrease in expense is attributable both to the timing of
certain sales and marketing expenses as well as reductions from
cost saving measures.

General and
Administrative.General and
administrative expenses were $2.4 million for the three
months ended June 30, 2001 compared to $4.8 million
for the prior year. General and administrative expenditures in
2001 include a net benefit of $4.9 million relative to the
recovery of a receivable balance written-off in prior years from
a bankrupt client, offset by bad debt expenses in the current
quarter of $1.5 million and an increase in severance and
related costs of $0.5 million.

Tower Portfolio Sale and
Administration.During February 2000,
the Company entered into an agreement for the sale of tower
sites that it owned. As part of the sale agreement the Company
agreed to lease unoccupied space on the towers, effectively
guaranteeing a minimum rent level of $5.2 million on the
towers sold. The gain from the tower portfolio sale deferred an
amount corresponding to this rent commitment, until the space
was leased to another tenant. In the current quarter the company
recognized $0.7 million of this previously deferred gain.

Depreciation and
Amortization.Depreciation and
amortization expense was $0.7 million for the three months
ended June 30, 2001 compared to $0.6 million for the
prior year.

Interest Income/
Expense.Interest income was
$0.5 million for the three months ended June 30, 2001
compared to $0.6 million for the prior year.

Other Expense.Other
expense was $0.1 million for the three months ended
June 30, 2001 compared to $0.2 million for the prior
year.

Provision for Income
Taxes.The provision for income taxes
was recorded for the three months ended June 30, 2001 using
an effective income tax rate of 40.0% compared to 42.0% for the
comparable period in 2000. The higher tax rate in 2000 reflects
permanent differences relative to the tower portfolio sale.

Net Income.Net
income was $0.7 million for the three months ended
June 30, 2001 compared to $3.6 million in the prior
year. The difference in net income can be attributed to the gain
from the tower portfolio sale, the decrease in gross profit in
2001 partially offset by a reduction in general and
administrative expense and sales and marketing expense as
described above.

12



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##### Table of Contents



Six Months Ended June 30, 2000

Compared to


Six Months Ended June 30, 2001


Revenues.Revenues
for the six months ended June 30, 2001 were
$72.2 million compared to $64.4 million for the prior
year, an increase of $7.8 million or 12.0%. Increased
revenue from the XM Satellite contract of
$11.7 million was the primary driver of the increase,
offset by decreases in international operations, primarily in
the Middle East, attributable to a slowdown in a large network
deployment contract.

Cost of Revenues.Cost of revenues for the six months ended June 30, 2001 was
$57.4 million compared to $46.8 million for the prior
year, an increase of $10.6 million. As a percentage of
total revenues, cost of revenues was 79.5% and 72.6% for 2001
and 2000, respectively. Cost of revenues were higher as a
percent of revenue in 2001 because of an increase in contract
costs estimated to complete a large fixed price contract in the
Middle East of $2.2 million, an additional provision for
expatriate employee reimbursed taxes of $1.3 million, and
costs associated with lower utilization of professional staff of
$0.6 million.

Gross Profit.Gross
profit for the six months ended June 30, 2001 was
$14.8 million compared to $17.7 million for the prior
year, a decrease of $2.9 million or 16.3%. As a percentage
of total revenues, gross profit was 20.5% and 27.4% for 2001 and
2000, respectively. The decline in gross profit margin in 2001
is largely attributable to the additional costs as discussed in
Cost of Revenues.

Sales and Marketing.Sales and marketing expenses were $3.6 million for the six
months ended June 30, 2001 compared to $4.1 million
for the prior year, a decrease of $0.5 million. As a
percentage of total revenues, sales and marketing was 5.0% and
6.4% for 2001 and 2000, respectively. The decrease is attributed
both to the timing of certain sales and marketing expenses as
well as reductions from cost saving measures.

General and
Administrative.General and
administrative expenses were $6.6 million for the six
months ended June 30, 2001 compared to $8.9 million
for the prior year. General and administrative expenditures in
2001 include a net benefit of $7.4 million relative to the
recovery of a receivable balance written-off in prior years from
two bankrupt clients, offset by bad debt expenses for the
current year of $1.7 million, employee severance and
related costs of $0.6 million, and increased health care
costs of $0.4 million.

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

Depreciation and
Amortization.Depreciation and
amortization expense was $1.5 million for the six months
ended June 30, 2001 compared to $1.6 million for the
prior year. The decrease expense is largely the result of a
reduction in the assets due to the Companys tower
portfolio sale.

Interest Income/
Expense.Interest income was
$1.1 million for the six months ended June 30, 2001
compared to $0.8 million for the prior year.

Other Expense.Other
expense was $0.2 million for the six months ended
June 30, 2001 compared to $0.6 million for the prior
year. The other expense in the current year is largely
attributable to foreign currency losses. Other expense in the
prior year was primarily due to losses using the equity method
of accounting for an investment.

Provision for Income
Taxes.The provision for income taxes
was recorded for the six months ended June 30, 2001 using
an effective income tax rate of 40.0% compared to 42.0% for the
comparable period in 2000. The higher tax rate in 2000 reflects
permanent differences relative to the tower portfolio sale.

Net Income.Net
income was $3.8 million for the six months ended
June 30, 2001 compared to $16.5 million in the prior
year. The difference in net income can be attributed to the gain
from the tower portfolio sale, the decrease in gross profit in
2001 offset by savings in general and administrative expense and
sales and marketing expense as described above.

13



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##### Table of Contents



Liquidity and Capital Resources

Cash and equivalents combined with short-term
investments at June 30, 2001 provide total liquid assets of
$38.2 million. Working capital was $59.7 million at
June 30, 2001, an increase of $0.2 million from
December 31, 2000. The Company believes it has sufficient
working capital for the next year to meet existing operational
needs.

Quantitative and Qualitative Disclosure
Regarding Market Risk

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

14



---



##### Table of Contents



PART II  OTHER
INFORMATION




Item 1: Legal Proceedings

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




Item 2:  Changes in
Securities

Not Applicable




Item 3:  Defaults Upon Senior
Securities

Not Applicable




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

The Annual Meeting of Shareholders was held on
May 24, 2001. All of the proposals for Shareholder
consideration at the Annual Meeting were approved. The following
is a tabulation of the voting on each proposal presented at the
Annual Meeting.

Proposal 1 Election of Directors

|                        |  |         |      |              |  |             |            |              |  |  |        |     |  |  |   |    
|----------------------- |  | ------- | ---- | ------------ |  | ----------- | ---------- | ------------ |  |  | ------ | --- |  |  | - | ---
|                        |  | Term    |      |              |  | Votes       |            | Broker      
|Elected Director        |  | Expires |      | Votes For(1) |  | Withheld(1) |            | Non-Votes(1)
|                        |  |         |      |              |  |             |            |             
|C. Thomas Faulders, III |  |         | 2002 |              |  |             | 10,754,972 | (A)          |  |  | 32,550 | (A) |  |  | 0 | (A)
|                        |  |         |      |              |  |             | 84,499,840 | (B)          |  |  | 0      | (B) |  |  | 0 | (B)
|                       
|                       
|                       
|                       
|Rajendra Singh          |  |         | 2002 |              |  |             | 10,754,972 | (A)          |  |  | 32,550 | (A) |  |  | 0 | (A)
|                        |  |         |      |              |  |             | 84,499,840 | (B)          |  |  | 0      | (B) |  |  | 0 | (B)
|                       
|                       
|                       
|                       
|Neera Singh             |  |         | 2002 |              |  |             | 10,754,972 | (A)          |  |  | 32,550 | (A) |  |  | 0 | (A)
|                        |  |         |      |              |  |             | 84,499,840 | (B)          |  |  | 0      | (B) |  |  | 0 | (B)
|                       
|                       
|                       
|                       
|Mark Ein                |  |         | 2002 |              |  |             | 10,754,972 | (A)          |  |  | 32,550 | (A) |  |  | 0 | (A)
|                        |  |         |      |              |  |             | 84,499,840 | (B)          |  |  | 0      | (B) |  |  | 0 | (B)
|                       
|                       
|                       
|                       
|Susan Mayer             |  |         | 2002 |              |  |             | 10,754,972 | (A)          |  |  | 32,550 | (A) |  |  | 0 | (A)
|                        |  |         |      |              |  |             | 84,499,840 | (B)          |  |  | 0      | (B) |  |  | 0 | (B)
|                       
|                       
|                       
|                       
|Steven Gilbert          |  |         | 2002 |              |  |             | 10,754,972 | (A)          |  |  | 32,550 | (A) |  |  | 0 | (A)
|                        |  |         |      |              |  |             | 84,499,840 | (B)          |  |  | 0      | (B) |  |  | 0 | (B)
|                       
|                       
|                       
|                       
|Gregory Ledford         |  |         | 2002 |              |  |             | 10,754,972 | (A)          |  |  | 32,550 | (A) |  |  | 0 | (A)
|                        |  |         |      |              |  |             | 84,499,840 | (B)          |  |  | 0      | (B) |  |  | 0 | (B)

Proposal 2  Ratification of
the appointment of KPMG LLP as the independent auditors of
the Company for the fiscal year ended December 31,
2001.

|              |  |            |          |               |  |              |          |  |  |  |      |  |  | 
|------------- |  | ---------- | -------- | ------------- |  | ------------ | -------- |  |  |  | ---- |  |  | 
|Votes         |  | Votes      |          | Votes         |  | Broker       |          | 
|For(1)        |  | Against(1) |          | Abstaining(1) |  | Non-Votes(1) |          | 
|              |  |            |          |               |  |              |          | 
|10,734,247(A) |  |            | 2,025(A) |               |  |              | 1,250(A) |  |  |  | 0(A) |  |  | 
|84,499,840(B) |  |            | 0(B)     |               |  |              | 0(B)     |  |  |  | 0(B) |  |  | 



---



| |           |                                                                                                                                                                                                         
| | --------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Note (1): | The shareholders are entitled to vote as a single
	class, with each share of the Companys Class A Common
	Stock having one vote and each share of the Companys
	Class B Common Stock having ten votes.




Item 5:  Other
Information

Not Applicable




Item 6:  Exhibits and Reports
on Form 8-K

(a)  Exhibits



| |                                         
| | ----------------------------------------
| | 11  Calculation of Net Income Per Share

15



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##### Table of Contents



(b)  Reports on Form 8-K

On June 22, 2001, the Company filed a
Current Report on Form 8-K, which reported that on
June 22, 2001 the US Court of Appeals for the District of
Columbia issued its decision in the case captioned NextWave
Personal Communications Inc. and NextWave Power
Partners Inc. v. the Federal Communications Commission
and United States of America, et. al.

On May 1, 2001, the Company filed a Current
Report on Forn 8-K, which reported that on May 1, 2001 the
Company issued a press release announcing its revenues and
operating results for the first quarter of 2001.

16



---



##### Table of Contents



Signature

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



| |                                         
| | ----------------------------------------
| | LCC International, Inc. and Subsidiaries



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

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

Date:  August 14, 2001


17