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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): April 9, 1997
LCC INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 0-21213 54-1807038
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
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7925 Jones Branch Drive, McLean, Virginia 22201
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(Address of Principal Executive Offices) (Zip Code)
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Registrant's telephone number, including area code: (703) 873-2000
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ITEM 5. OTHER EVENTS.
On April 9, 1997, LCC International, Inc. (the "Company")
announced that it intends to reserve with respect to 1996 earnings $30.1
million pre-tax ($24.5 million post-tax or $1.30 per share for the fourth
quarter and $1.49 for the full calendar year 1996) against certain receivables
from, investments in and costs associated with Pocket Communications, Inc.
(formerly known as DCR Communications, Inc.) and NextWave Telecom, Inc.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits
99. Press Release, dated April 9, 1997 regarding the Company's
intention to take certain reserves with respect to 1996
earnings.
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SIGNATURES
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 hereunto duly authorized.
Date: April 10, 1997 LCC INTERNATIONAL, INC.
By: /s/ RICHARD HOZIK
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Richard Hozik
Senior Vice President, Chief Financial
Officer and Treasurer
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EXHIBIT INDEX
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PAGE NUMBER IN
EXHIBIT NUMBER EXHIBIT SEQUENTIAL NUMBERING SYSTEM
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99. Press Release, dated April 10, 1997, regarding the Company's intention to take
certain reserves with respect to 1996 earnings.
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Exhibit 99
[LCC LETTERHEAD]
FOR IMMEDIATE RELEASE Contact: Tricia Drennan
APRIL 9, 1997 Director of Corporate Communications &
Investor Relations
(703) 873-2390 (phone)
(703) 873-9546 (fax)
LCC INTERNATIONAL, INC. INTENDS TO RESERVE AGAINST ITS
RECEIVABLES FROM AND INVESTMENTS IN POCKET AND NEXTWAVE
MCLEAN, VIRGINIA -- LCC International, Inc. ("LCC"), (NASDAQ: LCCI), one of the
world's largest providers of radio frequency engineering and network design
services and products to the international wireless telecommunications
industry, today announced that it intends to reserve with respect to 1996
earnings $30.1 million pre-tax ($24.5 million post-tax or $1.30 per share for
the fourth quarter and $1.49 per share for the full calendar year 1996) against
certain receivables from, investments in and costs associated with Pocket
Communications, Inc. ("Pocket" formerly known as DCR Communications, Inc.) and
NextWave Telecom, Inc. ("NextWave").
Piyush Sodha, President and Chief Executive Officer of LCC, said "Our core
business remains well positioned to prosper from the tremendous growth
opportunities in the industry. Despite these events, our fundamentals remain
strong, our customer base is solid, and our growth rate objectives are on
track."
LCC has ceased providing engineering and program management services in all
markets on the Pocket engagement and has redeployed its personnel to other
client assignments. LCC is currently providing engineering services to
NextWave on an advance cash payment basis.
Due to the exclusion of revenues and earnings associated with Pocket and
NextWave for 1997 and 1998, LCC expects that net income for the year ending
December 31, 1997 will be adversely impacted by up to $0.30 per share, and that
net income for the year ending December 31, 1998 will be adversely impacted by
up to $0.20 per share.
Mr. Sodha added, "We expect operating earnings in the first half of 1997 to be
below those reported for the first half of 1996. More importantly, however,
the company expects to report an increase in operating profits in both the
third and fourth quarters of 1997. The strong demand for our services has
enabled us to quickly put in place re-deployment plans which allow us to
achieve a year over year increase in operating results."
On March 31, 1997, Pocket failed to pay interest due LCC under a $6.5 million
convertible debenture and failed to pay principal and interest due LCC under a
$0.9 million note agreement. In addition, on April 1, 1997, Pocket announced
that it had voluntarily sought court protection under Chapter 11 of the U.S.
Bankruptcy Code. As of March 31, 1997, LCC's aggregate balance sheet and
contract cost exposure with respect to Pocket was $9.6 million.
Continued....
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[LCC LOGO]
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Also on March 31, 1997, NextWave failed to pay principal and interest due LCC
under a $5.9 million note agreement, and the parties are currently in
negotiations with respect to revised payment terms. As of March 31, 1997,
LCC's aggregate balance sheet and contract cost exposure with respect to
NextWave was $20.5 million.
LCC has extended for 15 days the filing of its 1996 Annual Report on Form 10-K
with the U.S. Securities and Exchange Commission in order to reflect the
reserve in its calendar year 1996 financial statements. As a result of this
reserve, LCC intends to report normalized pro forma net income per share for
the fourth quarter and year ended December 31, 1996 of $0.12 (on 18.9 million
shares) and $0.54 (on 16.5 million shares), respectively. Including the effect
of the reserve related to NextWave and Pocket, as well as certain costs
associated with LCC's third quarter initial public offering and fourth quarter
acquisition of European Technology Partner AS, LCC intends to report a pro
forma net loss per share of $1.31 for the fourth quarter and a pro forma net
loss per share of $1.19 for the year ended December 31, 1996.
# # #
This press release may contain forward-looking statements or implications that
are subject to risks and uncertainties. Actual results or performance could
differ materially from those expressed or implied by such forward-looking
statements, including, without limitation, statements regarding expectations of
future operating results, as a result of risks and uncertainties including
changes adversely impacting demand for LCC's products and services, risks from
competition, rapid technological change and those described from time to time
in LCC's reports to the U. S. Securities and Exchange Commission, including its
Registration Statement on Form S-1 effective September 24, 1996, its Annual
Report on Form 10-K (to be filed shortly), news releases and other
communications.
LCC is one of the world's largest providers of radio frequency engineering and
network design services and products to the international wireless
telecommunications industry. The Company's radio frequency engineering
business was founded in 1983, during the early years of the cellular industry.
Since that time, LCC has come to offer a range of complementary services and
products consisting of radio frequency engineering services, program management
and system deployment services, propagation modeling and network analysis
software, and field test measurement and analysis equipment.
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LCC INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
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THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
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1996 1995 1996 1995
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REVENUES:
Service revenue $ 29,037 $ 18,047 $ 93,156 $ 64,016
Product revenue 14,313 14,717 48,414 40,445
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43,350 32,764 141,570 104,461
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COST OF REVENUES:
Service revenue 20,608 12,495 65,801 45,682
Product revenue 9,883 7,786 32,039 25,455
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30,491 20,281 97,840 71,137
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GROSS PROFIT 12,859 12,483 43,730 33,324
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OPERATING EXPENSES
Sales and marketing 1,881 1,461 6,475 5,823
General and administrative 3,358 2,789 12,462 10,108
In-process research & development 5,605 - 5,605 -
Special charge 30,050 - 30,050 -
Non-cash compensation 670 1,130 7,005 4,646
Depreciation and amortization 1,260 1,310 5,039 3,699
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42,824 6,690 66,636 24,276
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OPERATING (LOSS) INCOME (29,965) 5,793 (22,906) 9,048
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OTHER INCOME (EXPENSE):
Interest income 347 (119) 925 625
Interest expense (659) (591) (3,050) (2,818)
Other income 263 402 2,376 1,027
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(49) (308) 251 (1,166)
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(LOSS) INCOME BEFORE INCOME TAXES (30,014) 5,485 (22,655) 7,882
(BENEFIT) PROVISION FOR INCOME TAXES (4,830) 1,863 (11,371) 3,142
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NET (LOSS) INCOME $ (25,184) $ 3,622 $ (11,284) $ 4,740
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PRO FORMA (LOSS) INCOME DATA:
(Loss) income before income taxes $ (30,014) $ 5,485 $ (22,655) $ 7,882
Pro forma (benefit) provision for income taxes (4,830) 2,194 (1,886) 3,153
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Pro forma net (loss) income $ (25,184) $ 3,291 $ (20,769) $ 4,729
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Pro forma net (loss) income per share: $ (1.31) $ 0.22 $ (1.19) $ 0.36
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NORMALIZED PRO FORMA INCOME DATA:
(Loss) income before income taxes $ (30,014) $ 5,485 $ (22,655) $ 7,882
In-process research & development 5,605 - 5,605 -
Special charge (A) 26,753 - 22,931 -
Non-cash compensation 670 1,130 7,005 4,646
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Normalized pre-tax income 3,014 6,615 12,886 12,528
Pro forma provision for income taxes 1,206 2,646 5,154 5,011
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Normalized pro forma net income $ 1,808 $ 3,969 $ 7,732 $ 7,517
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Normalized pro forma net income per share: $ 0.12 $ 0.27 $ 0.54 $ 0.53
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Common and common equivalent shares
used in the calculation of proforma and
normalized pro forma net income per share: 18,900 15,579 16,509 15,579
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(A) Normalizes for special charge offset by Nextwave and Pocket profit
recorded in 1996.
