<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): December 30, 1996
LCC INTERNATIONAL, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-21213 54-1807038
--------------------------- ---------- ----------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
</TABLE>
<TABLE>
<S> <C>
Arlington Courthouse Plaza II
2300 Clarendon Blvd., Suite 800, Arlington, VA 22201
- ---------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (703) 351-6666
<PAGE> 2
Pursuant to Items 7(a)(4) and 7(b)(2) of the Commission's General
Instructions for Form 8-K, the undersigned registrant hereby amends Item 7(a)
of its current Report on Form 8-K, which was filed with the Commission on
January 14, 1997, to file consolidated financial statements of European
Technology Partner AS, which was acquired by the registrant on December 30,
1996, and further amends Item 7(b) of that Current Report on Form 8-K to file
pro forma financial information for the registrant reflecting the acquisition
of the business of European Technology Partner AS.
<TABLE>
<S> <C>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Financial Statements of the Business Acquired
Included herewith are the following statements of European
Technology Partner AS:
Independent Auditors' Report
Balance Sheet as of December 31, 1995
Statement of Operations for the Year ended December 31,
1995
Statement of Shareholders' Equity for the Year ended December
31, 1995
Statement of Cash Flows for the Year ended December 31, 1995
Notes to Financial Statement
Unaudited Condensed Balance Sheet as of September 30, 1996
Unaudited Condensed Statements of Operations as of September
30, 1995 and 1996
Unaudited Condensed Statements of Cash Flows for the Nine
Months ended September 30, 1995 and 1996
Notes to Unaudited Condensed Financial Statements
(b) Pro Forma Financial Information
Included herewith are the following unaudited pro forma
financial information for the registrant:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1996
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1995
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
Nine Months Ended September 30, 1996
Notes to Unaudited Pro Forma Condensed Consolidated Financial
Information
(c) Exhibits.
*2. Asset Purchase Agreement, dated as of December 30, 1996, between
European Technology AS and LCC International AS.
23 Consent of KPMG as
27 Financial Data Schedule.
*99. Press Release, dated January 2, 1997, regarding the acquisition of
European Technology Partner AS.
</TABLE>
*Filed as an exhibit to the Current Report on Form 8-K filed January 14, 1997.
-3-
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
The Board of Directors
European Technology Partner AS:
We have audited the accompanying balance sheet of European Technology Partner
AS as of December 31, 1995 and the related statements of operations, cash flows
and shareholders' equity for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of European Technology Partner AS
as of December 31, 1995 and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles in the United States.
KPMG as
Arne Frogner
State Authorized Public Accountant
Oslo, Norway
March 11, 1997
<PAGE> 5
European Technology Partner AS
Balance Sheet as of December 31, 1995
(in 000's of Norwegian Kroner)
<TABLE>
<CAPTION>
Assets
------
<S> <C>
Cash 759
Accounts receivable 8,059
Unbilled receivables 4,271
Inventories 436
--------
Total current assets 13,525
Furniture, fixtures, and equipment, net 2,562
--------
Total Assets 16,087
========
<CAPTION>
Liabilities and Shareholders' Equity
------------------------------------
Short-term borrowings 2,114
Accounts payable 1,396
Accrued expenses 1,954
Deferred revenue 1,212
Deferred income taxes 133
--------
Total current liabilities 6,809
Convertible notes payable to shareholders 5,000
--------
Total liabilities 11,809
--------
Commitments and contingencies
Common shares, stated value 10 Kroner per share; 20,000 shares 200
authorized, issued, and outstanding
Capital reserves, undistributable 3,960
Capital reserves, distributable 118
--------
Total shareholders' equity 4,278
--------
Total Liabilities and Shareholders' Equity 16,087
========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
European Technology Partner AS
Statement of Operations
For the Year Ended December 31, 1995
(in 000's of Norwegian Kroner)
<TABLE>
<S> <C>
Revenues 26,279
Cost of goods sold 16,228
--------
Gross profit 10,051
--------
Selling, general and administrative 10,080
Depreciation and amortization 401
--------
Total operating expenses 10,481
--------
Operating loss (430)
Interest expense, net 246
--------
Loss before income taxes (676)
Income tax benefit (177)
--------
Net loss (499)
========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 7
European Technology Partner AS
Statement of Shareholders' Equity
For the Year Ended December 31, 1995
(in 000's of Norwegian Kroner)
<TABLE>
<CAPTION> Capital Reserves
Number of Share ----------------
Shares Capital Undistributable Distributable Total
------ ------- --------------- ------------- -----
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1994 16,266 163 263 617 1,043
Net loss - - - (499) (499)
Sale of common shares 3,734 37 3,697 - 3,734
-------- ----- ------ ------ --------
Balances at December 31, 1995 20,000 200 3,960 118 4,278
======== ===== ====== ====== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 8
European Technology Partner AS
Statement of Cash Flows
For the Year Ended December 31, 1995
(in 000's of Norwegian Kroner)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss (499)
Adjustments to reconcile net loss to net cash
used in operating activities-
Depreciation and amortization 401
Deferred income taxes (177)
Changes in operating assets and liabilities:
accounts receivable (5,509)
unbilled receivables (3,587)
inventories (436)
accounts payable and accrued expenses 1,474
deferred revenue (418)
----------
Net cash used in operating activities (8,751)
----------
Cash flows from investing activities:
Capital expenditures (1,682)
----------
Net cash used in investing activities (1,682)
----------
Cash flows from financing activities:
Short-term borrowings, net 2,114
Repayment of secured loan (485)
Issuance of convertible notes payable to shareholders 5,000
Sale of common shares 3,734
----------
Net cash provided by financing activities 10,363
----------
Net decrease in cash (70)
Cash at December 31, 1994 829
----------
Cash at December 31, 1995 759
==========
Supplemental disclosures of cash flow information:
Cash paid during the year for-
Interest 203
==========
Income taxes -
==========
</TABLE>
See accompanying notes to financial statements.
-9-
<PAGE> 9
EUROPEAN TECHNOLOGY PARTNER AS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1) DESCRIPTION OF OPERATIONS
European Technology Partner AS ("ETP"), a Norwegian limited liability company,
is a leading provider of hardware and software tools used in network
monitoring, analysis, and quality assessment in the wireless communications
business.
NOTE 2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation -- These financial statements are presented in Norwegian
Kroner (unless otherwise noted) and prepared using Generally Accepted
Accounting Principles as applied in the United States. These statements include
the historical financial position and results of operations of ETP and have not
been adjusted for the impact of the sale of the business (Note 10).
Pervasiveness of Estimates -- The preparation of the financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Cash -- Included in cash at December 31, are balances totaling 589,000
restricted for payroll tax obligations.
Concentration of Credit Risk -- Financial instruments that potentially expose
ETP to concentrations of credit risk consist primarily of trade receivables.
ETP sells its products primarily in Europe and Southeast Asia. While it is
ETP's practice to make progress billings as costs are incurred, it does not
require collateral or other security to support customer receivables. ETP
performs ongoing credit evaluations of its customers' financial condition. No
reserve for potential credit losses is deemed necessary at December 31. ETP had
the following significant concentrations of trade receivables.
<TABLE>
<S> <C>
Europe 6,684,000
Southeast Asia 1,375,000
---------
8,059,000
</TABLE>
<PAGE> 10
At December 31, the three largest customers represented 32%, 20%, and 18%,
respectively, of total accounts receivable.
Inventories -- Inventories consist of work-in-process and component parts and
are stated at the lower of cost or market value. At December 31, no allowance
for excess, obsolete, or slow moving parts is deemed necessary.
Contracts in Process -- Unbilled receivables represent costs and revenues
recognized in advance of billings on contracts in process. Amounts billed in
advance of satisfying revenue recognition criteria are classified as deferred
revenue. The amount of progress billings and payments netted against costs and
revenues on contracts in process was 7,931,000 at December 31, 1995.
Furniture, Fixtures, and Equipment -- Furniture, fixtures, and equipment are
stated at cost, net of accumulated depreciation and amortization. Depreciation
and amortization are calculated using the straight line method over the
estimated useful lives of the assets which range from four to 10 years. At
December 31, furniture, fixtures, and equipment consisted of the following:
<TABLE>
<S> <C>
Computer equipment 2,047,000
Furniture & fixtures 579,000
Office equipment 349,000
Vehicles 153,000
Leasehold improvements 211,000
---------
3,339,000
Less: accumulated depreciation and
amortization (777,000)
---------
2,562,000
=========
</TABLE>
Revenue Recognition -- ETP recognizes revenues for sales including both
software and hardware components using the percentage-of-completion method,
based on the ratio of costs incurred to date compared with total estimated
contract costs. Anticipated losses are recognized as soon as they become known
and estimable. Revenue for hardware sales, is recognized upon installation.
Support and maintenance fees are recognized ratably over the contract period
with related costs expensed as incurred.
Research and Development Expenditures -- Research and development expenditures
are expensed as incurred. In 1995, approximately 6,080,000 was expended for
research and development.
Income Taxes -- Deferred income taxes are provided for temporary differences
between income and expenses reported for financial and for tax purposes. These
-11-
<PAGE> 11
deferred tax assets and liabilities are determined based on currently enacted
tax rates that are expected to be in effect during the period in which the
differences are expected to reverse.
Foreign Currency -- Assets and liabilities denominated in foreign currencies
are translated to Norwegian Kroner at the exchange rate on the balance sheet
date. Gains and losses on foreign currency transactions are included in the
statement of operations.
NOTE 3) ACCRUED EXPENSES
At December 31, 1995, accrued expenses consist of :
<TABLE>
<S> <C>
Payroll and employee benefits 1,477,000
Warranty costs 307,000
Other 170,000
---------
1,954,000
=========
</TABLE>
NOTE 4) INDEBTEDNESS
ETP has a credit facility with a bank for 3,000,000 of which 2,114,000 was
outstanding at December 31. Substantially all the assets of ETP have been
pledged as collateral under the terms of the facility. Interest, payable
quarterly, accrues at 7.5% per annum.
Convertible notes payable totaling 5,000,000 were sold to shareholders in 1995.
Interest, payable annually, accrues at 6% per annum. The notes are convertible,
at the holders' option, into 4,000 common shares, subject to increases to avoid
future dilution, between August 1996 and August 2000. The notes mature in
August 2000.
NOTE 5) COMMITMENTS
ETP leases office facilities under an operating lease expiring in December
1997. Future minimum rental payments under this operating lease are 1,109,000
and 1,434,000 in 1996 and 1997, respectively. Rent expense under this lease and
a previous office lease was 530,000 in 1995.
-12-
<PAGE> 12
NOTE 6) SHAREHOLDERS' EQUITY
Shareholders' equity balances, which are undistributable due to statutory
restrictions for the protection of creditors, include share capital and
undistributable capital reserves.
In June 1995, 3,734 common shares were sold to ETP's largest shareholder for
3,734,000 in a private placement.
NOTE 7) INCOME TAXES
The income tax benefit recorded in the statement of operations consists
entirely of deferred components. This benefit differs from the benefit expected
using the applicable statutory rate (28%) as follows:
<TABLE>
<S> <C>
Income tax benefit at statutory rate (189,000)
Impact of non-deductible expenses 12,000
---------
Income tax benefit (177,000)
=========
</TABLE>
At December 31, 1995, deferred income tax assets and liabilities are composed
of the following:
<TABLE>
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards 1,049,000
Accrued warranty costs 86,000
Other 7,000 1,142,000
----------
Deferred tax liabilities:
Contracts in process 1,131,000
Depreciation and amortization 144,000 1,275,000
---------- ----------
Net deferred tax liability 133,000
==========
</TABLE>
At December 31, 1995, ETP has net operating losses available to offset future
taxable income in Norway of 3,748,000 which expire through 2005.
NOTE 8) GEOGRAPHIC DATA
Revenues by geographic region are as follows:
<TABLE>
<S> <C>
Europe 20,861,000
Southeast Asia 5,418,000
----------
26,279,000
==========
</TABLE>
-13-
<PAGE> 13
In 1995, three customers accounted for 33%, 20%, and 12% of revenues,
respectively.
NOTE 9) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments, including cash, accounts
receivable, and accounts payable approximated fair value as of December 31
because of the relatively short duration of these instruments. The carrying
values of the short-term borrowings and the convertible notes payable to
shareholders approximated fair value as of December 31, based upon ETP's
borrowing activities and assessment of current prices offered for similar
loans.
NOTE 10) SALE OF BUSINESS
On December 30, 1996, ETP sold its business to LCC International AS ("LCC AS"),
a Norwegian limited liability company, pursuant to the terms of an Asset
Purchase Agreement in which ETP transferred substantially all its assets and
liabilities to LCC AS. LCC AS is a wholly-owned subsidiary of LCC
International, Inc., a Delaware corporation, which is a leading provider of
integrated services and products relating to the design and engineering of
wireless communications networks.
As consideration for selling its business, ETP received US$12,825,000 which is
composed of: a) a promissory note which was paid in full in January 1997 for
US$10,445,000; b) an amount due in January 1999 totaling US$1,400,000 which is
held in an interest bearing escrow in a Norwegian bank; and c) payments
totaling US$980,000 to be made in January 1998 (US$616,000), and 1999
(US$364,000) plus interest at the prime rate. Certain of these payments are
subject to reduction if any claims under the indemnity obligations as specified
in the Asset Purchase Agreement arise within two years of the Agreement.
Additional payments totaling US$925,000 will be treated as compensation expense
and spread over the next three years. These payments are subject to reduction
if certain former shareholders of ETP leave the employ of LCC AS within three
years of the Agreement.
-14-
<PAGE> 14
European Technology Partner AS
Unaudited Condensed Balance Sheet
As of September 30, 1996
(in 000's of Norwegian Kroner)
<TABLE>
<CAPTION>
Assets
------
<S> <C>
Cash 2,549
Accounts and unbilled receivables, net 17,012
Inventories 1,457
---------
Total current assets 21,018
Furniture, fixtures, and equipment, net 2,591
---------
Total Assets 23,609
=========
Liabilities and Shareholders' Equity
------------------------------------
Accounts payable and accrued expenses 8,589
Deferred revenue 581
---------
Total current liabilities 9,170
Convertible notes payable to shareholders 5,000
---------
Total liabilities 14,170
Shareholders' equity 9,439
---------
Total liabilities and shareholders' equity 23,609
=========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
<PAGE> 15
European Technology Partner AS
Unaudited Condensed Statements of Operations
For the Nine Months Ended September 30, 1995 and 1996
(in 000's of Norwegian Kroner)
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Revenues 21,290 24,801
Cost of goods sold 12,967 17,442
--------- ---------
Gross profit 8,323 7,359
--------- ---------
Selling, general and administrative 6,198 11,394
Depreciation and amortization 270 760
--------- ---------
Total operating expenses 6,468 12,154
--------- ---------
Operating income (loss) 1,855 (4,795)
Interest expense, net 106 301
--------- ---------
Income (loss) before income taxes 1,749 (5,096)
Income tax expense (benefit) 490 (132)
--------- ---------
Net income (loss) 1,259 (4,964)
========= =========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
-16-
<PAGE> 16
European Technology Partner AS
Unaudited Condensed Statements of Cash Flows
For the Nine Months Ended September 30, 1995 and 1996
(in 000's of Norwegian Kroner)
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) 1,259 (4,964)
Adjustments to reconcile net income to net cash
provided by operating activities-
Deferred income taxes 490 (133)
Depreciation and amortization 270 760
Changes in operating assets and liabilities:
accounts and unbilled receivables (7,112) (4,682)
inventories - (1,021)
accounts payable and accrued expenses 815 5,292
deferred revenue (1,118) (631)
---------- ----------
Net cash used in operations (5,396) (5,379)
---------- ----------
Cash flows from investing activities:
Capital expenditures (514) (789)
---------- ----------
Net cash used in investing activities (514) (789)
---------- ----------
Cash flows from financing activities:
Short-term borrowings (repayments), net - (2,114)
Repayment of secured loan (400) (53)
Issuance of convertible notes payable to shareholders 5,000 -
Sale of common shares 3,734 10,125
---------- ----------
Net cash provided by financing activities 8,334 7,958
---------- ----------
Net increase in cash 2,424 1,790
Cash at beginning of period 829 759
---------- ----------
Cash at end of period 3,253 2,549
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for-
Interest 95 290
========== ==========
Income taxes - -
========== ==========
</TABLE>
See accompanying notes to unaudited condensed financial statements.
<PAGE> 17
EUROPEAN TECHNOLOGY PARTNER AS
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
NOTE 1) BASIS OF PRESENTATION
The condensed financial statements of European Technology Partner AS ("ETP")
have been prepared, without audit, and reflect all adjustments which are, in
the opinion of management, necessary for the fair presentation of the financial
position of ETP as of September 30, 1996 and the results of operations and cash
flows for the nine months ended September 30, 1995 and 1996. The results of
operations for the nine months ended September 30, 1996 are not necessarily
indicative of the results that may be expected for the full year. Certain
information and footnote disclosure normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The unaudited condensed financial statements
should be read in conjunction with the audited financial statements included
herein.
NOTE 2) SALE OF BUSINESS
On December 30, 1996, ETP sold its business to LCC International AS ("LCC AS"),
a Norwegian limited liability company, pursuant to the terms of an Asset
Purchase Agreement in which ETP transferred substantially all its assets and
liabilities to LCC AS.
<PAGE> 18
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information
gives effect to the purchase of European Technology Partner AS's ("ETP"), a
Norwegian limited liability company, business by LCC International AS ("LCC
AS"), a wholly-owned subsidiary of LCC International, Inc., pursuant to the
terms of an Asset Purchase Agreement in which ETP transferred substantially all
its assets and liabilities to LCC AS. The purchase was consummated on December
30, 1996 and will be accounted for by the purchase method of accounting.
The unaudited pro forma condensed consolidated balance sheet has been prepared
as if the purchase was consummated as of September 30, 1996. The unaudited pro
forma condensed consolidated statements of operations for the year ended
December 31, 1995 and the nine months ended September 30 1996, have been
prepared as if the purchase was consummated on January 1, 1995. These
statements of operations do not include the effect of the $5,605,000
non-recurring charge for in-process research and development taken in December
1996 at consummation of the purchase. However, these statements do reflect
adjustments for the amortization of goodwill and related income tax effects.
The unaudited pro forma condensed consolidated financial information is
presented for informational purposes only and does not purport to represent
what LCC International, Inc. and subsidiaries' consolidated financial position
or actual results of operations would have been had the purchase in fact
occurred on the dates assumed nor do they represent a forecast of the
consolidated financial position or results of operations for any future period.
The unaudited pro forma condensed consolidated financial information should be
read in conjunction with the historical financial statements and accompanying
notes of LCC International, Inc. contained in the Company's Registration
statement on Form S-1 dated September 24, 1996.
-19-
<PAGE> 19
LCC International, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 1996
(in 000's)
<TABLE>
<CAPTION>
Historical
----------
LCCI ETP Adjustments Pro Forma
---- --- ----------- ---------
Assets
------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 30,755 $ 396 $ - $ 31,151
Accounts receivable, net 46,764 2,640 - 49,404
Inventory, net 5,273 226 (20) (b) 5,479
Other current assets 9,585 - - 9,585
--------- --------- ------------ ----------
Total current assets 92,377 3,262 (20) 95,619
Furniture, fixtures, and equipment, net 5,302 402 (47) (b) 5,657
Software development costs, net 5,015 - - 5,015
Notes receivable 6,650 - - 6,650
Other assets 8,233 - 6,596 (c) 15,189
--------- --------- ------------ ----------
Total Assets $ 117,577 $ 3,664 $ 6,889 $ 128,130
========= ========= ============ ==========
Liabilities and Shareholders' Equity
------------------------------------
Short-term borrowings $ - $ - $ 11,845 (e) $ 11,845
Accounts payable and accrued
expenses 20,289 1,333 341 (d) 21,963
Deferred revenue 2,742 90 - 2,832
Income taxes payable 7,987 - - 7,987
Other current liabilities 2,504 - - 2,504
--------- --------- ------------ -----------
Total current liabilities 33,522 1,423 12,186 47,131
Long-term debt 50,000 776 204 (a)(f) 50,980
Other liabilities 1,458 - - 1,458
--------- --------- ------------ -----------
Total liabilities 84,980 2,199 12,390 99,569
Shareholders' equity 32,597 1,465 (5,501) (a)(g) 28,561
--------- --------- ------------ -----------
Total Liabilities and Shareholders'
Equity $ 117,577 $ 3,664 $ 6,889 $ 128,130
========= ========= ============ ===========
</TABLE>
See accompanying notes.
<PAGE> 20
LCC International, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1995
(in 000's, except per share data)
<TABLE>
<CAPTION>
Historical
----------
LCCI ETP Adjustments Pro Forma
---- --- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $104,461 $ 4,148 $ - $ 108,609
Cost of goods sold 71,137 2,561 20 (i) 3,818
-------- --------- ------------ -----------
Gross profit 33,324 1,587 (120) 34,791
-------- --------- ------------ -----------
Selling, general and administrative 20,577 1,591 240 (i) 22,408
Depreciation and amortization 3,699 63 552 (h) 4,314
-------- --------- ------------ -----------
Total operating expenses 24,276 1,654 792 26,722
-------- --------- ------------ -----------
Operating income (loss) 9,048 (67) (912) 8,069
Interest expense, net 1,166 39 998 (j) 2,203
-------- --------- ------------ -----------
Income (loss) before income taxes 7,882 (106) (1,910) 5,866
Income tax expense (benefit) 3,142 (27) (527) (k) 2,588
-------- --------- ------------ -----------
Net income (loss) $ 4,740 $ (79) $ (1,383) $ 3,278
======== ========= ============ ===========
Pro forma income data:
Income before taxes $ 5,866
Pro forma income tax expense 2,482
===========
Pro forma net income $ 3,384
===========
Pro forma net income per share $ 0.27
===========
15,579,000
Weighted average number of shares and share equivalents ===========
</TABLE>
See accompanying notes.
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<PAGE> 21
LCC International, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 1996
(in 000's, except per share data)
<TABLE>
<CAPTION>
Historical
----------
LCCI ETP Adjustments Pro Forma
---- --- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $ 98,220 $ 3,848 $ - $ 102,068
Cost of goods sold 67,349 2,706 90 (i) 70,145
--------- --------- ----------- -----------
Gross profit 30,871 1,142 (90) 31,923
--------- --------- ----------- -----------
Selling, general and administrative 20,033 1,768 180 (i) 21,981
Depreciation and amortization 3,779 118 414 (h) 4,311
--------- --------- ----------- -----------
Total operating expenses 23,812 1,886 594 26,292
--------- --------- ----------- -----------
Operating income (loss) 7,059 (744) (684) 5,631
Interest expense, net (300) 47 726 (j) 473
--------- --------- ----------- -----------
Income (loss) before income taxes 7,359 (791) (1,410) 5,158
Income tax expense (benefit) (6,543) (20) (395) (k) (6,958)
--------- --------- ----------- -----------
Net income (loss) $ 13,902 $ (771) $ (1,015) $ 12,116
========= ========= =========== ===========
Pro forma income data:
Income before taxes $ 5,158
Pro forma income tax expense 2,250
-----------
Pro forma net income $ 2,908
===========
Pro forma net income per share $ 0.23
===========
Weighted average number of shares and share equivalents 15,665,000
===========
</TABLE>
See accompanying notes.
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<PAGE> 22
LCC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
NOTE 1) ALLOCATION OF PURCHASE PRICE
The purchase price of ETP is composed of amounts due under the terms of the
Asset Purchase Agreement net of $925,000 which will be treated as compensation
expense over a three year period, plus transaction costs incurred. The
allocation of the purchase price will be based on the results of an independent
appraisal of certain assets acquired and an audit of ETP. The appraisal
indicated approximately $5,605,000 of the purchase price is allocable
to In-Process Research & Development. This cost was expensed by LCC AS in
December 1996. The unaudited pro forma condensed consolidated financial
information does not include this one-time charge as it represents a material
non-recurring charge.
NOTE 2) PRO FORMA ADJUSTMENTS
The following is a summary of the pro forma adjustments made to the unaudited
pro forma condensed consolidated financial information based on information
currently available. Actual adjustments and the allocation of the purchase
price may vary.
(a) Reflects the elimination of ETP's historical stockholders' equity and
liabilities not assumed by LCC AS.
(b) Reflects the adjustment of certain ETP assets to fair value based on
analysis by management.
(c) Represents the deferred tax asset totaling $1,569,000 that arises as a
result of the non-recurring In-Process Research & Development charge (see Note
1 above) and other purchased intangible assets identified by an independent
appraisal.
(d) Represents accrual of transaction fees associated with the acquisition
including professional fees, reimbursements due to ETP, and certain relocation
fees associated with the transaction.
(e) Represents obligation to ETP payable with in six days of consummation of
transaction including a promissory note $10,445,000 and the funding of an
escrow account due ETP $1,400,000.
(f) Includes $980,000 due to ETP in 1999 and 2000 under terms of Asset Purchase
Agreement.
-23-
<PAGE> 23
(g) Includes non-recurring charge of $5,605,000 for purchased In-Process
Research & Development net of related deferred tax benefit of $1,569,000 (see
Note (c) and Note 1).
(h) Represents the amortization of purchased intangible assets amortized using
the straight line method over an average life of 10 years.
(i) Represents compensation expense attributable to certain employees over the
term of employment contracts entered into at the time of the purchase.
(j) Represents interest expense incurred on $1,905,000 due under the Asset
Purchase Agreement over the next three years at prime (8.25%). Also includes
interest expense on the payments noted in (e) above. Interest is assumed to be
from borrowings under LCC International, Inc.'s Credit Facility at an average
rate of 7.5%. This also reflects the reduction in interest incurred on ETP's
convertible notes payable.
(k) Represents the impact on taxes of the pro forma adjustments noted herein.
Effective tax rates of 40% and 28% are used for US and Norwegian activity,
respectively.
NOTE 3) PRO FORMA INCOME DATA
In connection with the registrant's initial public offering of Class A common
stock in September 1996, the Company converted to a Subchapter C corporation
under the Internal Revenue Code of 1986, as amended. Accordingly, the
accompanying pro forma information has been prepared as if the registrant was
treated as a Subchapter C corporation for Federal and state income tax purposes
from January 1, 1995.
-24-
<PAGE> 24
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: March 17, 1997 LCC INTERNATIONAL, INC.
By:/s/ Richard Hozik
-----------------------------------
Richard Hozik
Senior Vice President, Treasurer
and Chief Financial Officer
-4-
<PAGE> 25
EXHIBIT INDEX
<TABLE>
<S> <C>
*2. Asset Purchase Agreement, dated as of December 30, 1996, between
European Technology Partner AS and LCC International AS.
23 Consent of KPMG as
27 Financial Data Schedule.
*99. Press Release, dated January 2, 1997, regarding the acquisition of
European Technology Partner AS.
</TABLE>
*Filed as an exhibit to the Current Report on Form 8-K filed January 14, 1997.
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
European Technology Partner AS:
We consent to incorporation by reference in the registration statement (No.
333-17803) on Form S-8 of LCC International, Inc. of our report dated March 11,
1997, with respect to the balance sheet of European Technology Partner AS as of
December 31, 1995 and the related statements of operations, shareholders'
equity, and cash flows for the year then ended, which report appears in the
Form 8-K/A of LCC International, Inc. dated March 17, 1997.
KPMG as
Arne Frogner
State Authortized Public Accountant
Oslo, Norway
March 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> NORWEGIAN KRONER
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 SEP-30-1996
<EXCHANGE-RATE> 6.3251 6.4448
<CASH> 759 2,549
<SECURITIES> 0 0
<RECEIVABLES> 12,330 17,012
<ALLOWANCES> 0 0
<INVENTORY> 436 1,457
<CURRENT-ASSETS> 13,525 21,018
<PP&E> 2,562 2,591
<DEPRECIATION> 777 1,537
<TOTAL-ASSETS> 16,087 23,609
<CURRENT-LIABILITIES> 6,809 9,170
<BONDS> 0 0
0 0
0 0
<COMMON> 200 290
<OTHER-SE> 4,078 9,149
<TOTAL-LIABILITY-AND-EQUITY> 16,087 23,609
<SALES> 26,279 24,801
<TOTAL-REVENUES> 26,279 24,801
<CGS> 16,228 17,442
<TOTAL-COSTS> 16,228 17,442
<OTHER-EXPENSES> 10,481 12,154
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 246 301
<INCOME-PRETAX> (676) (5,096)
<INCOME-TAX> (177) (132)
<INCOME-CONTINUING> (499) (4,964)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (499) (4,964)
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