<PAGE> 1
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): Commission File Number:
FEBRUARY 9, 1998 0-21213
LCC INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 54-1807038
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
7925 JONES BRANCH DRIVE
MCLEAN, VIRGINIA 22102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(703) 873-2000
(Former name or former address, if changed since last report)
NOT APPLICABLE
<PAGE> 2
LCC INTERNATIONAL, INC.
ITEM 5 OTHER EVENTS
On February 9, 1998, LCC International, Inc. ("LCC") issued a press
release announcing that the Board of Directors of LCC had unanimously voted to
authorize the purchase, through open market transactions, of up to one million
shares of LCC's class A common stock, par value $.01 ("Class A Common Stock"),
over the next twelve months. The actual timing and blocks of shares of Class A
Common Stock to be purchased will depend on a variety of factors, including
price and other market conditions.
The February 9, 1998 press release also reports LCC's earnings for the
fourth quarter ended December 31, 1997.
Enclosed as Exhibit 99 to this Current Report on Form 8-K and
incorporated herein by reference is the text of the February 9, 1998 press
release.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits.
99. Press Release, dated February 9, 1998, announcing LCC's fourth
quarter results and the Board of Directors' decision to
authorize the open market purchase of Class A Common Stock.
- 2 -
<PAGE> 3
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 hereunto duly authorized.
LCC INTERNATIONAL, INC.
Date: February 13, 1998 By: /s/ Richard Hozik
------------------------
Richard Hozik
Senior Vice President and Chief
Financial Officer
- 3 -
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C>
99. Press Release dated February 9, 1998
</TABLE>
<PAGE> 1
EXHIBIT 99
FOR IMMEDIATE RELEASE Contact: Tricia Drennan
Director of Corporate Communications
& Investor Relations
(703) 873-2390 (phone)
(703) 873-2300 (fax)
LCC INTERNATIONAL, INC. REPORTS FOURTH QUARTER AND
YEAR ENDED DECEMBER 31, 1997 RESULTS
Results negatively impacted by the economic
turmoil in the Asia Pacific region
Company announces share repurchase program
McLEAN, VA, February 9, 1998 - LCC International, Inc. (NASDAQ: LCCI), one of
the world's largest providers of radio frequency engineering and network
implementation services and products to the international wireless
telecommunications industry, today reported revenues for the fourth quarter
ended December 31, 1997 of $43.1 million versus $43.4 million posted in the
fourth quarter of 1996. Excluding revenues recorded in the fourth quarter of
1996 from C-Block customers ($7.9 million), revenues would have increased $7.6
million or 21%.
Normalized net income for the fourth quarter was $0.5 million compared to $1.8
million for the fourth quarter of 1996, a decrease of $1.3 million or 72%.
Normalized net income per share for the fourth quarter, decreased 58% to $0.05
(on 19.2 million shares) from $0.12 (on 18.9 million shares) in 1996.
Excluding the effect of economic difficulties in the Asia Pacific region, the
Company believes it would have recorded normalized net income and normalized
net income per share of $4.4 million and $0.25, respectively. Basic and
diluted net income per share under the new FASB release No. 128 for the fourth
quarter were each $0.03.
The Company normally derives approximately 15% of its revenues from the Asia
Pacific region. With the recent economic downturn and exchange rate
fluctuations in this area, certain of the Company's customers have experienced
difficulty in arranging in a timely fashion needed additional financing and
hard currency to satisfy U.S. dollar denominated liabilities to LCC and other
vendors. Due to the uncertainty associated with the collection of amounts owed
to LCC, LCC International, Inc. reports fourth quarter and year end results --
2/2/2 the Company did not recognize revenue and income in the fourth quarter
and full calendar year 1997 from two Asia Pacific region contracts
(approximately $0.09 per normalized share negative impact). In addition, the
Company elected to record in the fourth quarter and full calendar year 1997
additional receivable and other reserves to
<PAGE> 2
cover potential Asia Pacific region exposure (approximately $0.11 per
normalized share negative impact).
Revenues for the year ended December 31, 1997 were $155.2 million, up 9.7% from
the $141.6 million posted for the year ended December 31, 1996. Excluding
revenues recorded for calendar year 1996 from C-Block customers ($16.2
million), the increase in revenues would have been $29.9 million or 24%.
Normalized net income for the year was $5.6 million compared to $7.7 million
for calendar year 1996, a decrease of $2.1 million or 27%. Normalized net
income per share for the year, including the dilutive effect of LCC's initial
public offering, decreased 26% to $0.40 (on 18.8 million shares) from $0.54 (on
16.5 million shares) in 1996. Basic and diluted net income per share for the
year were $0.51 and $0.47, respectively.
Dr. Geoffrey Carroll, President and Chief Executive Officer of LCC said,
"Although our customers in the Asia Pacific region have acknowledged their
contractual obligations to LCC, are satisfied with the services we have
rendered and the products we have delivered, and have agreed to pay us, there
is a question of timing. It is therefore prudent to approach this situation
with caution."
"Nevertheless, despite the short term Asia Pacific challenges, the Company's
core business is quite solid -- evidence of this is the fact that we believe we
would have earned $0.25 per normalized share for the quarter absent the
downturn in the Asia Pacific region. We anticipate healthy growth next year,
but due to the uncertain forecasts for the region's economic health, we felt it
wise to take a conservative position related to revenue and income recognition,
receivable realization and revenue and income expectations going forward,"
continued Carroll.
Dr. Carroll announced, "The Board of Directors unanimously agreed to authorize
the purchase, through open market transactions, of up to 1.0 million shares of
our common stock over the next 12 months. This action reflects our confidence
in the future outlook for LCC. We believe purchasing our shares is a great
investment that provides our shareholders excellent value without impeding our
ability to take advantage of new and emerging growth opportunities."
The actual timing and blocks of shares to be purchased will depend on a variety
of factors, including price and other market conditions.
LCC International, Inc. (http://www.lcc.com) is one of the world's largest
providers of radio frequency engineering, network implementation and
optimization services and products to the international wireless
telecommunications industry. Headquartered just outside Washington, D.C. in
McLean, Virginia with regional headquarters and support centers in Skarer,
Norway, Sao Paulo, Brazil and Singapore, the company is engaged in three areas
of business: Services, Systems and Products and Asset Management.
<PAGE> 3
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 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, its Quarterly Reports on Form 10-Q, news releases and other
communications.
# # #
<PAGE> 4
LCC INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Service revenue 22,666 29,037 91,289 93,156
Product revenue 20,419 14,313 63,959 48,414
------- --------- -------- --------
43,085 43,350 155,248 141,570
------- --------- -------- --------
COST OF REVENUES:
Service revenue 18,236 20,608 66,837 65,801
Product revenue 12,777 9,400 40,869 29,533
------- --------- -------- --------
31,013 30,008 107,706 95,334
------- --------- -------- --------
GROSS PROFIT 12,072 13,342 47,542 46,236
------- --------- -------- --------
OPERATING EXPENSES
Sales and marketing 1,809 1,881 7,645 6,475
General and administrative 6,291 3,118 16,380 11,964
In-process research & development 1,237 6,328 4,570 8,609
Special charge (credit) - 30,050 (3,894) 30,050
Non-cash compensation 46 670 580 7,005
Depreciation and amortization 2,629 1,260 8,044 5,039
------- --------- -------- --------
12,012 43,307 33,325 69,142
------- --------- -------- --------
OPERATING INCOME (LOSS) 60 (29,965) 14,217 (22,906)
------- --------- -------- --------
OTHER INCOME (EXPENSE):
Interest 222 347 700 925
Interest expense (608) (659) (3,301) (3,050)
Other income 449 263 1,194 2,376
------- --------- -------- --------
63 (49) (1,407) 251
------- --------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 123 (30,014) 12,810 (22,655)
PROVISION (BENEFIT) FOR INCOME TAXES (350) (4,830) 5,235 $(11,371)
------- --------- -------- --------
NET INCOME (LOSS) $ 473 $ (25,184) $ 7,575 $(11,284)
======= ========= ======== ========
NET INCOME PER SHARE
Basic $ 0.03 $ 0.51
======= ========
Diluted $ 0.03 $ 0.47
======= ========
PRO FORMA INCOME DATA:
(Loss) before income taxes (30,014) $(22,655)
Pro forma (benefit) for income taxes (4,830) (1,886)
--------- --------
Pro forma net (loss) $ (25,184) (20,769)
========= ========
PRO FORMA NET LOSS PER SHARE:
Basic $ (1.73) $ (1.70)
========= ========
Diluted $ (1.73) $ (1.70)
========= ========
NORMALIZED INCOME DATA:
Income (loss) before income taxes $ 123 $ (30,014) $ 12,810 (22,655)
In-process research & development - 5,605 - 5,605
Special charge (credit) (A) - 26,753 (3,894) 22,931
Non-cash compensation 46 670 580 7,005
-- --------- -------- --------
Normalized income before
income taxes 169 3,014 9,496 12,886
Pro forma (benefit) for income (332) 1,206 3,909 5,154
------- --------- -------- --------
taxes
Normalized net income $ 501 $ 1,808 5,587 $ 7,732
======= ========= ======== ========
NORMALIZED NET INCOME PER SHARE: $ 0.05 $ 0.12 0.40 $ 0.54
======= ========= ======== ========
COMMON SHARES USED IN THE CALCULATION OF NET
INCOME PER SHARE:
Basic 15,107 14,527 14,740 12,211
======= ========= ======== ========
Diluted 16,358 14,527 15,954 12,211
======= ========= ======== ========
Normalized 19,199 18,900 18,765 16,509
======= ========= ======== ========
</TABLE>
<PAGE> 5
(A) Normalizes for special charge offset by Pocket and NextWave profit
recorded in 1996.
<PAGE> 6
LCC INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $3,810 $13,732
Short-term investments 20,647 6,934
Receivables, net of allowance for doubtful accounts of
$15,426 and $17,942 at December 31, 1997 and
1996, respectively:
Trade accounts receivable 30,542 35,563
Due from related parties and affiliates 1,294 2,244
Unbilled receivables 11,877 9,819
Inventory, net 7,400 6,387
Deferred income taxes, net 9,874 12,755
Prepaid expenses and other current assets 1,315 4,413
------- ------
Total current assets 86,759 91,847
Property and equipment, net 10,531 5,952
Software development costs, net 6,133 5,069
Notes receivable - 602
Investments in joint ventures 1,300 1,650
Deferred income taxes, net 1,513 4,584
Other assets 4,782 5,243
------- ------
$111,018 $114,947
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Note payable $ - 10,445
Accounts payable 4,994 6,218
Accrued expenses 18,933 23,296
Deferred revenue 4,650 4,951
Income taxes payable 7,507 7,446
Obligations under incentive plans 1,106 448
Other current liabilities 2,588 1,806
------- ------
Total current liabilities 39,778 54,610
Convertible subordinated debt 50,000 50,000
Obligations under incentive plans, net of current portion - 807
Other liabilities 1,038 1,053
Total liabilities 90,816 106,470
-------- --------
Preferred Stock:
10,000 shares authorized; -0- shares issued and outstanding - -
Class A Common stock, $.01 par value:
70,000 shares authorized; 6,644 and 6,066 shares issued and
outstanding at December 31, 1997 and 1996, respectively 66 61
Class B Common stock, $.01 par value:
20,000 shares authorized; 8,461 shares issued and
outstanding at December 312, 1997 and 1996 85 85
Paid-in capital 33,210 28,353
Retained capital (8,847) (16,422)
Cumulative foreign currency translation adjustment (1,512) (100)
Note receivable from shareholder (2,800) (3,500)
-------- -------
Total shareholders' equity 20,202 8,477
------ -------
$111,018 $114,947
======== ========
</TABLE>
<PAGE> 7
LCC INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,575 $(11,284)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,044 5,039
Provision for doubtful accounts 4,115 2,937
Non-cash compensation 580 7,005
In process research and development - 5,605
Special charge (credit) (3,894) 30,050
Loss (income) from investments in joint ventures, net 350 (346)
Gain on disposition of joint venture, net - (514)
Changes in operating assets and liabilities:
Trade, unbilled and other receivables (200) (23,378)
Accounts payable and accrued expenses (5,587) 8,809
Inventory (947) (1,154)
Other current assets and liabilities 10,502 (14,359)
Other noncurrent assets and liabilities 2,116 (11,538)
------- --------
Net cash provided by (used in) operating activities 22,654 (3,128)
------- -------
Cash flows from investing activities:
Increase in short term investments, net (13,713) (6,156)
Purchases of property and equipment (8,791) (3,263)
Increase in capitalized software (4,243) (3,177)
Investment in joint ventures - (787)
Proceeds from sale of joint venture - 3,800
Issuance of notes receivable - (5,602)
------- -------
Net cash (used in) investing activities (26,747) (15,185)
------- -------
Cash flows from financing activities:
Proceeds from note payable/line of credit - 10,000
Payments on note payable/line of credit (10,445) (20,000)
Distributions and loans to member - (5,928)
Loan to shareholder - (3,500)
Repayment of loan to shareholder 961 -
Proceeds from issuance of common stock 448 44,902
Proceeds from exercise of options 3,207 -
------ ------
Net cash (used in) provided by financing activities (5,829) 25,474
------ ------
Net (decrease) increase in cash and cash equivalents (9,922) 7,161
Cash and cash equivalents at beginning of period 13,732 6,571
------ -----
Cash and cash equivalents at end of period $ 3,810 $ 13,732
======= ========
</TABLE>
