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SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

For the fiscal year ended December 31, 1999

Commission file number: 0-21213

LCC INTERNATIONAL, INC.

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

Securities registered pursuant to Section 12(b) of the Act: Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

Class A Common Stock, par value $.01 per share

      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 

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [X]

      Based upon the closing price of the registrant’s common stock as of March 23, 2000, the aggregate market value of the common stock held by non-affiliates of the registrant is $252,193,874.*

      As of March 23, 2000, the registrant had outstanding 11,841,331 shares of Class A Common Stock, par value $.01 per share, (the “Class A Common Stock”) and 8,449,984 shares of Class B Common Stock, par value $.01 per share (the “Class B Common Stock”).

DOCUMENTS INCORPORATED BY REFERENCE

      List hereunder the following documents incorporated by reference and the Part of the Form 10-K into which the document is incorporated:

      (1)  Portions of the definitive Proxy Statement for the Annual Meeting of the Stockholders to be held on May 16, 2000 (the “Proxy Statement”) to be filed within 120 days after the end of the registrant’s fiscal year are incorporated by reference into Part III, Items 10 — 13 of this Form 10-K.

      This Annual Report on Form 10-K (“Form 10-K”) contains certain forward-looking statements within the meaning of Section 27A of the Securities and Exchange Act of 1934, which statements can be identified by the use of forward looking terminology, such as “may”, “will”, “expect”, “anticipate”, “estimate”, or “continue” or the negative thereof or other variations thereon or comparable terminology. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth elsewhere in this Form 10-K. See the “Risk Factors” section of Item 1 “Business” for cautionary statements identifying important factors with respect to such forward-looking statements, including certain risks and uncertainties, that could cause actual results to differ materially from results referred to in forward-looking statements. Unless the context indicates or requires otherwise, references in this Form 10-K to the “Company” are to (1) the combined operations of the Company’s predecessor, LCC, L.L.C., a Delaware limited liability company, and its subsidiaries (the “Limited Liability Company”) prior to the date of the merger of the Limited Liability Company into LCC International, Inc., a Delaware corporation formed in June 1996 (“LCC International”), as described below (the “Merger”) and (2) LCC International and its subsidiaries, after the Merger. Definitions of technical and other terms are set forth in the Glossary appearing elsewhere herein. References herein to wireless telecommunications or similar terms are not intended to include satellite transmission, which some consider to be a “wireless” technology.

PART I

Item 1.  Business

General

      The Company is one of the world’s largest independent providers of RF engineering and program management services to the wireless telecommunications industry. The Company provides end-to-end services solutions to operators of a wide range of wireless networks, incorporating all major wireless technologies available today, including W-CDMA, LMDS, MMDS, TDMA (which includes IS-54 and IS-136), GSM, CDMA, and iDEN. The Company provides services for operators involved in all four phases of wireless system development: (i) Phase 1 — strategic planning and bidding for the licenses necessary to build and operate the system; (ii) Phase 2 — design and build-out of the system; (iii)  Phase 3 — optimization and enhancement of the system to meet the requirements of an increasing subscriber base and to provide increased quality and coverage; and (iv)  Phase 4 — achievement of greater efficiencies in providing service in order to compete in areas where there are multiple system operators. In Phase 1, the Company will assist in the development of an operators’ business case planning, licensing strategy, technical requirements (both short term and long range), and vendor selection. In Phase 2, the Company offers a full range of integrated network deployment services including radio frequency engineering, site acquisition, construction management and related services designed to take the operator from concept to commercial launch. To address Phases 3 and 4, the Company offers benchmarking, optimization, technical evaluation and operations and maintenance services.

      The Company has provided services and products to seven of the ten largest U.S. cellular system operators; large international operators, including British Telecom, France Telecom, Misrfone (a Vodafone Airtouch affiliate) and Mannesmann; companies building PCS systems, including Sprint PCS, AT&T Wireless Services, Bell South Cellular Corporation, Lucent Technologies and Pacific Bell Mobile Services; operators of iDEN systems, including Nextel Communications; and operators of two-way messaging systems, such as SkyTel. The customers listed above each contributed approximately 5% or more of the Company’s consolidated revenues during one or more of fiscal years 1992 through 1999. In August 1999, the Company secured a contract from XM Satellite Radio, Inc. (“XM Satellite”) to complete, on a turn-key basis, the design and deployment of XM Satellite’s nationwide terrestrial repeater network. The Company also has established working relationships with two major telecommunications equipment vendors, pursuant to which the Company provides services and products on a subcontract basis. The Company derives a significant portion of its revenues from its international customers (approximately 47.0% in 1999).

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      In October 1999, the Company completed the sale of its software tools and field test measurement equipment business (“Products Business”) to Ericsson Radio Systems AB. In March 2000, the Company announced, and completed the initial closing with respect to, the sale of up to 197 telecommunication towers to Pinnacle Towers Inc., which towers were owned or being constructed by the Company’s subsidiary, Microcell Management, Inc. In connection with the sale of its towers, the Company was awarded a contract by Pinnacle to site audit, perform capital improvements (when necessary), and maintain a portion of Pinnacle’s telecommunication towers. The sale of the Company’s products business, and the conversion of the Company’s tower business from asset ownership to an operations and maintenance business, have allowed the Company to focus on its core strengths and on expanding its end-to-end services offerings.

      A substantial number of new wireless network licenses have been awarded worldwide over the last several years, and the Company expects a significant number of additional wireless licenses to be awarded in the next few years. Many of the new systems are being designed to deploy “3G” data capabilities, which the Company believes it is uniquely positioned to address given its experience in designing and deploying wireless systems. The Company has already performed work with respect to the design and deployment of fixed and mobile wireless data networks for more than eight customers in the United States and Europe. In addition, many existing systems are continuing to grow. Furthermore, competition among operators of wireless networks is generating greater requirements for operational quality and efficiency. Construction of new networks, and expansion and optimization of existing networks, require substantial amounts of RF engineering, system development, and ongoing maintenance services.

Company Background

      The Company’s business commenced in 1983 in a corporation named LCC Incorporated formed by Dr. Rajendra and Neera Singh. In 1994, entities formed by The Carlyle Group, a Washington, D.C.-based investment group (the “Carlyle Investors”) acquired a 25% indirect interest in LCC Incorporated. LCC International was formed in June 1996 in connection with the Company’s initial public offering.

      The Company issued 3,162,500 shares of Class A Common Stock in the Offering at an initial public offering price of $16.00 per share. The total proceeds of the Offering, net of underwriting discounts and offering expenses, were approximately $44.8 million.

      In June 1994, the Company’s predecessor entered into a Note Purchase Agreement with a then unrelated third party, MCI Telecommunications Corporation (now MCI/Worldcom, Inc.; “MCI/Worldcom”). These notes were convertible, under certain circumstances, into 2,841,099 shares of Class A Common Stock (see note 12 to the Consolidated Financial Statements). In July 1999, MCI/Worldcom converted these notes in their entirety into 2,841,099 shares of Class A Common Stock, and both notes were cancelled.

Recent Developments

      In October 1999, the Company completed the sale of its Products Business to Ericsson Radio Systems AB in consideration for an aggregate cash purchase price of $22.3 million, subject to a holdback of $1.9 million payable upon the collection of certain accounts receivable (see note 3 to the Consolidated Financial Statements).

      In March 2000, the Company announced, and completed an initial closing on 134 towers with respect to, the sale of up to 197 telecommunication towers owned or to be constructed be the Company’s subsidiary, Microcell Management, Inc., for an aggregate purchase price of $80 million, assuming all 197 towers are conveyed. At the initial closing, the Company conveyed 134 towers in consideration for cash proceeds of approximately $56.3 million. In connection with the sale of its towers, the Company entered into a five year Tower Service Agreement with Pinnacle Towers Inc., whereby the Company was engaged to provide site audit, program management and site maintenance services with respect to an initial 204 towers owned or managed by Pinnacle.

      Concurrent with the initial closing of its sale of 134 towers to Pinnacle, the Company prepaid, in full, its outstanding revolving credit facility with The Chase Manhattan Bank. The Company paid approximately

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      In July 1999, MCI/ Worldcom elected to convert its convertible subordinated notes, in the aggregate principal amount of $50 million, into 2,841,099 shares of Class A Common Stock.

      In August 1999, Telcom Ventures elected to convert its convertible subordinated note, in the principal amount of $5 million into 845,087 shares of Class A Common Stock (see note 5 to the Consolidated Financial Statements).

      In August 1999, the Company entered into a turn-key network deployment contract of approximately $124 million with XM Satellite pursuant to which the Company was engaged to design and deploy XM Satellite’s nationwide terrestrial repeater network.

      In October 1999, the Company (through its wholly-owned subsidiary, LCC Egypt, Ltd.) was awarded a contract of approximately $16.5 million by Misrfone Telecommunications Company S.A.E (“Misrfone”) with respect to the deployment of a minimum of 180 telecommunications cell sites in Egypt.

      In November 1999, the Company was awarded a master professional services contract by Cisco Systems, Inc. whereby the Company may be engaged to provide services with respect to the development and support of broadband fixed wireless internet services. In particular, the Company will assist in the design and deployment of wireless internet networks based on Cisco’s Orthogonal Frequency Division Multiplexing (“OFDM”) technology and equipment. On March 8, 2000, the Company entered into an agreement with Nucentrix Broadband Networks, Inc. to provide technical engineering and design support in connection with its efforts to deploy a Cisco powered network using Cisco’s OFDM based WT2700 wireless technology suite, and with its efforts to obtain permanent licenses from the Federal Communication Commission (“FCC”).

Industry Background

  Overview

      Wireless telecommunications networks use a variety of radio frequencies to transmit voice and data. Wireless telecommunications networks include two-way voice and data applications, such as cellular, wide band and narrow band PCS and iDEN networks, and various high speed data applications. Each application operates within a distinct radio frequency block. These technologies all require radio frequency engineering and system deployment services for system design, build-out and optimization. Once operational, they require ongoing technological evaluation, auditing, competitive benchmarking, operations and maintenance services.

  Types of Wireless Communications

      The wireless communications industry encompasses a broad range of technologies and applications from traditional voice to high speed data applications. These radio signals operate within portions of the spectrum designated by the government specifically for each technology. The key technologies in the communications industry today are as follows:

      Cellular. A cellular network is a telephone system based on a grid of “cells” deployed primarily at 800 and 900 MHz. Each cell contains transmitters, receivers and antennas, and is connected to switching gear and control equipment. As the cellular market migrates from an analog based transmission technology to a digital based transmission technology, demand has increased as prices decline. Demand for design and deployment services continues to increase both in the US and the rest of the world as carriers role out services in new areas and improve coverage in existing areas. Analog network demand is stagnating or declining as subscribers are switching to digital service. Over the next 5 to 10 years, it is anticipated that digital service will replace analog service.

      PCS. In 1993, the FCC allocated a portion of the radio spectrum for the provision of a new wireless communications service, commonly known as PCS. The principal difference between PCS and traditional cellular service is that PCS systems operate at a higher frequency range and have a more limited transmission

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      iDEN. iDEN is a mobile communication service that relies on specialized mobile radio frequencies that have been historically limited to two-way voice communications in small local networks (such as for taxi or messenger dispatch). As a result of advances in digital technology, iDEN operators have begun to design and deploy digital mobile networks that increase the frequency capacity of iDEN systems to a level that is competitive with that of cellular and PCS systems. Companies such as Nextel Communications (in the U.S.) have acquired licenses for iDEN two-way radio channels in their respective operating areas and are offering wireless voice services over their networks. A derivative SMR technology known as “TETRA” or “Terrestrial Trucking Radio” is becoming an increasingly popular technology in Europe.

      Third Generation (3G). 3G is the general term for the next generation of wireless services offering enhanced voice and data services, improved spectrum efficiency, high speed data, and superior voice quality as well as lower operating costs for the wireless service providers. 3G licenses are being auctioned in Europe, with Finland and Spain leading the auction calendar followed by the United Kingdom and Germany. Within the next three years, the Company expects that more than 80 new 3G licenses will be auctioned in Europe alone. In Europe, usually one of the new licenses in each country is reserved for a new carrier while the remaining licenses are awarded to the existing wireless carriers.

      Fixed Wireless High-speed Data and other Services. Local Multipoint Distribution System (“LMDS”) and Multichannel Multipoint Distribution System (“MMDS”) are fixed broadband point-to-multipoint systems which provide an alternative for offering local exchange service, wireless telephony, data, internet access, video and other broadband services. LMDS services and MMDS services can provide a wireless local loop (a system that eliminates need for a wire loop connecting users to the public switched telephone network) bridging the “last mile” gap enabling competitive local exchange carriers (“CLECs”) to offer a full array for telecommunications services to business and residential customers in a fast, timely, and cost-effective manner. Digital audio radio satellite systems (“DARS”), direct satellite broadcasting, and other wireless high-speed data services represent segments of the wireless communications industry being developed by operators in the U.S. and abroad. XM Satellite currently is in the process of deploying a terrestrial repeater network to improve its coverage in densely populated metropolitan areas. In the United States, Teligent, Winstar and ARTS are operating the first stages of their LMDS networks. Nucentrix Broadband Networks is among a group of other providers that are beginning to deploy MMDS networks, and who plans to construct fixed wireless networks in the near future. Similar opportunities exist throughout the world, especially in Europe, where new spectrum for fixed wireless is being auctioned.

  Wireless Technologies

      Most traditional cellular systems historically transmitted voice and data signals over analog-based systems, which use one continuous electronic signal that varies in amplitude or frequency over a single radio channel. Digital systems, on the other hand, convert voice or data signals into a stream of digits that is compressed before transmission, enabling a single radio channel to carry multiple simultaneous signal transmissions. This enhanced capacity, along with enhancements in digital protocols (discussed below), allows digital-based wireless technologies to offer new and enhanced services, such as greater call privacy and single number (or “find me”) service, and more data transmission features, such as “mobile office” applications (including facsimile, electronic mail and connecting notebook computers with computer/data networks).

      Digital signal transmission is accomplished through the use of frequency management technologies, or “protocols.” Two common protocols used in cellular and other networks “manage” the radio channel either by dividing it into distinct time slots (a method known as Time Division Multiple Access, or “TDMA”) or by assigning specific coding instructions to each packet of digitized data that comprises a signal (a method known as Code Division Multiple Access, or “CDMA”). In the U.S., the FCC has intentionally avoided mandating a universal digital signaling protocol, and three principal digital signal protocols (which are incompatible with each other) are currently being used in the U.S. for PCS networks: GSM, CDMA and TDMA. European

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      With the convergence of wireless and internet technologies, wireless carriers are beginning to deploy high speed data capabilities. As an interim measure, carriers are rolling out intermediary solutions generally referred to as “2.5G”, in particular GPRS and EDGE, which provide high speed data capabilities in conjunction with current digital networks. GPRS is being implemented as a software upgrade to existing GSM and TDMA networks enabling them to provide data services with speeds up to 128 kbps. The next step of 2.5G solutions, such as EDGE, allows for speeds up to 384 kbps, requiring hardware upgrades and engineering services. The Company also has experience in these technologies.

      The International Telecommunications Union (“ITU”) has agreed on an umbrella 3G standard combining WCDMA, cdma2000 and UWC-136 into a set of interoperable standards. This allows all existing carriers to choose a 3G standard that will allow them to reuse their existing infrastructure while making global roaming possible. 3G capabilities will include wireline quality voice service, collaborative working between multimedia and high speed data, user customization allowing the subscriber better control over features such as voicemail routing, announcements and call screening, mobility-enabled services such as vehicular navigation and emergency services, wireless local loop capabilities, seamless global roaming, zone identification and billing and satellite interworking. The Company also has experience in these technologies.

  Operation of Two-Way Wireless Systems

      Two-way mobile wireless service areas are divided into multiple regions called “cells,” each of which contains a base station consisting of a transmitter, a receiver and signaling equipment, located on a telecommunications tower. The cells are typically configured on a grid pattern, although terrain factors (including natural and man-made obstructions) and signal coverage patterns may result in irregularly shaped cells and overlaps or gaps in coverage. Cellular system cells generally have a radius ranging from two miles to 25 miles. PCS system cells have a radius ranging from approximately one-quarter mile to approximately 12 miles, depending on the PCS technology being used and the terrain. The base station in each cell is connected by microwave, fiber optic cable or telephone wires to a switch, which uses computers and specially developed software to control the operation of the wireless telephone system for its entire service area. The switch controls the transfer of calls from cells within the system and connects calls to the local landline telephone system or to a long distance telephone carrier. Since each cell site requires engineering and site acquisition services, growth in the number of cell sites is one of the key drivers of demand for the Company’s telecommunications services and telecommunications towers.

      Unlike cellular and PCS systems, which are designed principally to serve voice calls, 3G systems have been conceived to serve integrated voice, data, and multimedia applications. The typical range of coverage from a 3G cell is less than 1 mile depending on the environment and the applications being served. Due to the increased need for high speed mobile data and multimedia services, the range of coverage is expected to be within less than  1/2 mile in dense urban core areas, which renders a 3 to 4 fold increase in the number of base stations required to deploy 3G systems compared to PCS.

      Wireless transmission requires a certain signal strength for the parties to hear each other or for data to be received. The signal strength of a transmission between a handset and a base station declines as the handset moves away from the base station, so the switch and the base stations monitor the signal strength of calls in progress. When the signal strength of a call declines to a predetermined level, the switch may “hand off” the call to another base station that can establish a stronger signal with the handset. Hand-off to an adjacent system must be effected through an appropriate technical interface when a handset leaves the service area of the wireless service provider. The quality of wireless transmission depends in part on signal strength, limitations imposed by the terrain and interference from other uses of radio signals. Transmission quality is measured in the field at various locations so that adjustments can be made to enhance quality.

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      Each wireless network is designed to meet a certain level of subscriber density and traffic demand and to provide a certain geographic coverage. Each transmission over the wireless network requires a certain amount of radio frequency, so a system’s capacity is limited by the amount of frequency that is available. The same frequency can be reused by each separate transmitter, subject to certain interference limitations. The design of each wireless system involves placement of transmission equipment in locations that will make optimal use of available frequency based upon projected subscriber usage patterns, subject to availability of such locations and ability to use them for wireless transmissions under applicable zoning requirements.

      After a wireless system has been installed, the system’s capacity can be increased in various ways, by (i) adding available frequency capacity to cells as required, if such capacity is available, (ii) using directional antennae to divide a cell into discrete multiple sectors or coverage areas, thereby reducing the required distance between cells using the same frequency, or (iii) “cell splitting” (i.e., dividing a single cell into a number of smaller cells served by lower-power transmitters, thereby increasing the ability to reuse radio frequencies and increasing the number of calls that can be handled in a given area). Additional solutions are being designed to increase network capacity and coverage, including (i) the introduction of microcells, which can be placed very close together to increase frequency reuse and the total capacity of the wireless network and which can be placed within buildings, train stations and other structures to provide coverage where none was available before and (ii) the introduction of digital technologies, which increase the number of conversations which can be transported on a single radio carrier from two to potentially more than ten times, depending on the type of digital technology deployed.

  Wireless System Life Cycle

      Set forth below is a description of the life cycle of a typical wireless system.

      Phase 1. In Phase 1, the operator is developing its business strategy and pursuing the licenses necessary to build and operate the system. Technical planning and a rough engineering designs are often required to decide on a deployment strategy and determine construction costs and the revenue generating ability of the system.

      Phase 2. Phase 2 involves the actual design and build-out of the wireless system. Detailed site location designs are prepared, interference to or from co-located antennae is checked, site performance is measured after completing construction and, finally, the site is optimized to work with neighboring sites. Wireless network operators (even the few which have sizable internal engineering staffs) typically rely on outside RF engineering companies, such as the Company, for Phase 2 engineering services and often rely on outside parties to oversee the site acquisition and construction process. Depending on the size of the system, this phase can involve from four RF engineers for a typical small system, to 15 RF engineers for a typical medium-sized system and up to 100 RF engineers for a nationwide deployment over a period of 12 to 24 months. The Company believes that globally the number of RF engineers available on an outsourcing basis is limited.

      Phase 3. As the number of subscribers handled by the wireless system increases, the system enters Phase 3, the expansion of the system by adding cell sites or using other techniques to increase system coverage and capacity. The system must also be optimized to meet the increased subscriber usage from the new cell cites and to provide increased quality and coverage. In network expansions, the operator typically continues to rely on the RF engineering company and the external site acquisition team, such as the Company, to design and implement the expansion and make optimization adjustments to the existing system.

      Phase 4. Eventually the system will enter Phase 4, in which the operator must achieve greater efficiencies in service provision in order to compete in areas where there are multiple system operators. In most European countries and Australia, certain systems have entered Phase 4. In the U.S., with the construction of new PCS systems in areas that already have two cellular systems and with the rollout of a national iDEN system by Nextel Communications, wireless networks are reaching Phase 4. Competing systems in Phase 4 generally have the same network coverage; thus, competition is focused primarily on price and call quality.

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  Services for the Wireless Industry

      The planning, geographic layout, build out and operation of a wireless network requires significant RF engineering work. The RF engineers must design the wireless network to meet the operator’s requirements for transmission over the wireless network, which requirements are based upon a projected level of subscriber density and traffic demand and the coverage area specified by the operator’s license or cost-benefit decisions. In addition to meeting basic transmission requirements, the RF network design must make optimal use of available radio frequency and result in the highest possible signal quality for the greatest portion of projected subscriber usage within existing constraints. These constraints may be imposed by cost parameters, terrain, limitations in the license, interference with other operators, availability of cells, applicable zoning requirements and other factors. Based on these initial technical guidelines, desired cell site locations are identified. This process is known as identifying “search rings.”

      The RF engineering work performed in connection with both initial system design and buildout and subsequent system redesign and expansion must be coordinated with cell site acquisition activities. A site acquisition team identifies those potential sites within a given search ring (i) which most closely match the RF engineering specifications; (ii) can be leased; (iii) are suitable for construction; and (iv) are amenable to obtaining zoning and other required permits. The most desirable sites fitting these criteria are further analyzed by the RF engineers in the context of demographics, traffic patterns and signal characteristics. If necessary, the RF engineers may re-design their initial search rings to identify other suitable target locations.

      After a suitable site has been identified, the site acquisition team obtains either (i) a long-term lease for a rooftop or tower site, or (ii) in the case of a tower site, an option to purchase the property. In the case of a tower site, the site acquisition team will also obtain a title report on the site, conduct a survey of the site, obtain an environmental survey of the site and conduct a soil analysis of the site. The site acquisition team will also prepare all necessary zoning applications, attend any necessary zoning hearings and obtain necessary land use permits to begin construction or install equipment.

      Following the site acquisition process, cell site construction commences. This involves securing the necessary permits, installing the necessary equipment, antenna and shelters, and competing the initial cell site acceptance testing procedures. During this phase of development, construction budgets and schedules are prepared, sub-contractors are hired where necessary and construction begins. Construction involves, in the case of a tower site, clearing the site, laying foundations, bringing in utility lines (including interconnection with a local telephone provider) and constructing the multi-tenant tower, and, in some cases, shelters or buildings to house electronic equipment and, in the case of a rooftop site, assembling the necessary equipment.

End-to-End Telecommunications Services

      RF Engineering and System Deployment Services. The Company provides a variety of RF engineering and system deployment services over the four phases of the life cycle of a wireless telecommunications system, as follows:

	Phase 1 Services. The Company’s engineers help in the preparation of strategic plans, business plans and applications for network system operators seeking licenses in formal government license grant processes. The Company also has assisted foreign governments in preparing Requests for Proposals (“RFPs”) and analyzing responses thereto. The Company has assisted in preparing winning applications in several (approximately nine) license tender processes worldwide, including the second nationwide cellular license in Germany, the first cellular license in Bombay, India and a license in Belgium. The Company’s involvement in successful tenders has generally led to follow-on contracts with winning applicants as they implement new systems. The introduction of wireless data necessitates additional planning for wireless operators. The Company assists operators in 2G to 3G migration planning, technology and service evaluation, and end to end dimensioning of wireless networks to carry voice and data traffic.
	Phase 2 Services. The Company offers a full range of deployment services including analysis of customer expectations for network coverage, capacity and other requirements, analysis of interference

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	and other technical factors affecting coverage, capacity and performance, identification and rank of desirable cell sites, preparation of regulatory filings (FCC, FAA, zoning, land use and others) required for system deployment and attendance at regulatory hearings, turn-key systems deployment, including identification and site acquisition and construction management services, measurement of network performance and optimization of systems.
	Phase 3 Services. The Company’s services are used by existing system operators to plan system expansions to accommodate subscriber growth, incorporate improvements in technology, improve system performance and achieve efficient use of available radio spectrum. The Company also assists in capacity expansion planning and technology changeovers, such as conversion from analog to digital technology and the implementation of 2.5G solutions.
	Phase 4 Services. As multiple service providers offer competing services in the same service area, network operators will require additional engineering services focusing on the achievement of cost savings and quality enhancements within the existing coverage area. These services include system analysis and network management, including redistribution or elimination of cell sites, cost management, measurement of network performance, including “benchmarking” performance against that of competitors, and technology and network upgrades.

      The Company is one of the world’s largest independent providers of RF engineering and wireless network design services. (The Company maintains regional headquarters in Mission Viejo, California, London (UK), Cairo (Egypt), Sao Paulo (Brazil), and Singapore, in addition to its worldwide headquarters in McLean, Virginia.) The Company believes that its large number of RF engineers enables it to respond quickly to customers who may require the Company to staff a major project on a timely basis. In addition, the Company believes that the wide-ranging experience of its RF engineers, including exposure to and participation in the standards-setting process for new digital and wireless internet technologies, helps the Company understand the changing marketplace for wireless communications and for end-to-end services to support the wireless industry. Since a large number of its professionals work on customer sites, the Company is able to develop an understanding of many of the issues of importance to its customers and uses this information in planning. The Company also believes that the various nationalities of its professionals provides the Company with an understanding of different practices in business and wireless telephony in many countries around the world that will assist the Company in continuing to pursue international opportunities.

      The Company provides engineering services on a contract basis, usually in a customized plan for each client. The Company generally charges for engineering services on a time and materials basis, although Phase 1 services or other projects of short duration may involve a fixed price or success fee. The Company’s revenues also include reimbursement for expenses, including the living expenses of engineers on customer sites.

      The Company offers its customers a “one stop shopping” approach to Phase 2system build-outs and Phase 3 network expansions by packaging system deployment services in a customized plan for each client. The Company provides these services on a contract basis, on a time and materials basis or for a fixed price per cell site.

  Cellular Institute

      The Company provides training services, for its employees and clients, through the Cellular Institute. The Cellular Institute started in 1991 as the Company’s corporate university and has become one of the premier training schools for the wireless industry. The Cellular Institute has taught more than 2,000 employee and client classes worldwide in a variety of languages.

  Tower Service and Tower Management

      The Company recently launched a tower service and tower management business pursuant to which it will offer site audit, maintenance and project management services to telecommunications tower owners.

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Customers and Backlog

  Customers

      The Company has provided services and products to seven of the ten largest U.S. cellular system operators; large international cellular operators, including British Telecom, France Telecom, Misrfone (a Vodafone Airtouch affiliate) Mannesmann and Korea Mobile Telecom; companies building or proposing to build PCS systems, including Sprint PCS, AT&T Wireless Services and Pacific Bell Mobile Services; operators of iDEN systems, including Nextel Communications; operators of two-way messaging systems; and operators of emerging technologies such as XM Satellite. The Company also has established working relationships with two major telecommunications equipment vendors, pursuant to which the Company provides services and products on a subcontract basis.

      In 1999, XM Satellite and Sprint PCS accounted for approximately 13.6% and 11.2% respectively, of the Company’s revenues and were the only customers accounting for 10% or more of the Company’s revenues.

      The Company’s existing and targeted customer base includes operators and vendors of all forms of wireless communications services, operating a variety of different network platforms and access technologies in diverse geographic markets. The Company’s experience includes the following projects:

	•	In the U.S., the Company is assisting its cellular customers in implementing the North American digital cellular standards ( i.e., TDMA, CDMA and others).
	•	The Company has designed, or is currently designing, GSM digital cellular networks in the U.S., Germany, The Netherlands, Belgium, France, Italy, Portugal, Malaysia and other nations.
	•	In Asia, the Company has designed and developed GSM and CDMA networks in Korea, Malaysia, and Australia.
	•	The Company has designed, or is currently designing, iDEN systems throughout the U.S. and in Brazil, Canada, Mexico and China.
	•	In the U.S., the Company has supported narrowband PCS clients with INFLEXION™ and REFLEX™ standards.
	•	In the US, the Company is supporting design and deployment of wireless broadband networks including LMDS and MMDS.
	•	Currently, the Company is assisting in one of the first UMTS designs in the UK.

      In March, 2000, the Company entered into a Tower Services Agreement with Pinnacle Towers, Inc. to launch its new tower services and tower management business. The Company will provide the following services to Pinnacle: (i) site audit services, including field inspections, preparation of due diligence reports, provide deficiency summaries of the owner’s existing towers and new towers, complete site upgrade work, (ii) maintenance services, including routine inspections and maintenance and preparation of tower management reports, and (iii) project management services, including program management and implementation of new tower construction, zoning and land use services, lease re-negotiation and site evaluations. The agreement with Pinnacle provides for a monthly maintenance fee for maintenance services. The site audit and project management services are provided on a time and materials basis. The Company intends to market and provide similar services to other telecommunications owners.

  Backlog

      The Company has entered into long-term contracts with customers for the provision of the Company’s services. As of December 31, 1999, the Company had a total backlog of $135 million relating to professional services. In March 2000, the Company secured an additional $50 million in backlog relating to its newly-launched tower services and tower management business. The Company includes in its backlog only committed fees or purchase prices specified in contracts which have been executed by the Company to the extent that the Company contemplates recognition of the related revenue.

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      The principal portion of the Company’s present backlog arises from XM Satellite, which represents approximately $114 million (or 62.0%) of the overall backlog. Since the Company’s backlog is subject to significant timing uncertainties, the Company cannot accurately predict the portion of the backlog that will be filled within the current year, but expects that it will not fill at least $85.0 million of its overall backlog in 2000. There can be no assurance that the contracts included in the backlog will actually generate the specified revenues or that actual revenues will be generated within any particular period. Our contracts typically have provisions that permit customers to terminate their contracts under various circumstances, which include our nonperformance for customer convenience. With respect to the Company’s Tower Services Agreement with Pinnacle Tower Inc., the contract provides that on an annual basis, either party may request a renegotiation of the pricing and scope of services. Therefore, there are no guarantees the current contract will generate the specified revenues or the minimum payments of $10.0 million per year over the next five years.

Sales and Marketing

      The Company markets its telecommunications services to operators of wireless telecommunications networks in North America, Europe, the Middle East, Africa, Asia-Pacific and Latin America. The Company markets primarily through its executives, project managers and RF engineers and other technical professional staff. Customers generally have engineers involved in their procurement decisions, and the Company’s engineers work closely with the customer’s engineers to help them understand the Company’s services and their advantages compared to those of the competition. The Company also utilizes independent distributors and sales agents to supplement its sales force outside the U.S. where business practices or customs make it most effective to proceed through local companies. The Company utilizes the offices of its British subsidiary to lead its European sales efforts and the offices of its Brazilian subsidiary to lead its Latin American sales efforts and has established a regional sales office in the Asia-Pacific region.

      Additional business from existing customers is pursued through the joint efforts of both the project manager, the RF engineers and other technical staff who have developed a service relationship and worked closely with the customer’s engineers. This combination gives the Company an advantage in pursuing follow-on business.

      The Company generates sales leads for new customers through referrals from existing customers (including referrals to international wireless operators with which such customers have entered into partnership arrangements) and other industry suppliers, its reputation in the industry, contacts with bidders for new wireless licenses and others in the industry and other sources, which include advertising, use of explanatory literature and publications and participation in conferences and trade shows. The Company utilizes various strategies to attract business from new customers, particularly various arrangements in which Phase 1 services are provided for a reduced fee or with a success-based contingent arrangement, coupled with a commitment from, or understanding with, the customer to retain the Company in connection with Phase 2 services and products should the customer be awarded the applicable licenses.

      In addition to obtaining business directly from wireless network operators, the Company has also established working relationships with major telecommunications equipment vendors, pursuant to which the Company provides RF engineering services and related products, on a subcontract basis.

      Purchases of the Company’s services by customers often entails an extended decision-making process for the customer because of the substantial costs and strategic implications associated with selecting the Company’s services. Senior management of the customer is often involved in this process, given the importance of the decision as well as the risks faced by the customer if the Company’s services do not meet the customer’s particular needs. Therefore, large procurements of the Company’s services involve lengthy selling cycles, often as long as nine months.

Competition

      The current market for wireless network design and network deployment, and network optimization & maintenance services is highly competitive. Many companies offer such services and the Company believes

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      Engineering Services. The Company’s competition in the provision of RF engineering services consists of (i) companies such as Wireless Facilities, Inc., Metapath Software International, Inc., DETECON, Teleworx, Inc. and SAFCO, Inc., which provide a full range of RF engineering services, (ii) companies that provide only a portion of the engineering services, which generally act as a supplement to a wireless operator’s in-house engineering staff, (iii) telecommunications equipment vendors, which provide RF engineering services through subcontractors as part of larger turnkey projects, and (iv) the internal staffs of wireless network operators. The Company believes that it is able to compete effectively against competitors in RF engineering services procurements based upon its leadership position, pricing, reputation, experience, ability to provide its customers “one-stop-shopping,” ability to deploy quickly a large number of RF engineers to a project and its relationships with major wireless operators. In particular, the Company believes that its existing customer and industry relationships give it a significant advantage in obtaining additional business for its existing and new services. The Company has been less successful in competing where the customer has a strong internal staff of wireless network operators or where RF engineering services are packaged with large equipment procurements supported by vendor financing.

      Program Management Services. Competition for the provision of program management services is highly fragmented consisting of (i) equipment vendors that provide program management services as part of larger turnkey projects, (ii) companies with experience in project management in other industries, (iii) the internal staffs of wireless network operators and (iv) small firms that focus on a limited number of the entire range of activities involved in wireless network deployment and expansion.

Regulatory Matters Affecting the Telecommunications System Deployment Business

  Federal Regulation

      Both the FCC and the FAA regulate towers used for wireless communication transmitters and receivers. Such regulations control the siting, marking and lighting of towers and may, depending on the characteristics of particular multi-tenant towers, require licensing of tower facilities. Wireless communication devices operating on towers are separately regulated and independently licensed based upon the particular frequency used.

      The Telecommunication Act of 1996 (the “Telecom Act”) amended the Communications Act of 1934 by giving state and local zoning authorities jurisdiction over the construction, modification and placement of towers. The new law preserves local zoning authority but clarifies preemption of such authority by the FCC. The Telecom Act prohibits any action that would (i) discriminate between different providers of personal wireless services or (ii) ban altogether the construction, modification or placement of radio communication towers. Finally, the Telecom Act requires the federal government to help licensees for wireless communication services gain access to preferred sites for their facilities. This may require that federal agencies and departments work directly with licensees to make federal property available for tower facilities.

      All telecommunication sites must comply with the National Environmental Policy Act of 1969 as well as OSHA and other federal environmental statutes. The FCC’s environmental rules place responsibility on each applicant to investigate any potential environmental effects of operations and to disclose any significant effects on the environment in an environmental assessment prior to constructing a tower. In the event the FCC determines the proposed tower would have a significant environmental impact based on the standards the FCC has developed, the FCC would be required to prepare an environmental impact statement. This process could significantly delay the licensing of a particular tower site.

  Local Regulation

      Local zoning boards govern the approval of new tower construction. Currently, there are hundreds of moratoria on tower construction in local communities nationwide. Industry experts estimate there have been

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International Operations

      The development of the Company’s international operations will require the Company to obtain the necessary approvals and remain compliant with the applicable local regulations.

Research and Development

      The Company’s R&D group keeps pace with the rapidly changing technology developments in the wireless industry. Ongoing development of expertise in emerging technologies allows the Company to modify service offerings as well as create new services to meet client needs. Such services include 3G network design and dimensioning, engineering packet switched backbones, and design and testing of location based services (E911). The R&D group also provides strategic consulting to assist wireless data clients in issues such as business case planning, technology and vendor evaluation, CAPEX and OPEX evaluation and due diligence.

Risk Factors

  We depend on our professional staff

      The success of our business depends on our ability to attract, train and retain professional staff. Moreover, to achieve our present plans, we need to attract additional RF engineers and other system deployment professionals. There are a limited number of RF engineers, and many RF engineering companies and wireless network operators want to hire them. Intense competition for such personnel has at times made it difficult to recruit and retain qualified technical personnel to properly staff customer projects. In addition to recruitment difficulties, when staffing customer projects, the Company must (i) fully and properly train its employees to insure they are trained with respect to the customer’s technology requirements, (ii) deploy the employee to the customer’s project site which may require relocation and relocation expenses, and (iii) fully integrate the employee into the project. This training and deployment process requires time and resources. We may experience difficulties in, attracting, training, retaining and increasing our professional staff.

  We depend on key personnel

      Our success depends to a significant degree upon the contribution of our executive officers and other key personnel. With the exception of our Chief Executive Officer, none of our executive officers has an employment agreement with us, other than agreements terminable at will or that provide modest severance benefits. We may not be able to retain our key managerial and other key personnel or to attract suitable replacements or additional personnel if required.

  We experience significant fluctuations in our quarterly results and uncertainties relating to backlog

      Our quarterly revenues and operating results have varied considerably in the past and are likely to vary considerably from quarter to quarter in the future. Fluctuations in our revenues depend on a number of factors, some of which are beyond our control. These factors include, among others:

	•	the timing of receipt of new licenses or financing by potential customers;
	•	the length of sales cycles;
	•	changes in pricing policy by us or our competitors;
	•	the timing of contracts; and
	•	customer budget changes.

      Even after contracts are entered into, the timing of delivery of services depends in part on our customer’s readiness to receive the services and the pace of the build-out of our customer’s network. The timing of build-

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  An increasing percentage of our revenue is contracted on a fixed price basis which could cause our quarterly results to fluctuate

      We use the percentage-of-completion method to recognize revenue on our fixed priced contracts. With the percentage-of-completion method, in each period we recognize expenses as they are incurred and we recognize revenue based on a comparison of the current costs incurred for the project to the then estimated total costs of the project. Accordingly, the revenue we recognize in a given quarter depends on the costs we have incurred for individual projects and our then current estimate of the total remaining costs to complete individual projects. If in any period we significantly increase our estimate of the total costs to complete a project, we may recognize very little or no additional revenue with respect to that project. As a result, our gross margin in such period and in future periods may be significantly reduced and in some cases we may recognize a loss on individual projects prior to their completion. The portion of our revenue from fixed price contracts has grown significantly as a percentage of revenues. We are relatively inexperienced at estimating total project costs, particularly on a quarterly basis. To the extent that our estimates fluctuate over time or differ from actual requirements, gross margins in subsequent quarters may vary significantly from our estimates and could harm our business.

  Demand for telecommunications services may decrease

      The wireless telecommunications industry is undergoing significant changes that has reduced, and may continue to reduce, the demand for our services. Those changes include:

	•	operators of mature wireless networks may use their own engineers instead of hiring us; and
	•	equipment vendors may offer design services and financing bundled with their equipment.

      Operators of mature wireless networks may use their own engineers instead of hiring us. Over the last few years, operators of several mature wireless networks have reduced the amount of engineering services they buy from us and have been using their own engineers. We expect this trend to continue and to affect other types of wireless networks in the U.S. and internationally.

      Equipment vendors may offer design services and financing bundled with their equipment. Wireless network operators, particularly new operators and new licensees, depend increasingly on wireless telecommunications equipment vendors to supply and to finance entire wireless networks. Frequently, those vendors only make financing available for services or products that the vendors do not provide directly if they have the right to select the providers of those services and products, including RF engineering and network design.

  Fluctuations from our international operations may have an adverse result on our business

      Approximately 47% of our revenues for 1999 were generated outside of the United States, and we expect this segment of our business to increase as a percentage of our revenues. Selling services in foreign countries are subject to various risks inherent in international business activities. Risks include:

	•	the general economic and political conditions in each country;
	•	the effect of applicable foreign tax structures;
	•	tariff and trade regulations;
	•	difficulties in obtaining local business licenses;
	•	management of a geographically diverse organization; and
	•	difficulties in complying with a variety of foreign laws and regulations.

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      In addition, changes in the regulatory environments in foreign countries, including delays in deregulation or privatization affecting the pace at which licenses are awarded to wireless network system operators, affect the level and timing of the demand for our services and products.

      Providing services outside the United States carries the additional risk of currency fluctuations and foreign exchange controls imposed by certain countries. We try to address these issues at the onset of an agreement and establish proper reserves. In addition, when entering into agreements with foreign customers, many of those customers will not agree to US style payment terms or payment in US dollars.

  We face intense competition

      We face intense competition in the market for wireless network design and system deployment services. Many other companies offer these services, and we believe that the number of other independent firms providing these services to wireless network operators throughout the world is increasing. Wireless operators themselves and system equipment vendors are also developing capabilities competitive with those we provide.

      Some of our competitors have greater resources than ours. Also, some of our competitors have been founded by or have recruited senior engineering executives from our current or potential customers and may have better relationships with those customers than we may be able to develop. The intense competition may continue to adversely affect our business.

  We depend on significant customers and large contracts

      We derived approximately 66% of our revenues from our ten largest customers in the year ended December 31, 1999. Although our major customers generally have differed from year to year as we complete work under existing contracts and begin providing services under new contracts, we depend on having large contracts from some customers each year to meet our expected revenues. We may not continue to receive large contracts from customers. In addition, our contracts typically have provisions that permit customers to terminate their contracts under various circumstances, which include our nonperformance or unsatisfactory performance. Customers under long-term contracts may attempt to cancel or renegotiate those contracts.

  Our lengthy sales cycles result in high costs for new business generation

      Purchases of our services by customers often entail a lengthy decision-making process for the customer. Selecting wireless network deployment services involves substantial costs and has strategic implications. Senior management of the customer is often involved in this process, given the importance of the decision as well as the risks faced by the customer if the services do not meet the customer’s particular needs. Therefore, large procurements of our services involve lengthy selling cycles, resulting in a relatively high cost of new business generation.

  We will depend on proprietary technology of others

      Following the sale of our Products Businesses, we do not own proprietary software and field test measurement equipment products used to perform RF engineering services. Instead, we will license these technologies from third parties pursuant to agreements which may not be perpetual in duration. While these products are available from multiple sources, the termination of one or more of these licenses, their renewal on terms materially less favorable to us or any other loss of the right to use such technologies (including loss of intellectual property rights by a licensor) could adversely affect our business.

      In addition, effective copyright, trademark or trade secret protection may be unavailable to our licensors or limited in certain circumstances. Third parties may assert infringement claims against us in the future that may require us to enter into royalty arrangements or result in costly litigation, damages or injunctive relief against us for which we may not be compensated by our licensors.

  RF Investors’ voting control may result in the taking of certain unilateral actions

      RF Investors owns all of the outstanding shares of our Class B Common Stock, which represents 87% of the combined voting power of both classes of common stock. These shares may be sold without your

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      RF Investors may also, by converting its shares of Class B Common Stock into shares of Class A Common Stock, obtain a sufficient number of shares of Class A Common Stock (41% of the total outstanding shares of Class A Common Stock on March 23, 2000) to influence the outcome of any vote on which the holders of Class A Common Stock are entitled to vote together as a class.

      Dr. Rajendra and Neera Singh, who with certain Singh family trusts indirectly own 75% of Telcom Ventures, are directors or executive officers. Gregory Ledford, a designee of the Carlyle Investors, 25% owners of Telcom Ventures, is also one of our directors.

      The Telcom Ventures and RF Investors limited liability company agreements provide that, for as long as the Carlyle Investors collectively owns at least 5% of the total membership interests of Telcom Ventures, Telcom Ventures and RF Investors must vote their stock in us:

	•	to elect as our directors up to two persons recommended by the Carlyle Investors, upon the request of the Carlyle Investors; and
	•	not to take any of the following actions without the consent of the Carlyle Investors:

	(a)	approve any amendment to our certificate of incorporation or bylaws;
	(b)	approve our incurrence of any debt (or the granting of security relating to the incurrence of debt) if as a result of the debt incurrence, our debt to equity ratio exceeds 6:1 or, if as a result of the debt incurrence, our total outstanding debt exceeds $50 million plus or minus, as the case may be, our cumulative net income or our net losses after January 1994;
	(c)	approve any new affiliated party transactions between us and RF Investors, Telcom Ventures or the Singh family in excess of $150,000 or modifications to existing transactions, subject to certain limited exceptions;
	(d)	approve the appointment as our independent accountants of a firm other than one of the “big five” accounting firms; or
	(e)	approve certain events relating to our bankruptcy or insolvency.

      The RF Investors and Telcom Ventures limited liability company agreements provide for certain rights of the Carlyle Investors to cause the distribution to the Carlyle Investors, beginning September 30, 1999, of up to 25% of the common stock held by RF Investors. Such a distribution would still leave RF Investors with voting control over us.

  Our relationship with Telcom Ventures may result in potential conflicts of interest

      Telcom Ventures, RF Investors’ parent company, is principally engaged in making investments in wireless system operators and emerging wireless and internet technologies. Directors of Telcom Ventures and its subsidiaries who are also our directors or officers have certain fiduciary obligations to each organization. Telcom Ventures and directors of Telcom Ventures and its subsidiaries who are also our directors and officers may be subject to conflicts of interest in transactions concerning us.

      We have entered, and will enter, into arrangements with Telcom Ventures and certain of Telcom Ventures’ subsidiaries which provide for transactions and relationships between the parties or which otherwise affect us. Our company, RF Investors, Telcom Ventures, and the Telcom Ventures owners (the Singh family (including companies they own) and the Carlyle Investors) have entered into an intercompany agreement, by which, among other things, (i) the Singh Family group is limited in its ability to compete with us in our traditional lines of business and (ii) Telcom Ventures is limited in its ability to invest in entities whose primary business is to compete with us in our traditional lines of business, in each case until the earlier of

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      Each of the Carlyle Investors (but not its affiliates) is limited in its ability to invest in entities whose primary business is to compete with us in our traditional line of business (excluding the program management and tower businesses) until the earlier of (i) the date on which the Carlyle Investor no longer owns, directly or indirectly, an interest in us or (ii) the occurrence of certain termination events specified in the intercompany agreement.

      We are free to pursue investment opportunities on our own, but we are obligated to refer to Telcom Ventures investment opportunities prior to offering the opportunities to any other third party. If Telcom Ventures does not elect to pursue the investment opportunity within five days, we will then be free to offer the opportunity to third parties. The intercompany agreement may not eliminate or reduce conflicts of interest or inconsistent fiduciary obligations.

Employees

      As of December 31, 1999, the Company employed approximately 570 full-time employees. The Company believes that relations with its employees are good. None of its employees is part of any collective bargaining unit. The Company believes that its future growth and success will depend upon its ability to attract and retain skilled and motivated personnel.

Item 2.  Properties

      As of December 31, 1999 the Company had leased approximately 155,000 square feet of office space in McLean, Virginia pursuant to a lease entered into in May 1996, with an initial annual rent of approximately $2.9 million. The term of this lease is ten years, with two five-year renewal options. The company subleases approximately 58% of this space to third parties. The Company entered into another lease in May 1996, for approximately 10,000 square feet of office space in McLean, Virginia, with an initial annual rent of approximately $153,700. The term of this lease is five years with three five-year renewal options. In January 1997 and June 1998 the Company signed amendments to the lease to expand into additional office space, bringing the total space leased at this property to approximately 35,500 square feet, with an annualized rent in 1998 of approximately $600,900. In February 1999, the Company agreed to return approximately 6000 square feet of leased space to the landlord, bringing the total space leased to approximately 29,500 square feet, with an annualized rent in 1999 of approximately $504,000. The Company has occupied a portion of the overall space at this location since May 1996 and since October 1997 has subleased additional portions thereof to other tenants. During December 1998, the Company entered into a lease for approximately 2,000 square feet in London, England with an approximate initial annual rent of $100,000. In July 1999, the Company leased approximately 1,400 square feet in Pittsburgh, Pennsylvania with an initial annual rent of approximately $18,000. In August 1999, the Company entered into a lease of approximately 1,500 square feet with an initial annual rent of approximately $14,400 in Boston, Massachusetts. During September 1999, the Company leased approximately 4,600 square feet in Chicago, Illinois with an annual rent of approximately $84,000. In October 1999, the Company entered into a lease for approximately 1,400 square feet in Seattle, Washington with an initial annual rent of approximately $16,800. The Company entered into another lease in October 1999 in Los Angeles, California for approximately 12,000 square feet with an initial annual rent of approximately $131,000. During November 1999, the Company entered into a lease in New York, New York for approximately 6,700 square feet with an initial annual rent of approximately $140,400. Also, during November 1999, the Company entered into another lease in Philadelphia, Pennsylvania for approximately 1,000 square feet with an initial annual rent of approximately $17,000. In December 1999, the Company entered into a lease in Atlanta, Georgia for approximately 3,500 square feet with an initial annual rent of approximately $43,000. The Company believes that its facilities will be adequate for its needs for the foreseeable future.

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Item 3.  Legal Proceedings

      The Company is party to various non-material legal proceeding and claims incidental to its business.

      Albert Grimes et al. V LCC International, Inc. et al., Civil Action No. 16957-NC, in the Court of Chancery of the State of Delaware, Castle County. On February 12, 1999, the minority shareholders of the Company’s majority-owned Microcell subsidiary filed a suit against the Company, the directors appointed by the Company to the Microcell Board and Microcell itself, seeking rescission of the shareholders’ agreement between the Company and the minority shareholders (which concerns management of Microcell, funding commitments and other matters), the appointment of a custodian or receiver, and unspecified monetary damages. In connection with the sale of the Company towers to Pinnacle Towers, Inc., the parties settled all pending litigation, and all claims were dismissed with prejudice on March 7, 2000.

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

      None

PART II

Item 5.  Market for Registrant’s Common Stock and Related Stockholder Matters

      Since completion of the Offering in September 1996, the Class A Common Stock has been quoted on the Nasdaq National Market under the trading symbol “LCCI.” As of March 23, 2000, there were 127 stockholders of record of the Class A Common Stock and, in excess of 3,000 beneficial holders thereof, and two stockholders of record of the Class B Common Stock. The following table summarizes the high and low closing sale prices of the Class A Common Stock by fiscal quarter for 1998 and 1999 as reported on the Nasdaq National Market:

      The Company has never paid any cash dividends on Common Stock and the Company does not anticipate paying dividends on the Common Stock, cash or otherwise, in the foreseeable future. Future dividends, if any, will be at the discretion of the Board of Directors and will depend upon, among other things, the Company’s operations, capital requirements and surplus, general financial condition, contractual restrictions and such other factors as the Board of Directors may deem relevant.

Item 6.  Selected Financial Data

      Set forth below are (i) selected consolidated financial data as of and for each of the years in the five-year period ended December 31, 1999, which have been derived from the Company’s audited Consolidated Financial Statements and (ii) unaudited pro forma net income (loss) and net income (loss) per share data prepared as if the Company was treated as a Subchapter C Corporation for Federal and state income tax purposes from January 1, 1995. The selected consolidated financial data set forth below should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of

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(1)

Unaudited pro forma net income (loss) has been adjusted to reflect the pro forma effects as if the Company was a Subchapter C Corporation in 1995. Unaudited pro forma net income (loss) is net of a provision (benefit) for income taxes at an assumed effective income tax rate of 40%. The total amount of the pro forma provision (benefit)  for income taxes was $3,153,000 and ($1,886,000) for the years ended December 31, 1995 and 1996, respectively. Weighted average shares used in the computation of pro forma net income per share was as follows:

(2)	In March 1999, the Company’s Board of Directors adopted a Plan to dispose of the operations comprising its hardware and software segments (see note 3 to the Consolidated Financial Statements) which were sold to Ericsson Radio Systems AB in October 1999. Prior year balances have been restated to reflect these segments as discontinued operations.

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Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

      The following discussion and analysis should be read in conjunction with the Company’s Consolidated Financial Statements and the notes thereto and the other financial data appearing elsewhere in this Form 10-K.

Overview

      The Company is one of the world’s largest independent providers of Radio Frequency (“RF”) engineering and program management services to the wireless telecommunications industry. In 1996 the Company entered the tower ownership and management business which consists of acquiring, developing and managing telecommunications towers. The telecommunication towers were sold in March 2000, and the Company repositioned this operation to provide tower site audit, operations and management services.

      The Company’s revenues are generated through contracts for RF engineering and system deployment services, and lease revenue from its tower ownership and management business. The Company provides engineering 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 provides system deployment program management services on a time and materials or fixed price basis. The Company’s revenues also include reimbursement for expenses, including the living expenses of engineers on customer sites.

      In March 1999, the Company’s Board of Directors adopted a plan to dispose of the operations comprising its software and hardware segments (the “Products Businesses”). Software products develops software and data which support the design and operation of wireless communications systems. Hardware products are used in the implementation, testing and maintenance of wireless communications systems. The Company engaged an investment banking firm to assist in the marketing and sale of these segments. The sale of the product segments was completed in October 1999.

      Service revenues consist of revenues from engineering design services and system deployment services. Tower ownership and management revenues consist of lease revenue from the leasing of space on telecommunications towers to wireless communication carriers. The leases generally have initial terms of 5 to 11 years and generally include multiple options to renew upon similar terms at the option of the lessee. In general, the lease terms include periodic adjustments to base rent. The Company derives a significant portion of its total revenues from its international customers. To date, its tower ownership and management revenues have come exclusively from the leasing of RF transmission towers in the United States.

      Cost of revenues consists of costs associated with engineering design and program management services and direct costs related to the tower ownership and management business. 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. Non-cash compensation consists of awards under a program for key employees adopted in 1994. Such plan was accounted for as a variable plan, and therefore, to the extent that the deemed fair market value of the Company increased, compensation expense increased accordingly. In connection with the Company’s initial public offering in September 1996, the Company granted stock options to replace the awards granted under this plan.

      The key drivers of the Company’s growth have historically been (i) the issuances of new or additional wireless telecommunications licenses by governmental authorities to wireless operators, (ii) increases in the number of cell sites operated and the number of subscribers served by wireless network operators, (iii) the introduction of new services or technologies, (iv) the increasing complexity of the systems deployed by wireless network operators, and (v) the expansion and optimization of existing systems by wireless network operators.

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      To keep pace with the subscriber growth currently anticipated by most industry analysts, the Company expects that there will continue to be significant investment by network system operators over the next few years in design, system deployment and tower operations and management services.

Results of Operations

  Continuing Operations

      The following table sets forth certain items as a percentage of revenues from the Company’s audited consolidated statements of operations for the years ended December 31, 1997, 1998, and 1999. The table and discussion which follows provides 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 consolidated financial statements and accompanying notes thereto included elsewhere herein.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

      Revenues. Revenues for the twelve months ended December 31, 1999 were $75.8 million compared to $87.2 million for the prior year, a decrease of $11.4 million or 13.1%. The 1999 revenue decline reflects the slowdown in contract awards in late 1998 for new network deployment contracts. The 1998 revenue remained high as several large contracts were completed from existing backlog. Engineering and design services revenue constituted $13.0 million of the revenue decline, with $10.8 million (83%) of this decline attributable to the softened market conditions in Asia Pacific and Brazil. The decline in service revenue was offset by other revenue growth, included in tower ownership and management revenues, of $1.6 million.

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      Cost of Revenues. Cost of revenues for the twelve months ended December 31, 1999 was $54.3 million compared to $66.8 million for the prior year, a decrease of $12.5 million or 18.7%. As a percentage of total revenues, cost of revenues was 71.6% and 76.6% for 1999 and 1998, respectively. The 1998 contract costs contained a large amount of non-billable expenditures making cost of revenue as a percent of revenue significantly higher in 1998 than 1999.

      Gross Profit. Gross profit for the twelve months ended December 31, 1999 was $21.5 million compared to $20.4 million for the prior year, an increase of $1.1 million or 5.4%. As a percentage of total revenues, gross profit was 28.4% and 23.4% for 1999 and 1998, respectively. Gross profit was significantly higher in 1999, due to reductions on non-billable expenditures, including an increase in utilization of professional staff.

      Sales and Marketing. Sales and marketing expenses were $5.5 million for the twelve months ended December 31, 1999 compared to $3.8 million for the prior year, an increase of $1.7 million. The increase is due primarily to business development efforts related to the Company’s Europe/ Middle East/ Africa regional office.

      General and Administrative. General and administrative expenses were $18.1 million for the twelve months ended December 31, 1999 compared to $22.0 million for the prior year, a decrease of $3.9 million or 17.8%. General and administrative expenditures in 1998 were unusually high, driven by a large increase in the allowance for doubtful accounts of approximately $2.0 million, largely attributed to the Company’s Asia-Pacific customers and costs associated with the growth of the Company’s tower ownership and management business, which declined approximately $1.0 million in 1999.

      Restructure Charge. In October 1998, the Company’s Board of Directors approved a restructuring plan that resulted in a total fourth quarter charge of approximately $2.5 million. The restructure charge contained $1.3 million relative to the Company’s discontinued operations and $1.2 million relative to the continuing operations. Approximately $0.3 million of these revenues were not required in 1999 and were recovered.

      Depreciation and Amortization. Depreciation and amortization expense was $3.6 million for the twelve months ended December 31, 1999 compared to $2.4 million for the prior year, an increase of $1.2 million or 50.6%. The increased depreciation is largely related to the Company’s tower ownership and management business, reflecting the increased number of towers that are constructed and placed-in-service. The company completed construction of 169 microcell towers as of December 31, 1999 compared to 65 as of December 31, 1998.

      Interest Expense. Interest expense was $2.2 million for the twelve months ended December 31, 1999 compared to $2.3 million for the prior year, a decrease of $ 0.1 million or 6.1%. Interest expense was reduced $1.0 million attributable to MCI Worldcom converting its $50.0 million convertible note into equity on July 27, 1999. This savings was offset by increased borrowings under the Company’s credit facility with Chase during the twelve months as well as interest associated with the $5.0 million convertible promissory note with Telcom Ventures.

      Other Income (Expense). Other expense was $1.4 million for the twelve months ended December 31, 1999 compared to $0.6 million for the prior year, an increase of $0.8 million. The increase is due primarily to foreign currency transaction losses of approximately $1.4 million relative to the Company’s Latin American operations. The majority of the losses were from the Company’s Brazilian operations as a result of the devaluation of the Brazilian Real in the first quarter of 1999.

      Benefit for Income Taxes. The benefit for income taxes was $2.7 million for the twelve months ended December 31, 1999 compared to a benefit of $4.6 million for the prior year, a reduction of $1.9 million. The benefit for income taxes was recorded for the twelve months ended December 31, 1999 using an effective tax rate of 30.1%, compared to 39.6% in 1998. The difference in the effective tax rate reflects both a valuation reserve for tax benefits related to the losses from foreign operations and a permanent difference arising from the deductibility of interest expense from the MCI Worldcom convertible note. The decreased tax benefit in 1999 is attributable to the decrease in loss from continuing operations and the difference in the effective tax rates.

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      Loss from Continuing Operations. The loss from continuing operations was $6.2 million for the twelve months ended December 31, 1999 compared to $7.0 million for the prior year, a reduction of $0.8 million. The largest reduction in loss was driven by the decline of operating expenses of $2.7 million, primarily general and administrative expenses. Offsetting the increase in pre-tax earnings was a reduction of tax benefit of $1.9 million.

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

      Revenues. Revenues for 1998 were $87.2 million compared to $91.3 million for 1997, a decrease of $4.1 million or 4.5%. The decrease is primarily the result of a $13.8 million or 16.9% decrease in engineering design services revenue offset by a $8.8 million or 91.3% increase in program management services revenue and a $0.9 million increase in tower ownership and management revenue. The decrease in engineering design services revenue is primarily due to a decrease in billable hours between years as a result of increased competition, a slowdown in network deployment in the United States and a lack of effective sales and marketing efforts. North American and Asian revenue decreased, but were partially offset by increases in Europe and Latin America. The increase in Latin America is the result of new system deployment and the increase in Europe is the result of an increased Company presence in the region. The decrease in program management services revenues is primarily a result of ceasing all work from Pocket and NextWave during the first quarter of 1997 as well as an increased volume of work in Latin America in 1998.

      Cost of Revenues. Cost of revenues was $66.8 million for 1998, compared to $62.3 million for 1997, an increase of $4.5 million or 7.2%. As a percentage of total revenues, cost of revenues was 76.6% and 68.2% for 1998 and 1997, respectively. The dollar increase is due primarily to an increase in program management services volume. The increase in cost of revenues as a percentage of total revenues is due to increased design engineering costs primarily as a result of decreased chargeability between years.

      Gross Profit. Gross profit was $20.4 million, compared to $29.0 million for the prior year, a decrease of $8.6 million or 29.6%. As a percentage of total revenues, gross profit was 23.4% and 31.8% for 1998 and 1997, respectively. The decrease in gross profit was due primarily to a decrease in chargeability related to the engineering design services business, offset by an increase in program management services and tower ownership and management volume.

      Sales and Marketing. Sales and marketing expenses were $3.8 million, compared to $2.5 million for the prior year, an increase of $1.3 million or 55.8%. The increase was due primarily to increased business development costs year over year as a result of the continued regionalization of the Company’s business on a world wide basis.

      General and Administrative. General and administrative expenses were $22.1 million compared to $18.3 million for the prior year, an increase of $3.8 million or 20.5%. The increase was primarily due to costs associated with the growth of the Company’s tower ownership and management business ($2.2 million), unsuccessful merger & acquisition activities, including the Company’s proposed exchange of its hardware products business, and costs related to the office of the former Chief Executive of the Company and related changes thereto during 1998.

      Special (credit). During September 1997, the Company recognized an approximate $3.9 million recovery of the special charge recorded in December 1996 related to Pocket Communications, Inc. and NextWave Telecom, Inc.

      Restructuring Charge. In October 1998, the Company’s Board of Directors approved a restructuring plan that resulted in a total fourth quarter charge of approximately $2.5 million, including approximately $1.2 million related to continuing operations. The restructuring charge included $0.1 million related to the Company’s services business, $1.1 million related to corporate general and administrative expenses, and $1.3 million related to the Company’s products businesses. The charge was taken to cover the one-time costs associated with the closure of the Company’s office in Dusseldorf, Germany, a reduction of approximately 70 non-billable full and part-time employees and the termination of approximately 30 contractors.

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      Non-Cash Compensation. Non-cash compensation was $0.4 million for 1998, compared to $0.5 million for the prior year, a decrease of $0.1 million or 29.6%. The decrease is the result of certain awards becoming fully vested and related expense recognition completed.

      Depreciation and Amortization. Depreciation and amortization expense was $2.4 million for 1998 compared to $3.4 million for the prior year, a decrease of $1.0 million or 29.4%. The decrease is a result of certain equipment, primarily computer and related equipment, becoming fully depreciated.

      Interest Income. Interest income was $0.9 million for 1998 compared to $0.7 million for the prior year, an increase of $0.2 million or 22.0%. The increase is due primarily to earnings on funds held by the Company’s overseas operations, offset by a decrease in earnings on funds held domestically.

      Interest Expense. Interest expense was $2.3 million for 1998 compared to $3.3 million for the prior year, a decrease of $1.0 million or 30.2%. The decrease is due primarily to a reduction in interest rates on the MCI convertible subordinated debt. On October 23, 1997, the Company announced that it had agreed with MCI to defer the Company’s option to convert the notes in 1997. As part of the agreement, interest payable under the notes was reduced from 6.8% to 4.4% per annum.

      Other Income (Expense). Other income (expense) was $(0.6) million for 1998 compared to other income of $1.2 million for the prior year. The decrease is due primarily to foreign currency transaction losses in 1998, the expiration of the 24-month distribution rights arrangement granted with the sale of the Company’s 50.0% interest in Telemate S.A. in January 1996 and a reduction in income recognized from the Company’s 33.3% joint venture with KTS. In July 1998, the Company acquired the remaining 66.7% membership interest in KTS, bringing its total membership interest to 100.0%.

      Provision (Benefit) for Income Taxes. The (benefit) for income taxes was $(4.6) million for 1998 compared to a provision of $1.5 million for the prior year. The benefit for income taxes was recorded in 1998 using a consolidated effective income tax rate of approximately 39.6%. The provision for income taxes was recorded in 1997 based on a consolidated effective income tax rate of approximately 22.3%. The reduced rate in 1997 is a result of a reduction in valuation reserves previously established as it was determined that the reserve was no longer required.

      Income (Loss) from Continuing Operations. Income (loss) from continuing operations was a loss of $(7.0) million in 1998 compared to income of $5.4 million for the prior year. Adjusting for the recovery of the special charge in 1997, non-cash compensation and the restructuring charge in 1998, income (loss) from continuing operations would have been $(6.0) million compared to $2.8 million for the prior year.

Discontinued Operations

      In March 1999, the Company’s Board of Directors adopted a plan to discontinue the operations comprising its products businesses. Included in the assets of discontinued operations was a loss of $8.9 million on 1999 discontinued operations revenue of $19.5 million. On October 22, 1999, the Company closed on the sale of the products businesses for $22.3 million. The gain on disposal in 1999 was $0.8 million, which was net of the loss from discontinued operations and includes $1.9 million of certain accounts receivable to be remitted to the Company upon collection. (see note 3 to the Consolidated Financial Statements).

      Product revenues for 1998 were $33.8 million compared to $64.0 million for 1997, a decrease of $30.2 million or 47.2%. The decrease is primarily a result of customer spending constraints due to cost cutting measures in the face of increased competition, the continued economic downturn in the Asia-Pacific region and softness in the U.S. domestic market. In addition, release of the Company’s next generation network propagation modeling tool has been delayed resulting in a significant reduction in software sales. Product gross profit was $11.4 million compared to $32.4 million for the prior year, a decrease of $21.0 million or 64.8%. The decrease in gross profit is due primarily to the decrease in volume between years. Operating losses were $24.8 million compared to income of $6.0 million in the prior year, a decrease of $30.8 million. The decrease was due primarily to the shortfall in revenue discussed above as well as a write-off of software development costs. The loss from discontinued operations was $17.8 million in 1998 compared to income of $2.2 million in 1997.

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Liquidity and Capital Resources

      Cash and cash equivalents were $2.0 million and $4.2 million at December 31, 1999 and 1998, respectively. Net cash used from operations was $4.2 million and $8.9 million for the twelve months ended December 31, 1999 and 1998. Cash used from operations was primarily attributed to the loss from continuing operations of $6.2 million and $7.0 million in each of the respective years. Net cash used in investing activities was $10.0 million and $7.9 million in 1999 and 1998, respectively. The largest use of funds from investment activities is increases in property and equipment of $17.1 million and $16.7 million, in 1999 and 1998, the largest component of which is construction of telecommunications towers. Approximately, $15.2 million in 1999 and $14.9 million in 1998 was spent on telecommunications towers. The investment in property and equipment was offset by investment proceeds of $8.2 million from the sale of assets from discontinued operations in 1999 and from security sales of $8.5 million in 1998. Net cash provided by financing activities was $14.6 million and $4.2 million in 1999 and 1998, respectively. Financing activity was largely derived from the Company’s line of credit in 1999 of $9.5 million and from the exercise of stock options and from the issuance of shares under the Company’s Employee Stock Purchase Plan of $4.2 million and $3.4 million in 1999 and 1998, respectively.

      Working capital was $(8.0) million at December 31, 1999, compared to $14.5 million at December 31, 1998, a decrease of $22.5 million. The decrease in working capital was primarily a result of losses from continuing operations ($5.3 million pre-tax and excluding depreciation and amortization) and funds used to build telecommunications towers. Capitalized cost resulting from telecommunications tower development was $15.2 million during 1999. During 1999 the Company’s working capital requirements were provided from cash proceeds from the sale of its discontinued products business as well as borrowings under the Company’s credit facility. During 1999, the Company maintained a credit facility with the Chase Manhattan Bank, as Administrative Agent (“Chase”). This credit facility consisted of a revolving loan and letter of credit facility in the aggregate not to exceed $18.0 million for the Company. Approximately $4.5 million was outstanding under the Credit Facility at December 31, 1999. On March 3, 2000 the Company completed the initial closing of the sale of its telecommunications tower portfolio to Pinnacle Towers, Inc. (see note 21 to the Consolidated Financial Statements). The Company used the proceeds from this transaction to repay all of its obligations under its credit facility. The credit facility was terminated and all of the lender’s liens and security interests in the Company’s assets were released.

      Several events have significantly improved the Company’s liquidity. In July 1999, the Company received notice of conversion from MCI Worldcom of its convertible subordinated notes in the principal amount of $50.0 million. In August 1999, the Company received notice of conversion from Telcom Ventures of its convertible subordinated note in the principal amount of $5 million. In October 1999, the Company sold its discontinued products operations, which reduced the Company’s borrowings and disposed of an unprofitable operation. Lastly, the proceeds from the sale of the Company’s tower portfolio in March 2000, has eliminated the Company’s debt and has provided sufficient working capital for the next year.

Foreign Currency

      During the two month period ended February 28, 1999, the Company recognized total foreign currency transaction losses of approximately $2.1 million related to its Latin American operations. The majority of the losses were from the Company’s 1998 Brazilian operations as a result of the devaluation of the Real in 1999. The Company is in the process of exploring its options to limit any future exposure from further exchange rate fluctuations.

Recent Accounting Pronouncements

      In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, which is effective for fiscal years beginning after June 15, 2000. This standard establishes accounting and reporting standards for derivative instruments and for hedging activities and requires that an entity recognize all derivatives as either assets or liabilities in the statement of

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Impact of the Year 2000 Issue

      The year 2000 issue results from a programming convention in which computer programs use two digits rather than four to define the applicable year (the “Year 2000 Issue”). Software, hardware or firmware may recognize a date using “00” as the year 1900, rather than the year 2000. Such an inability of computer programs to recognize a year that begins with “20” could result in system failures, miscalculations or errors causing disruptions of operations or other business problems, including, among others, a temporary inability to process transactions, send invoices or engage in similar normal business activities.

      The Company undertook a program to address the Year 2000 Issue with respect to the following: (i) the Company’s information technology and operating systems; (ii) the Company’s non-information technology systems (such as buildings, plant, equipment and other infrastructure systems that may contain embedded microcontroller technology); (iii) certain systems of the Company’s major vendors and material service providers (insofar as they relate to the Company’s business activities with such parties); and (iv) the Company’s material clients (insofar as the Year 2000 Issue relates to the Company’s ability to provide services to such clients).

      No public infrastructure problems or any problems with respect to any of the areas listed in the previous paragraph were encountered during the rollover to the year 2000. After extensive system verification and testing, the Company’s systems are operating normally. The Company is not aware of any significant issues related to the Year 2000 Issue.

      The Company continues to monitor the status of its operations, major vendors, material service providers and material clients to ensure that no significant business interruptions occur.

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Item 8.  Financial Statements and Supplementary Data

INDEPENDENT AUDITORS’ REPORT

The Board of Directors

      We have audited the accompanying consolidated balance sheets of LCC International, Inc. and Subsidiaries (the “Company”) as of December 31, 1998 and 1999, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 1999. In connection with our audits of the consolidated financial statements, we have also audited the related financial statement schedule. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

      We conducted our audits in accordance with generally accepted auditing standards. 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 audits provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LCC International, Inc. and Subsidiaries as of December 31, 1998 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1999, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

KPMG LLP

Washington, D.C.

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LCC INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 1997, 1998, 1999

The accompanying notes are an integral part of the Consolidated Financial Statements.

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LCC INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

The accompanying notes are an integral part of the Consolidated Financial Statements.

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LCC INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Years ended December 31, 1997, 1998 and 1999