UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended: June 30, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission file number: 1-8443
TELOS CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 52-0880974
(State of Incorporation) (I.R.S. Employer Identification No.)
19886 Ashburn Road, Ashburn, Virginia 20147-2358
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (703) 724-3800
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 ____
As of August 1, 1997, the registrant had 23,076,753 shares of Class A Common
Stock, no par value, and 4,037,628 shares of Class B Common Stock, no par value;
and 3,595,586 shares of 12% Cumulative Exchangeable Redeemable Preferred Stock
par value $.01 per share, outstanding.
No public market exists for the registrant's Common Stock.
Number of pages in this report (excluding exhibits): 14
TELOS CORPORATION AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Statements of Income for the Three and Six Months
Ended June 30, 1997 and 1996 .......................................3
Condensed Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996 ...............................................4
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1997 and 1996..............................5
Notes to Condensed Consolidated Financial Statements...................6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................9-12
PART II. OTHER INFORMATION
Item 3. Defaults Upon Senior Securities...............................13
Item 4. Submission of Matters to a Vote of Security Holders...........13
Item 6. Exhibits and Reports on Form 8-K..............................13
SIGNATURES...................................................................14
PART I - FINANCIAL INFORMATION
TELOS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(amounts in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1997 1996 1997 1996
---- ---- ---- ----
Sales
Systems and Support Services $33,182 $26,223 $59,300 $52,455
Systems Integration 24,907 17,643 53,134 31,574
------ ------ ------ ------
58,089 43,866 112,434 84,029
Costs and expenses
Cost of sales 48,511 38,352 95,159 74,255
Selling, general and
administrative expenses 6,869 6,770 13,394 12,821
Goodwill amortization 209 275 434 550
----- ---- ------ ----
Operating income (loss) 2,500 (1,531) 3,447 (3,597)
Other income (expenses)
Other income (expenses) 11 (352) 23 (349)
Interest expense (1,883) (1,336) (3,643) (2,536)
----- ----- ----- -----
Income (loss) before taxes 628 (3,219) (173) (6,482)
Income tax provision -- - -- -
---- ---- --- --
Income (loss) from continuing operations 628 (3,219) (173) (6,482)
Discontinued operations:
Income from discontinued operations -- 261 -- 130
--- ----- --- -----
Net income (loss) $628 $(2,958) $(173) $(6,352)
=== ===== === =====
The accompanying notes are an integral part of these condensed consolidated
financial statements.
TELOS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
(amounts in thousands)
June 30, 1997 December 31, 1996
------------- -----------------
Current assets
Cash and cash equivalents (includes $ 757 $ 2,781
restricted cash of $327 at June 30, 1996)
Accounts receivable, net 49,032 51,549
Inventories, net 15,673 17,066
Other current assets 4,086 2,567
------ -----
Total current assets 69,548 73,963
Property and equipment, net of
accumulated depreciation of
$21,580 and $20,390, respectively 16,536 16,486
Goodwill 13,111 13,545
Other assets 6,553 6,070
------ -------
$105,748 $110,064
======= =======
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current liabilities
Accounts payable $17,544 $35,730
Other current liabilities 10,281 11,708
Accrued compensation and benefits 8,857 10,163
------ ------
Total current liabilities 36,682 57,601
Senior credit facility 33,421 15,418
Subordinated notes 16,647 17,439
Capital lease obligation 12,257 12,537
Other long-term liabilities -- 154
------ -------
Total liabilities 99,007 103,149
------ -------
Redeemable preferred stock
Senior redeemable preferred stock 4,993 4,828
Class B redeemable preferred stock 11,501 11,087
Redeemable preferred stock 27,083 24,230
------ ------
Total preferred stock 43,577 40,145
------ ------
Stockholders' investment
Common stock 78 78
Capital in excess of par 615 4,048
Retained earnings (deficit) (37,529) (37,356)
------ ------
Total stockholders' investment (deficit) (36,836) (33,230)
------ ------
$105,748 $110,064
======= =======
The accompanying notes are an integral part of these condensed consolidated
financial statements.
TELOS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(amounts in thousands)
Six Months
Ended June 30,
1997 1996
--------------------
Operating activities:
Net (loss) income $ (173) $(6,352)
Adjustments to reconcile net (loss) income to
cash used in operating activities:
Depreciation and amortization 1,919 1,365
Goodwill amortization 434 780
Provision for legal settlement -- 355
Other noncash items 39 90
Changes in assets and liabilities (19,128) (1,024)
------ -----
Cash used in operating activities (16,909) (4,786)
------ -----
Investing activities:
Investment in products (1,154) (668)
Purchase of property and equipment (1,106) (1,643)
----- -----
Cash used in investing activities (2,260) (2,311)
----- -----
Financing activities:
Proceeds from borrowings under senior
credit facility 18,003 10,823
Proceeds from capital lease transaction -- 1,300
Payments under capital leases (183) --
Repayment of senior subordinated notes (675) --
------ ------
Cash provided by financing activities 17,145 12,123
------ ------
(Decrease) increase in cash and
cash equivalents (2,024) 5,026
Cash and cash equivalents at beginning
of period 2,781 735
----- ----
Cash and cash equivalents at end
of period $ 757 $5,761
==== =====
The accompanying notes are an integral part of these condensed consolidated
financial statements.
TELOS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. General
The accompanying condensed consolidated financial statements of Telos
Corporation ("Telos") and its wholly owned subsidiaries, Telos Corporation
(California), Telos Field Engineering, Inc., Telos International Corporation,
and enterWorks.com, inc. (collectively, the "Company") have been prepared
without audit. Certain information and note disclosures normally included in the
financial statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. The Company believes the disclosures
made are adequate to make the information presented consistent with past
practices. However, these condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K for the fiscal year ended
December 31, 1996.
In the opinion of the Company, the accompanying condensed consolidated
financial statements reflect all adjustments and reclassifications (which
include only normal recurring adjustments) necessary to present fairly the
financial position of the Company as of June 30, 1997 and December 31, 1996, and
the results of its operations and its cash flows for the three and six month
periods ended June 30, 1997 and 1996. Interim results are not necessarily
indicative of fiscal year performance because of the impact of seasonal and
short-term variations.
In December 1996, the Company sold substantially all of the assets of its
consulting division, Telos Consulting Services (TCS), to COMSYS Technical
Services, Inc., a subsidiary of COREStaff, Inc. for approximately $31.6 million.
The sale of TCS was treated as a discontinued operation in accordance with APB
Opinion Number 30. Accordingly, the results of operations for TCS included in
the three and six month period ended June 30, 1996 have been reported separately
as "income from discontinued operations".
Certain reclassifications have been made to the prior year's financial
statements to conform to the classifications used in the current period.
Note 2. Accounts Receivable
The components of accounts receivable are as follows (in thousands):
June 30, 1997 December 31, 1996
Billed accounts receivable $35,915 $40,225
Unbilled accounts receivable 14,164 12,249
------ ------
50,079 52,474
Allowance for doubtful accounts (1,047) (925)
----- -----
$49,032 $51,549
====== ======
TELOS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3. Debt Obligations
Senior Credit Facility
At June 30, 1997, the Company had a $45 million senior credit facility
("Facility") with a bank maturing on July 1, 2000.
Note 4. Preferred Stock
Senior Redeemable Preferred Stock
The components of the senior redeemable preferred stock are Series A-1 and
Series A-2 redeemable preferred stock each with $.01 par value and 1,250 and
1,750 shares authorized, issued and outstanding, respectively. From July 1, 1995
through June 30, 1997, the Series A-1 and A-2 each carry a cumulative dividend
rate equal to 11.125% per annum of its liquidation value, and increases to
14.125% per annum thereafter. The dividends are payable semi-annually on June 30
and December 31 of each year. The liquidation preference of the preferred stock
is the face amount of the Series A-1 and A-2 ($1,000 per share), plus all
accrued and unpaid dividends. The Series A-1 and A-2 Preferred Stock is senior
to all other present and future equity of the Company. The Company is required
to redeem all of the outstanding shares of the Series A-1 and A-2 on December
31, 2001, subject to the legal availability of funds. At June 30, 1997 and
December 31, 1996 cumulative undeclared, unpaid dividends relating to Series A-1
and A-2 Preferred Stock were accrued for financial reporting purposes in the
amount of $1,993,000 and $1,828,000, respectively.
Class B Redeemable Preferred Stock
The Class B Redeemable Preferred Stock has a $.01 par value, with 7,500
shares authorized, issued and outstanding. The Class B Redeemable Preferred
Stock has a cumulative dividend payable semi-annually at June 30 and December
31. From July 1, 1995 through June 30, 1997, the dividend is calculated at a
rate equal to 11.125% per annum of its liquidation value, and increases to
14.125% per annum thereafter. The Class B Redeemable Preferred Stock may be
redeemed at its liquidation value together with all accrued and unpaid dividends
at any time at the option of the Company. The liquidation preference of the
preferred stock is the face amount, $1,000 per share, plus all accrued and
unpaid dividends. The Company is required to redeem all of the outstanding
shares of the stock on December 31, 2001, subject to the legal availability of
funds. At June 30, 1997 and December 31, 1996 cumulative undeclared, unpaid
dividends relating to the Class B Redeemable Preferred Stock were accrued for
financial reporting purposes in the amount of $4,001,000 and $3,587,000
respectively.
12% Cumulative Exchangeable Redeemable Preferred Stock
A maximum of 6,000,000 shares of 12% Cumulative Exchangeable Redeemable
Preferred Stock, par value $.01 per share, have been authorized for issuance.
The Company has issued 3,595,586 shares of 12% Cumulative Exchangeable
Redeemable Preferred Stock (the "Preferred Stock"). The Preferred Stock accrues
a semi-annual dividend at the annual rate of 12% ($1.20) per share, based on the
liquidation preference of $10 per share and is fully cumulative.
TELOS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Through November 21, 1995, the Company had the option to pay dividends in
additional shares of Preferred Stock in lieu of cash (provided there were no
blocks on payment as further discussed below). Dividends are payable by the
Company, provided the Company has legally available funds under Maryland law and
is able to pay dividends under its charter and other corporate documents, when
and if declared by the Board of Directors, commencing June 1, 1990, and on each
six month anniversary thereof. Dividends in additional shares of the Preferred
Stock were paid at the rate of 0.06 of a share for each $.60 of such dividends
not paid in cash. No dividends have been declared or paid during fiscal years
1992 through 1996. Cumulative undeclared dividends as of June 30, 1997 accrued
for financial reporting purposes totaled $12,578,000. Dividends for the years
1992 through 1994 and for the dividend payable June 1, 1995 were accrued under
the assumption that the dividend will be paid in additional shares of preferred
stock and are valued at $3,950,000. Had the Company accrued these dividends on a
cash basis, the total amount accrued would have been $15,101,000. The dividends
payable on December 1, 1995, June 1, 1996, December 1, 1996, and June 1, 1997
totaling $8,628,000 were accrued on a cash basis.
The Company has not declared or paid dividends since 1991, due to
restrictions and ambiguities relating to the payment of dividends contained
within its charter, its working capital facility agreement, and under Maryland
law.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
General
In the first six months of 1997, the Company had increased revenue and
profitability as compared to 1996. The increased revenue resulted from increased
order volume in the Systems Integration Group, as well as revenue generated from
contracts awarded in 1997 to the Systems and Support Services Group. The
increase in profitability was also attributable to the cost reductions and
branch consolidation measures implemented by the Company in the last half of
1996. The profitability was further enhanced by an improvement in the product
mix on the Company's long term contracts and improved profit margins realized on
new contracts.
Total backlog from existing contracts was $1.1 billion as of June 30, 1997
and is approximately the same as the total backlog as of December 31, 1996. As
of June 30, 1997, the funded backlog of the Company totaled $103 million, a
decrease of $12 million from December 31, 1996. Funded backlog represents
aggregate contract revenues remaining to be earned by the Company at a given
time, but only to the extent, in the case of government contracts, funded by a
procuring government agency and allocated to the contracts.
Results of Operations
The condensed consolidated statements of income include the results of
operations of Telos Corporation and its wholly owned subsidiaries Telos
Corporation (California), Telos Field Engineering Inc. ("TFE"), enterWorks.com,
inc. ("enterWorks"), and Telos International Corporation ("TIC"), ("the
Company"). The major elements of the Company's operating expenses as a
percentage of sales for the three and six month periods ended June 30, 1997 and
1996 are as follows:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 83.5 87.5 84.6 88.4
SG&A expenses 11.8 15.4 11.9 15.3
Goodwill amortization 0.4 0.6 0.4 0.6
---- ---- ---- ----
Operating income (loss) 4.3 (3.5) 3.1 (4.3)
Other income (expense) -- (0.8) -- (0.4)
Interest expense (3.2) (3.0) (3.2) (3.0)
Income tax provision -- -- -- --
--- --- --- ---
Income (loss) from continuing operations 1.1 (7.3) (0.1) (7.7)
Discontinued operations:
Income from discontinued operations -- 0.6 -- 0.2
--- --- --- ---
Net income (loss) 1.1% (6.7)% (0.1)% (7.5)%
=== === === ===
Financial Data by Market Segment
The Company operates in two market segments: systems and support services
(the "Systems and Support Services Group"), which consists of enterWorks and
hardware and software support services; and the Systems Integration Group.
Sales, gross profit, and gross margin by market segment for the periods
designated below are as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ------------------
1997 1996 1997 1996
---- ---- ---- ----
(amounts in thousands)
Revenues:
Systems and Support Services $33,182 $26,223 $ 59,300 $52,455
Systems Integration 24,907 17,643 53,134 31,574
------ ------ ------ ------
Total $58,089 $43,866 $112,434 $84,029
====== ====== ======= ======
Gross Profit:
Systems and Support Services $5,886 $4,130 $9,653 $ 7,010
Systems Integration 3,692 1,384 7,622 2,764
----- ----- ----- -----
Total 9,578 $5,514 $17,275 $9,774
===== ===== ====== =====
Gross Margin:
Systems and Support Services 17.7% 15.8% 16.3% 13.4%
Systems Integration 14.8% 7.8% 14.3% 8.8%
Total 16.5% 12.6% 15.4% 11.6%
For the three month period ended June 30, 1997, revenue increased by $14.2
million, or 32.4%, to $58.1 million from $43.9 million for the comparable 1996
period. The increase for the three month period includes a $7.3 million increase
in systems integration revenue and a $6.9 million increase in systems and
support services revenue.
The increase in the Systems Integration Group revenue of $7.3 million
results from increased orders on its Small Multiuser Computer II contract, as
well as increased sales in other business lines of the division. The Company
anticipates that the last half of 1997 will show stronger order and revenue
volume. However, there can be no assurance that such order and sales volume
growth will materialize.
The Systems and Support Services Group revenue increase of $6.9 million is
due to an increase in software support revenue of $6.5 million, an increase in
hardware support revenue of $500,000, offset by a $100,000 decrease in
enterWorks revenue. The increase in software support is due to increased
services under certain of the Company's large labor contracts. The increase is
also attributable to the revenue recognized on its Immigration and
Naturalization Service Blanket Purchase Agreement for Field Operation Support
contract, which was awarded in early 1997. The increase in hardware support
revenue is due to increased firm orders on its existing contracts, as well as
sales generated on contracts awarded in 1997. The decline in enterWorks sales is
due to a decline in order volume for the quarter.
Revenue increased $28.4 million or 33.8% to $112.4 million for the six
months ended June 30, 1997 from $84.0 million for the comparable 1996 period.
The increase for the six month period includes a $21.6 million increase in
systems integration revenue and a $6.8 million increase in systems and support
services revenue. The reasons for these revenue increases are discussed above.
Cost of sales increased by $10.2 million or 26.5%, to $48.5 million in the
three month period ended June 30, 1997, from $38.3 million in the comparable
1996 period. The increase in cost of sales for the three month period includes a
$5.0 million increase in systems integration and a $5.2 million increase in
systems and support services cost of sales. The increase in systems integration
and system and support services cost of sales is due to the increased sales
volume for 1997 as compared to 1996.
For the six months ended June 30, 1997, cost of sales increased $20.9
million, or 28.1%, to $95.2 million from $74.3 million for the same period in
1996. The increase in cost of sales includes a $16.7 million increase in systems
integration cost of sales and a $4.2 million increase in systems and support
services cost of sales. The reasons for these cost of sales increases are
discussed above.
Gross profit increased $4.1 million in the three month period to $9.6
million in 1997, from $5.5 million in the comparable 1996 period. The increase
in gross profit includes a $2.3 million increase in systems integration gross
profit, and a $1.8 million increase in systems and support services gross
profit. For the six month period, gross profit increased by $7.5 million to
$17.3 million from $9.8 million. This increase includes a $4.9 million increase
in systems integration gross profit and a $2.6 million increase in systems and
support services gross profit. The reasons for the gross profit increase for the
periods ended June 30, 1997 compared to June 30, 1996 related to the changes in
revenues and cost of sales for the respective periods. In addition, the Systems
Integration Group experienced shifts in product mix on its large contracts which
improved profit margins. The Systems and Support Services Group improved its
gross margin by maximizing its efforts on profitable contracts and progressively
reducing the number of less profitable contracts. The Group further enhanced its
gross profit through cost reduction measures implemented in the fourth quarter
of 1996.
Gross margins were 16.5% and 15.4%, respectively, for the three and six
month periods of 1997 as compared to 12.6% and 11.6%, respectively, for the
comparable periods of 1996.
Selling, general, and administrative expense ("SG&A") increased by
approximately 100,000 or 1.5%, to $6.9 million in the second quarter of 1997
from $6.8 million in the comparable period of 1996. For the six month period of
1997, SG&A increased $573,000 to $13.4 million from $12.8 million in 1996. These
increases are primarily due to increased spending and investment by the Company
on its enterWorks subsidiary. This investment was offset by a decline in bid and
proposal and sales and marketing expense in both the Systems Integration Group
and the rest of the Systems and Support Services Group as a result of the cost
reductions and branch consolidation measures implemented by the Company in the
last half of 1996. SG&A as a percentage of revenues decreased to 11.8% for the
second quarter of 1997 from 15.4% in the comparable 1996 period. SG&A as a
percentage of revenues for the six month period ended June 30, 1997 decreased to
11.9% from 15.3% compared to the same period in 1996.
Goodwill amortization expense decreased $66,000 to $209,000 for the three
months and decreased by $116,000 to $434,000 for the six months ended June 30,
1997. These reductions are due to adjustments in the goodwill balance as a
result of realization of acquired tax benefits resulting from the 1992
acquisition of Telos Corporation (California) and a writedown in the goodwill
balance from the sale of TCS in 1996.
Operating income increased by $4.0 million to a $2.5 million operating
profit in the 1997 three month period from $1.5 million of operating loss in the
comparable 1996 period. Operating income increased $7.0 million to a $3.4
million operating profit from a $3.6 million operating loss for the six month
period ended June 30, 1997 compared to the six month period ended June 30, 1996.
These increases resulted from the aforementioned increases in gross profit.
Non operating income (expense) in the three and six month periods ended
June 30, 1997 increased over the comparable 1996 periods due to the $355,000
Rosecliff litigation settlement provision expense that the Company recorded in
the second quarter of 1996.
Interest expense increased approximately $547,000 to $1.9 million in the
second quarter of 1997 period from $1.3 million in the comparable 1996 period,
and increased approximately $1.1 million to $3.6 million for the six months
ended June 30, 1997 from $2.5 million for the comparable 1996 period. These
increases are due to increased debt levels in 1997 as well as an increase in
interest recorded for capital lease payments for leases entered into after March
1996.
The Company did not have an income tax provision for the three month and
six month periods ended June 30, 1997 or 1996 due to its cumulative net losses
in the six month 1997 and 1996 periods.
Liquidity and Capital Resources
For the six months ended June 30, 1997, the Company used $16.9 million of
cash in its operating activities primarily as a result of a significant
reduction in trade accounts payable and other Company obligations. The use of
cash was also a result of a significant investment by the Company in its
enterWorks division. The Company funded its net loss and use of operating cash
as well as its investing activities through increased borrowings under its term
facility.
As a result of the Company's sale of its TCS division for $31.6 million in
December 1996, the Company's short-term liquidity constraints have improved.
However, the Company continues to aggressively manage its cash and reduce its
discretionary spending. The Company also continues to evaluate its cost
reduction programs and its investment in enterWorks.
At June 30, 1997, the Company had outstanding debt of $50.0 million,
consisting of $33.4 million under the secured senior credit facility and $16.6
million in subordinated debt. Subsequent to December 31, 1996, the Company's
bank entered into an agreement with the Company to refinance its $45 million
term facility and extend the maturity date to July 1, 2000. The terms and
conditions of the new facility are similar to the previous senior credit
facility except for amendments made to certain of the financial and non
financial covenants.
The Company is actively reviewing its financing requirements for
enterWorks, and continues to fund on-going product development, sales and
marketing, and business activities of the subsidiary. The Company will continue
to evaluate various financing alternatives to maintain the enterWorks
operations.
The Company continually evaluates its financing requirements to support its
business base and anticipated growth. The Company anticipates that its current
facility will be adequate for 1997. However, should faster than anticipated
growth occur, the Company believes that an expanded senior credit facility would
be required through a multi-bank syndication arrangement.
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
Senior and Class B Redeemable Preferred Stocks
The Company has not declared dividends on its Senior Redeemable Preferred
Stock, Series A-1 and A-2, and its Class B Redeemable Preferred Stock since
their issuance. Total undeclared unpaid dividends accrued for financial
reporting purposes are $1,993,000 for the Series A-1 and A-2 Preferred Stock and
$4,001,000 for the Class B Preferred Stock at June 30, 1997.
12% Cumulative Exchangeable Redeemable Preferred Stock
Through November 21, 1995, the Company had the option to pay dividends in
additional shares of Preferred Stock in lieu of cash (provided there were no
blocks on payment as further discussed below). Dividends are payable by the
Company, provided the Company has legally available funds under Maryland law and
is able to pay dividends under its charter and other corporate documents, when
and if declared by the Board of Directors, commencing June 1, 1990, and on each
six month anniversary thereof. Dividends in additional shares of the Preferred
Stock were paid at the rate of 0.06 of a share for each $.60 of such dividends
not paid in cash. No dividends have been declared or paid during fiscal years
1992 through 1996. Cumulative undeclared dividends as of June 30, 1997 accrued
for financial reporting purposes totaled $12,578,000. Dividends for the years
1992 through 1994 and for the dividend payable June 1, 1995 were accrued under
the assumption that the dividend will be paid in additional shares of preferred
stock and are valued at $3,950,000. Had the Company accrued these dividends on a
cash basis, the total amount accrued would have been $15,101,000. The dividends
payable on December 1, 1995, June 1, 1996, December 1, 1996, and June 1, 1997
totaling $8,628,000 were accrued on a cash basis.
The Company has not declared or paid dividends since 1991, due to
restrictions and ambiguities relating to the payment of dividends contained
within its charter, its working capital facility agreement, and under Maryland
law.
Item 4. Submission of Matters to a Vote of Security Holders
On May 24, 1997 at the annual meeting of common shareholders a vote was
taken to elect the following directors: Dr. Fred Charles Ikle', John B. Wood,
Norman P. Byers, and Dr. Stephen Bryen. The persons nominated were approved to
be directors of the Corporation by unanimous vote of all shareholders present at
the meeting which represented a majority of the Company's common shares
outstanding.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.82 Amended and Restated Credit Agreement among Telos Corporation,
a Maryland Corporation; Telos Corporation, a California
Corporation; and NationsBank, N.A. dated as of July 1, 1997
27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: Telos Corporation
August 14, 1997 /s/ Lorenzo Tellez
Lorenzo Tellez
(Principal Financial Officer &
Principal Accounting Officer)
Telos Corporation
Exhibit Index
Exhibit
Number Exhibit Name
10.82 Amended and Restated Credit Agreement among Telos
Corporation; a Maryland Corporation; Telos Corporation;
a California Corporation, and NationsBank, N.A. dated
as of July 1, 1997
27 Financial Data Schedule