SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
TELOS CORPORATION
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(Name of Issuer)
12% Cumulative Exchangeable Redeemable Preferred Stock, $.01 par value
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(Title of Class of Securities)
8796B200
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(CUSIP Number)
Andrew R. Siegel
c/o Costa Brava Partnership III, LP
237 Park Avenue, Suite 800
New York, New York 10017
(212) 692-6395
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 17, 2005
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the Notes)
Page 2 of 13
SCHEDULE 13D
CUSIP NO. 8796B200
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Costa Brava Partnership III, LP
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 436,811
BENEFICIALLY--------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON
--------------------------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
436,811
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
436,811
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [X]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.7%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 13
SCHEDULE 13D
CUSIP NO. 8796B200
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Roark, Rearden & Hamot, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC, AF
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY--------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 436,811
PERSON
--------------------------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
436,811
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
436,811
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [X]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.7%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 13
SCHEDULE 13D
CUSIP NO. 8796B200
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Seth W. Hamot
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, AF
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY--------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 436,811
PERSON
--------------------------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
436,811
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
436,811
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [X]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.7%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 5 of 13
SCHEDULE 13D
CUSIP NO. 8796B200
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
White Bay Capital Management, LLC
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY--------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 436,811
PERSON
--------------------------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
0
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
436,811
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
436,811
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [X]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.7%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 6 of 13
SCHEDULE 13D
CUSIP NO. 8796B200
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Andrew R. Siegel
--------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
--------------------------------------------------------------------------------
3 SEC USE ONLY
--------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
--------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
--------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
--------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 14,476
BENEFICIALLY--------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 436,811
PERSON
--------------------------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
14,476
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
436,811
--------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
451,287
--------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
--------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.2%
--------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
--------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 7 of 13
ITEM 1. SECURITY AND ISSUER
This statement relates to the 12% Cumulative Exchangeable
Redeemable Preferred Stock, $0.01 par value ("Redeemable
Preferred Stock") of Telos Corporation, a Maryland corporation
(the "Issuer"). The principal executive offices of the Issuer
are presently located at 19886 Ashburn Road, Ashburn, Virginia,
20147. Although the Redeemable Preferred Stock is non-voting
stock, it has the exclusive right to vote as a class for up to
two directors to the Board of Directors of the Issuer if at any
time or times dividends payable on the Redeemable Preferred
Stock shall be in arrears and unpaid for three consecutive full
semi-annual periods. The two directors that may be elected by
the holders of the Redeemable Preferred Stock constitute a
minority of the total Board of Directors of the Issuer, which
results in the holders of the Exchangeable Preferred Stock
being unable to exercise control over the Issuer.
ITEM 2. IDENTITY AND BACKGROUND
(a) This statement is being filed jointly by (i) Costa Brava
Partnership III, LP ("Costa Brava") with respect to shares
beneficially owned by it; (ii) Roark, Rearden & Hamot, LLC, a
Delaware limited liability company ("Roark"), with respect to
shares beneficially owned by Costa Brava; (iii) Seth W. Hamot
with respect to shares beneficially owned by Roark and Costa
Brava; (iv) White Bay Capital Management, LLC, a Delaware
limited liability company ("White Bay") with respect to shares
beneficially owned by Costa Brava, Roark and Mr. Hamot; and (v)
Andrew R. Siegel (Mr. Siegel, together with Costa Brava, Roark,
Mr. Hamot and White Bay shall hereinafter be referred to as the
"Reporting Persons") with respect to shares beneficially owned
by him and with respect to shares beneficially owned by Costa
Brava, Roark, Mr. Hamot and White Bay. Mr. Hamot is the sole
member and manager of Roark, which is the general partner of
Costa Brava. Mr. Siegel is the sole member and manager of White
Bay. Roark and White Bay are parties to a certain Memorandum of
Understanding which provides White Bay with, among other
things, the right to receive or the power to direct the receipt
of dividends from or the proceeds from the sale of, the shares
of Redeemable Preferred Stock beneficially owned by Roark,
Rearden & Hamot, LLC.
(b) The address of the principal business of each of Costa
Brava, Roark and Mr. Hamot is 68 Harvard Street, Brookline,
Massachusetts 02445. The address of the principal business of
White Bay and Mr. Siegel is c/o Costa Brava Partnership III,
LP, 237 Park Avenue, Suite 800, New York, New York 10017.
(c) The principal business of each of the Reporting Persons is
investment management, with a focus on acquisitions of, and
investments in, distressed debt. The present principal
occupation or employment of Mr. Hamot is as the manager of
Roark. The present principal occupation or employment of Mr.
Siegel is as a Senior Vice President of Roark and the manager
of White Bay.
(d) None of the Reporting Persons has during the past five
years been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors).
(e) None of the Reporting Persons has during the last five
years been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(f) Mr. Hamot and Mr. Siegel are citizens of the United States
of America.
Page 8 of 13
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On March 17, 2005, Costa Brava acquired 302,896 shares of the
Redeemable Preferred Stock at $5.85 per share and 1,100 shares
of the Redeemable Preferred Stock at $5.80 per share in open
market transactions and paid a total of $1,778,321 for the
shares. The source of funds was from Costa Brava's working
capital. On March 23, 2005, Costa Brava acquired an additional
92,700 shares of the Redeemable Preferred Stock in an open
market transaction and paid a total of $542,295 for the shares.
The source of funds for that purchase was also from Costa
Brava's working capital. Prior to March 17, 2005, Costa Brava
was the holder of 40,115 shares which it had acquired in open
market transactions.
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Persons have acquired the shares of Redeemable
Preferred Stock reported in Item 5 in open market transactions.
The Reporting Persons currently hold their shares of Redeemable
Preferred Stock for investment purposes. However, the Reporting
Persons intend to closely monitor the Company's performance and
may modify their plans in the future. In their capacities as
holders of the Redeemable Preferred Stock, the Reporting
Persons may contact members of the Company's board of directors
or management from time to time to discuss shareholder
concerns. In addition, the Reporting Persons and their
representatives and advisers may communicate with other
shareholders, industry participants and other interested
parties concerning the Company.
Although the Reporting Persons do not have any current plans
other than the monitoring and communication program outlined in
the previous paragraph, the Reporting Persons may in the future
exercise any and all of their respective rights as holders of
the Redeemable Preferred Stock and beneficiaries of the accrued
and unpaid dividends of the Redeemable Preferred Stock in a
manner consistent with their interests. More specifically,
depending on their evaluation of various factors, including the
investment potential of the Redeemable Preferred Stock, the
Company's business prospects and financial position, other
developments concerning the Company, the price level and
availability of the Redeemable Preferred Stock, available
opportunities to acquire or dispose of the Redeemable Preferred
Stock, realize trading profits or minimize trading losses,
conditions in the securities markets and general economic and
industry conditions, reinvestment opportunities, developments
relating to the business of the Reporting Persons and other
factors deemed relevant, the Reporting Persons may take such
actions with respect to their holdings in the Company,
including the redemption amount of the Redeemable Preferred
Stock and the accrued and unpaid dividends of the Redeemable
Preferred Stock, as they deem appropriate in light of
circumstances existing from time to time, including the first
mandatory redemption date of the Redeemable Preferred Stock and
associated unpaid and accrued dividends on November 21, 2005.
Such actions may include the purchase of additional shares of
Redeemable Preferred Stock in the open market, through
privately negotiated transactions with third parties or
otherwise, or the sale at any time, in the open market, through
privately negotiated transactions with third parties or
otherwise, of all or a portion of the shares now owned or
hereafter acquired.
As of the date of this statement, except as set forth above,
none of the Reporting Persons has any present plan or intention
which may result in or relate to any of the actions described
in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5 INTEREST IN SECURITIES OF THE ISSUER
(a) Costa Brava is the direct beneficial owner of the 436,811
Page 9 of 13
shares of the Redeemable Preferred Stock currently owned
beneficially by Costa Brava, Roark and Mr. Hamot. Such shares
represent approximately 13.7% of the outstanding Redeemable
Preferred Stock, based upon the 3,185,586 shares of the
Redeemable Preferred Stock outstanding as of September 30,
2004, as reported in the Issuer's Form 10-Q filed on November
22, 2004. By virtue of the relationships described under Item 2
of this Statement, each of the other Reporting Persons may be
deemed to share indirect beneficial ownership of the shares of
the Redeemable Preferred Stock directly beneficially owned by
Costa Brava. Each of the other Reporting Persons, however,
disclaims such beneficial ownership of such shares.
Mr. Siegel is the direct beneficial owner of the 14,476 shares
of the Redeemable Preferred Stock currently owned by him. Such
shares represent approximately 0.45% of the outstanding
Redeemable Preferred Stock, based upon the 3,185,586 shares of
the Redeemable Preferred Stock outstanding as of September 30,
2004, as reported in the Issuer's Form 10-Q filed on November
22, 2004. Each of the Reporting Persons other than Mr. Siegel
disclaims beneficial ownership of such shares.
(b) Costa Brava, acting through its general partner, Roark,
which in turn acts through Mr. Hamot, has the sole power to
vote or direct the vote, and to dispose or direct the
disposition of the shares of Redeemable Preferred Stock
beneficially owned by it. By virtue of the relationships
described under Item 2 of this Statement, each of the other
Reporting Persons may be deemed to share the indirect power to
vote and direct the disposition of the shares held by Costa
Brava.
Mr. Siegel has the sole power to vote or direct the vote, and
to dispose or direct the disposition of the shares of
Redeemable Preferred Stock beneficially owned by him.
(c) The table below sets forth purchases of the shares of the
Redeemable Preferred Stock by the Reporting Persons during the
last 60 days. All of such purchases were effected in open
market transactions by Costa Brava.
Shares
Date Purchased Price
-------------------- -------------- ---------
January 25, 2005 9,900 $5.25
February 14, 2005 8,000 $5.32
February 15, 2005 4,500 $5.30
February 16, 2005 1,515 $5.30
February 28, 2005 1,200 $5.30
March 8, 2005 9,500 $5.30
March 16, 2005 500 $5.40
March 17, 2005 302,896 $5.85
March 17, 2005 1,100 $5.80
March 23, 2005 92,700 $5.85
Page 10 of 13
ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE SECURITIES OF THE ISSUER.
Except as set forth elsewhere in this Schedule 13D, there are
no contracts, arrangements, understandings or relationships
among the Reporting Persons, and any other person with respect
to any securities of the Issuer, including but not limited to
the transfer of voting of any securities, finder's fees, joint
ventures, loan or option agreements, puts or calls, guarantees
of profits, division of profits or loss, or the giving or
withholding of proxies.
ITEM 7 MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Joint Filing Agreement
Page 11 of 13
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 25, 2005 COSTA BRAVA PARTNERSHIP III, LP
By: Roark, Rearden & Hamot, LLC
Its General Partner
By: /s/ Seth Hamot
-----------------------------
Name: Seth W. Hamot
Title: Manager
ROARK, REARDEN & HAMOT, LLC
By: /s/ Seth Hamot
-----------------------------
Name: Seth W. Hamot
Title: Manager
/s/ Seth Hamot
------------------------------------
Seth W. Hamot
WHITE BAY CAPITAL MANAGEMENT, LLC
By: /s/ Andrew Siegel
-----------------------------
Name: Andrew R. Siegel
Title: Manager
/s/ Andrew Siegel
------------------------------------
Andrew R. Siegel
Page 12 of 13
EXHIBIT INDEX
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Exhibit 1 Joint Filing Agreement, dated as of March 25, 2005.
Page 13 of 13
EXHIBIT 1 - JOINT FILING STATEMENT
Pursuant to Rule 13d-1(k)(1), we, the undersigned, hereby express our
agreement that the Schedule 13D for Telos Corporation is filed on behalf of each
of us. This agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
Dated: March 25, 2005 COSTA BRAVA PARTNERSHIP III, LP
By: Roark, Rearden & Hamot, LLC
Its General Partner
By: /s/ Seth Hamot
-----------------------------
Name: Seth W. Hamot
Title: Manager
ROARK, REARDEN & HAMOT, LLC
By: /s/ Seth Hamot
-----------------------------
Name: Seth W. Hamot
Title: Manager
/s/ Seth Hamot
------------------------------------
Seth W. Hamot
WHITE BAY CAPITAL MANAGEMENT, LLC
By: /s/ Andrew Siegel
-----------------------------
Name: Andrew R. Siegel
Title: Manager
/s/ Andrew Siegel
------------------------------------
Andrew R. Siegel