5
These forward-looking statements relate to our plans, objectives and expectations for future operations. We base these
statements on our beliefs as well as assumptions made using information currently available to us. In light of the risks and
uncertainties inherent in all projected operational matters, the inclusion of forward-looking statements in this document should not be
regarded as a representation by us or any other person that our objectives or plans will be achieved or that any of our operating
expectations will be realized. Revenues, results of operations, and other matters are difficult to forecast and could differ materially
from those projected in the forward-looking statements contained in this Annual Report on Form 10-K as a result of factors discussed
in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations”, the matters discussed in “Risk Factors
Affecting Our Business and Future Results”, which are included in Item 1A, and those factors discussed elsewhere in this Annual
Report on Form 10-K including, changes in economic conditions, technology and the market in general, and our ability to adapt our
products and services to these changes. We undertake no obligation to release publicly the results of any future revisions we make to
forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
We caution you not to put undue reliance on these forward-looking statements.
Item 1.
Business
Overview
TeleCommunication Systems, Inc. develops and delivers highly reliable and secure wireless communication technology, the
development of which has led to ownership of 349 patents and nearly 400 patent applications as of December 31, 2013. We deliver
cellular network computing services that include public safety solutions for 9-1-1 call delivery, precision location platforms, and
applications that include navigation, locator applications and text messaging, as well as secure wireless communications systems and
professional services, including cybersecurity training and technology for defense and other government customers. Customers use
our “mobile cloud” software functionality through connections to and from network operations centers, paying us monthly fees based
on the number of subscribers, cell sites, call center circuits, or other metrics. We do business with the U.S. federal government as a
prime contractor under major technology contract vehicles, as well as state, local and foreign government entities. We also monetize
our intellectual property portfolio via patent sales and licensing of the technology as well as incorporation of our inventions in our
deliverables.
We are a Maryland corporation with global headquarters at 275 West Street, Annapolis, Maryland 21401 and we were founded
in 1987. Our web address is
. The information contained on our website does not constitute part of this Annual
Report on Form 10-K. All of our filings with the Securities and Exchange Commission are available through links on our website. The
terms “TCS”, “Company”, “we”, “us” and “our” as used in this Annual Report on Form 10-K refer to TeleCommunication Systems,
Inc. and its subsidiaries as a combined entity, except where it is made clear that such terms mean only TeleCommunication Systems,
Inc.
We report two operating segments, Government (53% of 2013 revenue) and Commercial (47% of 2013 revenue). TCS is
increasingly working to deliver solutions contributed by engineers from both segments of the company. See further detail about the
segment operations below, and discussion of segment reporting in Note 21 to the audited Consolidated Financial Statements presented
elsewhere in this Annual Report on Form 10-K.
Government Segment:
We provide professional services including field support of deployable wireless systems and
cybersecurity training to the U.S. Department of Defense and other government and foreign customers. We own and operate secure
satellite teleport facilities, resell access to satellite airtime (known as space segment), and design, furnish, install and operate wireless
communication systems and components, including our SwiftLink
®
deployable communication systems which integrate high speed,
satellite, and, internet protocol technology with secure, federal government-approved cryptologic devices.
Commercial Segment:
We are one of two leading companies that enable 9-1-1 call routing via cellular, Voice over Internet
Protocol (VoIP), and next generation technology. Other TCS hosted and managed services include cellular carrier infrastructure for
text messaging and location-based platforms and applications, including turn-by-turn navigation. Commercial segment customers
include wireless carrier network operators, Voice over Internet Protocol service providers, wireless device manufacturers, automotive
industry suppliers, and state and local governments.
SwiftLink
®
, Xypoint
®
, AtlasBook
®
, Gokivo
®
, Connections that Matter
®
, Designed for Mobility
®
, Secure the Edge
®
, Art of
Exploitation
®
,
and Enabling Convergent Technologies
®
are registered trademarks or service marks of TeleCommunication Systems,
Inc. or our subsidiaries. This Annual Report on Form 10-K also contains trademarks, trade names and services marks of other
companies that are the property of their respective owners.
Government Segment Products and Services
We engineer and provide secure, wireless communication solutions, including deployable communication systems and related
support services with emphasis on satellite-based technology, to agencies of the U.S. Departments of Defense (“DoD”), Homeland
