CTA INCORPORATED, S-1, 1996-09-09

CTA INCORPORATED
S-1, 1996-09-09
COMPUTER PROGRAMMING SERVICES

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 9, 1996

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------------

CTA INCORPORATED
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
COLORADO 3761 84-0797618
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

--------------------------

6116 EXECUTIVE BOULEVARD
ROCKVILLE, MARYLAND 20852
(301) 816-1200
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
--------------------------

MR. GREGORY H. WAGNER
CTA INCORPORATED
6116 EXECUTIVE BOULEVARD
ROCKVILLE, MARYLAND 20852
(301) 816-1200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------

COPIES TO:

<TABLE>
<S> <C>
BRUCE R. KRAUS, ESQ. ANDREW R. KELLER, ESQ.
WILLKIE FARR & GALLAGHER SIMPSON THACHER & BARTLETT
ONE CITICORP CENTER 425 LEXINGTON AVENUE
153 EAST 53RD STREET NEW YORK, NEW YORK 10017
NEW YORK, NEW YORK 10022 (212) 455-2000
(212) 821-8000
</TABLE>

--------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.01 par value..................... 3,450,000 shares $16.00 $55,200,000 $19,035
</TABLE>

(1) Includes 450,000 shares issuable upon exercise of the Underwriters'
over-allotment options.

(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Subject to Completion, dated September 9, 1996

PROSPECTUS

3,000,000 SHARES
[CTA (LOGO) INCORPORATED]

COMMON STOCK
----------------

Of the 3,000,000 shares of Common Stock, par value $.01 per share (the
"Common Stock"), of CTA INCORPORATED, a Colorado corporation (the "Company" or
"CTA"), offered hereby, 2,400,000 shares are being offered initially in the
United States and Canada by the U.S. Underwriters and 600,000 shares are being
offered initially in Europe by the International Managers (together with the
U.S. Underwriters, the "Underwriters"). Such offerings are referred to
collectively as the "Offerings." See "Underwriting."

Prior to these Offerings, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price will be
between $ and $ per share. See "Underwriting" for a discussion
of the factors considered in determining the initial public offering price. The
initial public offering price and the underwriting discount and commission per
share are identical for each of the Offerings. The Company intends to apply to
trade the Common Stock on the Nasdaq National Market ("NNM") under the symbol
"CTAI."
---------------------

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.

SEE "RISK FACTORS" BEGINNING AT PAGE 8.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
Underwriting
Discounts and Proceeds to
Price to Public Commissions(1) Company(2)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(3).................................. $ $ $
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."

(2) Before deducting expenses estimated at $ payable by the Company.

(3) The Company has granted the U.S. Underwriters a 30-day option to purchase up
to 360,000 additional shares on the same terms and conditions as set forth
above solely to cover over-allotments, if any. The International Managers
have been granted a similar option to purchase up to 90,000 additional
shares solely to cover over-allotments, if any. If such options are
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
---------------------

The shares of Common Stock offered by this Prospectus are offered by the
U.S. Underwriters subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
U.S. Underwriters and to certain further conditions. It is expected that
delivery of the certificates for the shares will be made at the offices of
Lehman Brothers, in New York, New York, on or about , 1996.
---------------------
LEHMAN BROTHERS
COWEN & COMPANY
LEGG MASON WOOD WALKER
INCORPORATED

, 1996
<PAGE>
[FRONT COVER FOLDOUT GRAPHICS]
CTA SPACE AND TELECOMMUNICATIONS

Weather Data Processing Systems
[Montage of large computers and computer generated weather map.]

Remote Environmental Sensors
[Photograph of sensors being built and technician.]

NASA Special Payloads
[Photograph of payloads under construction and two engineers.]

Satellite Command and Control
[Photograph of computer operator controlling satellites.]

Broadcast Control Facilities
[Photograph of broadcast control facilities.]

<TABLE>
<S> <C> <C> <C> <C>
Weight Class: 50-150 lbs 150-300 lbs 300-1000 lbs 1000+ lbs

[Photograph of [Photograph of [Photograph of [Photograph of
satellite] satellite] satellite] satellite]

Spacecraft: GLOMR, REX(2), STEP(5), COMET, INDOSTAR-1*
TERCEL/SECS, GEMstar-1(TM), SSTI, CLARK*,
MICROSAT(7), RADCAL TSX-5*,
POGS, TEX, SCE, EarthWatch(2)*
MACSAT, CRO(3),
MightySat-1*

Orbit: LEO LEO LEO GEO

Attitute Control: Gravity Gradient Gravity Gradient, 3-axis 3-axis
3-axis

Launch Vehicle: Shuttle, Pegasus, Scout, Pegasus Pegasus XL, Ariane IV
Atlas, Scout XL, LLV-1 Conestoga,
LMLV-1, Taurus,
Cosmos
</TABLE>

- ------------------------

*Currently Under Construction

------------------------

IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

------------------------

2
<PAGE>
[INSIDE FRONT COVER GRAPHICS]
CTA INFORMATION TECHNOLOGY

CTA HAS DEVELOPED ITS IT SKILLS OVER A WIDE RANGE OF SYSTEMS, CLIENTS, AND
APPLICATION AREAS.

OVER $1 BILLION IN COMPLETED IT CONTRACTS

CIVIL AGENCIES
DOJ; TREASURY; GSA
SYSTEM INTEGRATION; CLIENT SERVER IMPLEMENTATION; ELECTRONIC DATA INTERCHANGE;
GRAPHIC USER INTERFACE; INTERNET/INTRANET APPLICATIONS

[Photograph of computers and personnel.]

COMMAND AND CONTROL
USAF; BMDO
NETWORK DEVELOPMENT AND TEST; INFORMATION SYSTEM SECURITY; DATABASE ENGINEERING
[Photograph of command control center, with large and small display screens and
personnel.]

AIR TRAFFIC CONTROL
FAA
MAN-MACHINE INTERFACE; HUMAN FACTOR SIMULATION; ADVANCED COMMUNICATIONS SYSTEMS
[Photograph of air traffic control tower and aircraft.]

COMMERCIAL
REYNOLDS METALS; USAA; MCI
MANUFACTURING PROCESS CONTROL; ELECTRONIC DOCUMENT MANAGEMENT
[Photograph of rolls of aluminuml]

AVIONICS
US NAVY
REALTIME SOFTWARE DEVELOPMENT; AVIONICS INTEGRATION AND TEST
[Photograph of fighter aircraft in flight, firing missile.]

SPACE
USAF; NASA
SATELLITE AND MISSION CONTROL; IMAGE PROCESSING
[Photograph of Hubble Telescope being repaired by Space Shuttle.]

LEGACY SYSTEMS
VA; FSS; USAF
YEAR 2000 CONVERSION; SOFTWARE UPGRADES
[Photograph of mainframe computers and systems engineer.]
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN
THIS PROSPECTUS. THE INFORMATION IN THIS PROSPECTUS, UNLESS OTHERWISE INDICATED,
DOES NOT GIVE EFFECT TO THE EXERCISE OF THE OVER-ALLOTMENT OPTIONS DESCRIBED
UNDER "UNDERWRITING." SEE "GLOSSARY OF TERMS" FOR DEFINITIONS OF CERTAIN TERMS
USED IN THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES TO
"CTA" OR THE "COMPANY" REFER TO CTA INCORPORATED, A COLORADO CORPORATION, AND
ITS SUBSIDIARIES, AND THEIR RESPECTIVE PREDECESSORS.

THE COMPANY

CTA designs, manufactures and integrates small communications and
earth-sensing satellites, and provides advanced Information Technology ("IT")
services, principally to government customers. The convergence of CTA's unique
strengths in space, information systems and communications technologies has
positioned the Company to address space-based communications markets as a
turn-key provider of complete satellite systems and has opened opportunities for
the Company as a wireless data service provider. In addition, the Company is
well-positioned for continued growth in the civil and commercial IT services
markets. During the past three years, CTA's total revenues have increased from
$125.1 million in 1993 to $217.0 million in 1995. At June 30, 1996, the Company
had total backlog of approximately $535 million.

SPACE AND TELECOMMUNICATIONS SYSTEMS

CTA is the world's leading supplier of small low-earth orbit ("LEO")
satellite systems and an emerging competitor in the market for small
geosynchronous ("GEO") satellite systems. CTA has successfully designed, built
and delivered 27 satellites over the past eleven years with seven additional
satellites currently under construction. During the next twelve months, the
Company is scheduled to deliver three commercial satellites, one satellite for
the United States Air Force (the "Air Force") and one satellite for the National
Aeronautics and Space Administration ("NASA"). During the past three years,
Space and Telecommunications Systems revenues have increased from $32.9 million
in 1993 to $107.6 million in 1995. CTA is currently preparing or has outstanding
bids for six government and commercial satellite systems contracts with an
estimated total value exceeding $1 billion.

The Company's satellites perform a variety of commercial, scientific and
military missions, including communications, direct broadcast services ("DBS")
and space-based imaging. CTA satellites have a record of 100% mission success
after reaching orbit. As a complete space systems manufacturer, the Company also
designs and manufactures environmental monitoring sensors, advanced payloads for
NASA, real time, high-speed processors for meteorological satellite data and
mission control and other specialized ground data and communications systems.

The Company has introduced a number of innovative designs and mission
capabilities to satellite systems, including store-and-forward and
handset-to-LEO satellite constellation communications. CTA's adaptable common
satellite platform for the Air Force's five-satellite Space Test Experiments
Platform ("STEP") program led directly to the Company's recent award of a $25
million prime contract for the Tri-Service Experiment Mission 5 ("TSX-5")
satellite system, scheduled for launch in 1998. Additionally, CTA is building
the Clark spacecraft, a high-performance remote sensing satellite, for NASA's
Small Spacecraft Technology Initiative ("SSTI"), a key component of NASA's
announced plan to develop "smaller, faster, cheaper" satellites. Based in part
on this experience, the Company has designed and is currently manufacturing for
EarthWatch, Inc. ("EarthWatch") the first commercial small satellite for
high-precision remote sensing applications. In the DBS market, STARbus, the
Company's three-axis stabilized small GEO platform, is the core of CTA's
turn-key $127 million contract for INDOSTAR, a complete direct-to-home ("DTH")
television system for Indonesia. The Company expects that the low cost and
technical superiority of the flexible STARbus design, which is capable of
generating up to 3.5 kilowatts of power, will

3
<PAGE>
enable the Company to adapt it to a variety of payloads and thereby capture
additional market share in the growing small satellite segment of the commercial
communications satellite industry.

INFORMATION TECHNOLOGY SERVICES

The Company provides its customers with a full range of IT services, with
emphasis on large-scale network integration and management, information systems
security, mainframe to client/server migration, relational database engineering,
electronic data interchange ("EDI") and real-time embedded computer systems. In
addition to its strong technical and program management capabilities, the
Company has established a reputation for customer satisfaction, as reflected in
its 100% win rate when recompeting for contracts for which it is the incumbent
and average award fee scores in excess of 90%. In 1992, the Company's
acquisition of its space systems business ended its eligibility for government
programs which assist small businesses, with the last significant contract
awarded under these programs completed in early 1996. Since 1992, the Company
has replaced contracts awarded under these programs with contracts awarded under
full and open competition, growing the share of IT revenue derived from
competitive awards from 19% in 1992 to an estimated 97% in 1996. Reflecting the
success of this transition, CTA's IT revenues during this period increased from
$92.1 million in 1993 to $109.4 million in 1995. CTA is currently preparing or
has outstanding bids for 37 contracts with an estimated total value exceeding $1
billion.

To date, substantially all of the Company's IT revenues have been derived
from sales to various agencies of the U.S. government. Federal Sources, an
independent market research firm, estimates that the total federal government IT
support services market in 1996 will be $9 billion, growing at an annual rate of
6%. CTA has a strong base of military IT business, with a current contract base
that includes $120 million in avionics systems integration and mission control
software support contracts for the Naval Air Warfare Center ("NAWC") at China
Lake, California and a $54 million network engineering and support contract for
the Air Force's Electronic Systems Center at Hanscom Air Force Base.

The Company has also broadened its IT business to include a substantial
civil federal and state presence. CTA currently has major contracts with the
Department of Justice ("DOJ"), the Federal Aviation Administration ("FAA"), the
General Services Administration ("GSA") and the Treasury Department.

The complex task of century date change software conversion (the "Year 2000
Conversion") of legacy mainframe software for critical applications, such as
insurance benefits, motor vehicle registration and payroll systems, is emerging
as a major opportunity for CTA. The Gartner Group has estimated that the Year
2000 Conversion opportunity from federal and state government agencies alone
will exceed $38 billion over the next four years. The Company has established a
leading position in federal and state government Year 2000 Conversions with a
completed contract for the Department of Veterans Affairs Austin Automation
Center and ongoing projects with the GSA and the Air Force. CTA has expanded its

4
<PAGE>
position with the recent award of a $22 million contract from the State of
Nebraska for Year 2000 Conversion of all of the State's mainframe application
software and databases. CTA is currently preparing or has outstanding bids for
16 contracts with an estimated total value of $363 million for federal and state
Year 2000 Conversions.

In addition, CTA is developing a commercial IT business through a series of
strategic alliances with a number of specialized software companies to pursue
turn-key solutions for manufacturing process control and electronic document
management. These alliances combine specialized software applications with CTA's
core competency in large-scale systems integration and recognized program
management skills.

MOBILE INFORMATION AND COMMUNICATIONS SERVICES

The Company is currently developing GEMtrak, an automated tracking and cargo
status data system for unpowered mobile assets such as truck trailers, railcars
and containers. A trucking industry source has estimated that there are 4.5
million truck trailers in the U.S. alone. The Company believes that GEMtrak will
reduce trailer monitoring and rental costs, and offer fleet owners marketing and
revenue enhancement opportunities by providing positive cargo track-and-trace,
active manifest control, intrusion sensing and alert, remote asset status
monitoring and enhanced asset utilization.

The Company has completed the development of the hardware and software
required to operate the system and to provide the information management reports
to be used by the trailer fleet operators. The Company is negotiating reseller
agreements with AT&T Wireless Services and RAM Mobile Data Systems to provide
GEMtrak coverage over substantially all of the contiguous U.S. using those
companies' established wireless data networks. The GEMtrak system is currently
being beta tested by three different carriers, each in a different market
segment. The Company expects to initiate several pilot programs over the next
six to nine months under which several hundred units will be placed in service
in each of several national trucking company fleets, with full commercial
roll-out scheduled for the second half of 1997. The Company expects that the
GEMtrak trailer communication unit will be priced at between $ and
$ per unit, when purchased in volume, depending on its features, with
anticipated monthly service charges of between $ and $ per unit per
month, depending on the level of service selected.

BUSINESS STRATEGY

Since its founding, the Company has focused on certain growing market niches
in which its unique skills and capabilities provide significant competitive
advantages. CTA has invested significant resources to establish strong positions
in small satellites, network management and IT services, and intends to continue
to invest selectively in future growth opportunities in its core space and IT
businesses. The Company is also leveraging its expertise to enter into selected
value-added wireless service opportunities. CTA is pursuing several strategies
to achieve its objectives:

GROWING SHARE OF SMALL SPACE SYSTEMS MARKET NICHE. To enhance its
competitive position, CTA is combining its space, communications and IT
capabilities to provide full turn-key satellite systems to its commercial
customers, including delivery of the satellite on orbit, and the design,
procurement and installation of all of the necessary ground control and
communications equipment. CTA is focused on lowering the cost, shortening the
cycle from contract award to launch and adding advanced technology to enable the
Company to win an increasing share of the growing small satellite market. CTA
has invested significant resources developing STARbus, a technologically
advanced, multi-purpose satellite bus that can be configured to support DTH
television, high-bandwidth data transmission or voice communications payloads.
CTA has also entered into a marketing alliance with a leading satellite industry
participant through which it intends to expand its market presence throughout
the world.

EXPANDING INTO TARGETED IT MARKETS. The Company believes that its long-term
incumbent position as a key systems integrator for some of the nation's most
complex information networks provides it with a substantial advantage in terms
of technicial expertise and demonstrated past performance when competing

5
<PAGE>
for future awards from those customers, and believes that its Year 2000
Conversion initiative will provide the Company similar competitive advantages
with respect to an even broader range of customers. In addition, the Company
continually seeks to transfer the technical and marketing expertise it has
developed over many years of successful competition in the Department of Defense
("DOD") DOD market to civil agencies that have similar IT systems needs such as
NASA, the FAA and the Federal Bureau of Investigation ("FBI") and to market its
experience supporting federal government functions to state government and
commercial customers. CTA continues to establish strategic alliances with a
number of small software providers to offer complete, turn-key systems solutions
to commercial customers. The Company also intends to pursue strategic
acquisitions to penetrate more rapidly the commercial market for IT services.

PARTICIPATING IN VALUE-ADDED SERVICES LEVERAGING SPACE COMMUNICATIONS AND IT
EXPERTISE. CTA expects to invest approximately $8 million developing and
rolling out its GEMtrak business over the next two years to establish a
terrestrial wireless data communications system to track untethered trailers and
their cargo. CTA intends to use its IT expertise to work with its customers to
customize the GEMtrak service and accelerate the roll-out across each customers'
fleet. The Company anticipates that a second generation GEMtrak system will draw
upon the Company's space systems expertise to expand the system's addressable
market globally through GEMnet, a proposed LEO satellite constellation. To date,
CTA has invested over $15 million in GEMtrak and GEMnet development. The Company
is also participating in, and will seek to expand into, space-based
communications services in partnership with its commercial satellite service
customers such as PT MediaCitra Indostar and EarthWatch.

CTA was incorporated in Colorado in 1979. The Company's principal executive
office is located at 6116 Executive Boulevard, Rockville, Maryland 20852 and its
telephone number is (301) 816-1200. CTA maintains a World Wide Web site at
http://www.cta.com. The information contained in the Company's World Wide Web
site should not be considered a part of this Prospectus.

THE OFFERINGS

<TABLE>
<S> <C>
Common Stock offered for sale in the
Offerings:
U.S. Offering............................... 2,400,000 shares
International Offering...................... 600,000 shares
Total Common Stock offered.............. 3,000,000 shares(1)

Common Stock outstanding after the
Offerings................................... 7,993,885 shares(1)(2)

Use of Proceeds............................... For (i) development expenses and capital
expenditures for the development of STARbus
and INDOSTAR and the commercial roll-out of
GEMtrak, (ii) the repayment of the Company's
subordinated notes (the "Notes") and (iii)
other capital expenditures and general
corporate purposes. See "Use of Proceeds."

Proposed NNM symbol........................... CTAI
</TABLE>

- ------------------------

(1) Excludes 450,000 shares issuable upon exercise of the Underwriters'
over-allotment options.

(2) Includes 433,259 shares of Common Stock to be issued upon the consummation
of the Offerings to holders of the Notes in payment of contingent interest
that will become payable as a result of the Offerings (the "Contingent
Interest"). Excludes (i) 669,870 shares of Common Stock issuable upon the
exercise of outstanding stock options having a weighted average exercise
price of $9.37 per share and (ii) 377,274 shares of Common Stock reserved
for future grants under the Company's 1991 Stock Option, Stock Purchase
Right and Stock Bonus Plan (the "1991 Plan").

6
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------ ------------------
1991 1992(1) 1993 1994 1995 1995 1996(2)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Contract revenues
Information Technology Services....... $ 94,698 $100,415 $ 92,133 $107,450 $109,361 $ 54,372 $ 49,727
Space and Telecommunications
Systems............................. -- 14,694 32,939 35,621 70,675 30,858 31,899
Launch Support...................... -- -- -- -- 36,971 17,622 19,065
Mobile Information and Communication
Services............................ -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total contract revenues............. 94,698 115,109 125,072 143,071 217,007 102,852 100,691
Operating profit (loss)................. 5,902 7,596 7,309 11,613 10,235 4,317 (3,033)
Interest expense........................ 82 461 992 3,627 4,116 1,692 2,304
Income (loss) from continuing
operations............................ 3,506 3,883 3,538 4,552 3,671 1,502 (3,042)
Income (loss) from discontinued
operations, net of income taxes(3).... 355 490 1,012 (93) (1,725) (181) --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)....................... $ 3,861 $ 4,373 $ 4,550 $ 4,459 $ 1,946 $ 1,321 $ (3,042)
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
EARNINGS (LOSS) PER SHARE:
Continuing operations................. $ 0.76 $ 0.82 $ 0.75 $ 0.95 $ 0.78 $ 0.31 $ (0.66)
Discontinued operations............... 0.08 0.10 0.22 (0.02) (0.37) (0.04) --
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) per share............... $ 0.84 $ 0.92 $ 0.97 $ 0.93 $ 0.41 $ 0.27 $ (0.66)
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Weighted average number of shares
outstanding, including common stock
equivalents........................... 4,597 4,750 4,689 4,783 4,709 4,827 4,593
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------------
PRO FORMA
DECEMBER 31, AS
1995 ACTUAL ADJUSTED(4)(5)
------------ --------- ----------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................. $ 235 $ 6,504 $ 32,404
Working capital....................................................... 19,713 14,590 43,063
Total assets.......................................................... 91,530 95,053 122,636
Short-term debt....................................................... 17,074 20,000 20,000
Long-term debt........................................................ 17,431 18,127 541
Total stockholders' equity............................................ 28,773 25,461 70,630
</TABLE>

- ------------------------

(1) In July 1992, the Company acquired a 79% interest in CTA Space Systems
(formerly known as Defense Systems, Inc.) ("CTASS") for $10.3 million. In
July 1994, the Company acquired the remaining CTASS common stock for $2.5
million, payable 50% in cash and 50% in Common Stock. The consolidated
financial statements of the Company reflect the results of operations of
CTASS since July 1992.

(2) Gives effect to a reduction in revenues and operating profit due to (i) a
$2.8 million ($1.6 million after tax) charge related to a $6.7 million
addition to reserves for estimates of potential cost increases at program
completion on the INDOSTAR program and (ii) a $2.2 million ($1.3 million
after tax) charge on the Eastern Zone contract.

(4) Gives effect to the issuance of 3,000,000 shares of Common Stock in the
Offerings and the receipt of the estimated net proceeds of the Offerings,
based on an assumed public offering price of $15.00 per share.

(5) Gives pro forma effect to the issuance of 433,259 shares of Common Stock to
the holders of the Notes in payment of Contingent Interest upon consummation
of the Offerings, which will result in a one-time interest expense in the
fourth quarter of 1996 of $3.9 million ($2.2 million on an after-tax basis),
based on an assumed public offering price of $15.00 per share.

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STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE

Certain statements contained in this Prospectus, including in "Prospectus
Summary," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," including statements regarding space
systems and IT market size and growth, conversion of backlog into revenues, the
development of and market for GEMtrak, the expansion of CTA's civil government
and commercial IT business, capital expenditures, international business
development, and expenditures on GEMtrak, and other statements contained herein
regarding matters that are not historical facts, are forward-looking statements
(as such term is defined in the Private Securities Litigation Reform Act of
1995) and because such statements include risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
include, but are not limited to, those discussed under "Risk Factors."

RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING RISK
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING THE COMPANY AND ITS
BUSINESS BEFORE PURCHASING THE SHARES OF COMMON STOCK OFFERED HEREBY.

OPERATING RISKS

FLUCTUATIONS IN FINANCIAL RESULTS; RECENT AND ANTICIPATED OPERATING LOSSES

The Company's operating results are subject to fluctuations due primarily to
variations in the timing of awards and activities (such as milestone-dependent
payments and revisions to cost estimates) under contracts with the U.S.
government and the Company's commercial customers. Revenues recognized by the
Company in each fiscal quarter fluctuate accordingly. In addition, revenues
associated with the Company's procurement of launch services (including the
procurement of launch vehicles and launch insurance and the provision of
launch-related services) in connection with turn-key satellite contracts may
cause significant fluctuations in quarterly revenues. Such fluctuations may have
a material adverse effect on cash flow from operations in the periods in which
they occur.

The Company experienced an operating loss of $3.1 million for the six months
ended June 30, 1996. The loss resulted primarily from a reduction in revenues
and operating profit of $2.8 million ($1.6 million after tax) due to additions
to reserves for estimates of potential cost increases at program completion on
INDOSTAR and $2.2 million ($1.3 million after tax) due to changes in the
estimated contract value on the Eastern Zone contract. In addition, the Company
will issue 433,259 shares of Common Stock to the holders of the Notes upon the
consummation of the Offerings in payment of Contingent Interest. As a result of
the issuance of these shares, the Company will record a one-time interest
expense in the fourth quarter of 1996 of approximately $3.9 million ($2.2
million after tax), based upon an assumed public offering price of $15.00 per
share. This charge, when combined with the charges associated with INDOSTAR and
the Eastern Zone contract, is expected to result in a net loss for 1996.

LIQUIDITY AND CAPITAL REQUIREMENTS

The Company's future business requirements and growth plans will require
significant additional capital. While the Company believes that working capital,
cash flow from operations, available bank borrowings and the net proceeds of the
Offerings will provide adequate funds for continued operations through the end
of 1997, additional capital will be required to continue to fund its strategic
initiatives of expanding Space and Telecommunications Systems and its Mobile
Information and Communications Services businesses. Accordingly, the Company
expects that it will need to incur additional indebtedness or raise additional
equity capital to fund its anticipated growth.

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The timing of payments to the Company by customers under existing contracts
may lead to fluctuations in annual and quarterly cash flows. Sales to foreign
customers often entail the additional risk of slow or delayed payment for the
Company's products or services. Any such delay by customers of the Company could
have a material adverse effect on the Company's liquidity.

The Company has entered into preliminary negotiations for a $50.0 million
secured credit facility to replace its $32.0 million existing credit facility
(the "Credit Facility"), which expires on December 9, 1996. There can be no
assurance that upon expiration of the Credit Facility, the Company will be able
to renew or replace the Credit Facility or that it will be able to enter into a
new credit facility on the same or similar terms. The failure of the Company to
renew its Credit Facility, or to obtain a replacement credit facility on terms
favorable to the Company, could have a material adverse effect on the Company's
liquidity and results of operations.

As a result of the charges to earnings related to INDOSTAR and Eastern Zone,
the Company was required to obtain waivers from its Credit Facility lender and
the holders of the Notes. In the third quarter of 1996, the Company amended its
Credit Facility to increase the available borrowings to $320 million and modify
certain financial covenants. There can be no assurance that the Company will not
sustain operating losses in future periods and be required to request additional
covenant waivers under the terms of its Credit Facility and or a successor
facility or covenants relating to future long-term debt, or that such waivers,
if requested, would be granted. See "Management Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."

CONCENTRATION OF CUSTOMERS

Approximately 66%, 69%, 95% and 99% of the Company's total revenues for the
six months ended June 30, 1996, and the years 1995, 1994 and 1993, respectively,
were derived from contracts with the U.S. government (or as subcontractor to
companies doing business with the U.S. government). Contracts funded by the DOD
accounted for approximately 36%, 31%, 36% and 60% of the Company's total
revenues in such periods, respectively. The Company believes that the success
and development of its business will continue to be dependent upon its ability
to participate in U.S. government contract programs. Accordingly, the Company's
financial performance may be directly affected by changes in U.S. government
contracting policies. See "Business--U.S. Government Contracting."

In addition, the Company's INDOSTAR contract accounted for 30.6% of total
revenues for the six months ended June 30, 1996 and 26.8% in 1995.

BACKLOG

The Company's total backlog was approximately $535 million, $511 million,
$453 million and $293 million at June 30, 1996 and December 31, 1995, 1994 and
1993, respectively. The Company's backlog is comprised of the unrealized
portions of the Company's government contracts, government-related contracts and
commercial contracts. Backlog for government and government-related contracts
consists of both funded and unfunded backlog. Much of the Company's future
revenue is dependent upon the eventual funding of its currently unfunded
backlog. Unfunded government backlog comprised approximately 80% of total
backlog at June 30, 1996, as compared to approximately 79% of total backlog at
December 31, 1995. Commercial and other backlog comprised approximately 10% of
total backlog at June 30, 1996 as compared to approximately 9% of total backlog
at December 31, 1995. Approximately $30 million or 6% of total backlog at June
30, 1996 was related to the INDOSTAR contract. Because many of the Company's
contracts are multi-year contracts, total backlog may include revenues expected
to be realized several years into the future. Because there is no assurance that
the unfunded portion of backlog will be funded, or that the amounts reflected in
backlog will ultimately be paid, the Company's total backlog at June 30, 1996
may not be representative of future revenues. See "Business--Backlog."

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DEPENDENCE ON THIRD PARTIES

The Company depends significantly on other companies for the development,
manufacture and timely delivery of various components, subsystems and products
that are material to its business. The Company has not experienced material
difficulty or delays in obtaining product components or necessary parts and
equipment and believes that alternative sources of supply would be available,
although increased costs could be incurred in securing alternative sources of
supply. However, the failure of third parties to deliver the requisite product
components, necessary parts or equipment on schedule, or the failure of third
parties to perform at expected levels, could affect the Company's ability to
discharge its obligations to its customers and, under certain circumstances,
could have a material adverse effect on the Company's profitability and its
ability to win future awards.

The Company relies on various third parties for the design and construction
of certain component parts of the INDOSTAR satellite. In the event such third
parties are unable to perform their respective functions in accordance with the
detailed schedule for the INDOSTAR project, the deployment and ultimate
commercial operation of INDOSTAR may be delayed, which could have a material
adverse effect on the Company's results of operations as well as on the
Company's relationship with its customer and the prospects for similar follow-on
business. The Company also has contracted with a third party for the launch of
the INDOSTAR satellite. See "--Risks Associated With Satellite Launches."

The Company has recorded the notes it received in consideration for the sale
of the assets of its Simulation Systems Division at their principal amount of
$2.2 million. A default in payment of these notes and an inability to realize
the full principal amount thereof upon sale of their collateral could have a
material adverse effect on the Company's results of operations in the quarter
recorded.

COMPETITION

The space systems manufacturing industry includes both foreign and U.S.
commercial and governmental entities and is becoming increasingly competitive.
The Company's satellites, space instruments and sensors, advanced electronics
products, ground systems and software each face competition from at least
several manufacturers. The Company's competitors include Ball Corporation
("Ball"), Hughes Aircraft Company (a subsidiary of GM Hughes Electronics
Corporation) ("Hughes"), Lockheed Martin Corporation ("Lockheed Martin"), Loral
Space & Communications Ltd. ("Loral"), Matra Marconi, Orbital Sciences
Corporation ("OSC"), Spectrum Astro, Inc. ("Spectrum Astro"), TRW, Inc. ("TRW")
and other international companies. The Company's communications satellites also
face competition from alternative technologies, including fiber optic cable
technology, which could reduce demand for the services of the Company's
customers and thus for the Company's communications products. Some of the
Company's competitors have significantly greater financial, manufacturing,
marketing and technical resources than those of the Company. In particular,
vendor financing is emerging as an important competitive factor in commercial
customers' selection of a satellite systems manufacturer. To the extent that the
Company provides customers with financing, the Company may be required to obtain
its own sources of financing and will be subject to the risk that customers may
fail to repay the amounts financed and may be required to incur additional
indebtedness. There can be no assurance that the Company will be able to compete
successfully in any of the markets for its space products and services. See
"Business--Space and Telecommunications Systems-Competition."

The IT services industry in which the Company operates is highly fragmented
with no single company or small group of companies in a dominant position. The
Company's competitors include large, diversified firms with substantially
greater financial resources and larger technical staffs than the Company, such
as BDM International, Inc. ("BDM"), Cap Gemini Sogeti SA ("Cap Gemini"),
Computer Sciences Corporation ("CSC"), Electronic Data Services Corporation
("EDS"), Lockheed Martin, PRC, Inc. (a subsidiary of Litton Industries) ("PRC"),
SAIC, Inc. ("SAIC"), as well as firms that receive preferences under government
programs for small businesses. The firms that compete with the Company include
consulting

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firms, computer services firms, applications software companies and accounting
firms, as well as the computer service arms of computer manufacturing companies
and defense and aerospace firms. In addition, the internal staffs of client
organizations, non-profit federal contract research centers and universities
are, in effect, competitors of the Company. See "Business--Information
Technology Services-Competition."

The Company anticipates that the GEMtrak system will face competition from
numerous existing and potential alternative communications products and services
provided by various companies including American Mobile Satellite Corporation
("AMSC"), HighwayMaster Communications, Inc. ("HighwayMaster"), ORBCOMM Global,
L.P. ("Orbcomm"), QUALCOMM, Incorporated ("Qualcomm") and StarSys, Inc. (a
subsidiary of The General Electric Company) ("StarSys"). There are a number of
other companies that are developing LEO systems, some of which would likely be
direct competitors of the Company in this market. See "Business--Mobile
Information and Communications Services."

The Company generally obtains its contracts through the process of
competitive bidding. There can be no assurance the Company will continue to be
successful in having its bids accepted or, if accepted, that awarded contracts
will generate sufficient revenues to result in profitability. Many of the
Company's contracts obtained under small business programs prior to 1992
produced higher profit margins than contracts obtained in full and open
competition. In addition, the Company has occasionally in the past submitted
bids which would result in minimal or no profitability with the expectation of
more profitable follow-on contracts. The minimum profitability of these
contracts and the failure of the Company to obtain more profitable follow-on
contracts may have a material adverse effect on the Company's results of
operations.

INTERNATIONAL OPERATIONS

The Company recognized revenues from PT MediaCitra Indostar, an Indonesian
company, of $30.8 million (30.6% of total revenues) for the six months ended
June 30, 1996 as compared to $58.1 million (26.8% of total revenues) in 1995,
$7.9 million (5.5% of total revenues) in 1994 and $0.7 million (0.6% of total
revenues) in 1993. According to recent press reports, the political, diplomatic
and social conditions in Indonesia have entered a period of increased
uncertainty. Any change in the political, social or economic climate in
Indonesia could have a significant effect on the business relationships between
Indonesian companies and foreign companies, such as CTA, and, as a result, could
affect the development, delivery and deployment of the INDOSTAR satellite.

The Company's future growth is dependent, in part, on continuing to increase
its sales to foreign customers and its expansion into additional foreign
markets. The Company expects that sales to foreign customers will be an
increasing portion of the Company's business, and while management believes that
the Company's experience serving the domestic market translates into an ability
to serve foreign customers, no assurance can be given that the Company's efforts
will succeed.

Sales to foreign customers entail additional business risks and complexities
such as slow or delayed payment, inflation, interest rate fluctuations, foreign
currency exchange fluctuations, price and wage controls, different taxation
methods, increases in duty rates, difficulties in obtaining export licenses,
restrictions on financial and business practices and other general economic,
political and cultural conditions. In addition, the general political,
diplomatic and social conditions in foreign countries may be inherently more
volatile or unstable than those commonly experienced in the U.S. The Company may
be adversely affected by such economic risks as well as changes in political,
diplomatic, social or economic conditions in those foreign markets in which the
Company conducts its business. Moreover, due to the fact that the Company's
contracts with foreign customers may be governed by the laws of those countries
in which its customers are located and not those of the U.S., it is uncertain
the extent to which the Company will be able to enforce its contracts if a
dispute arises with a foreign customer. The Company's inability to

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enforce any such contracts could have a material adverse effect on the Company's
business. See "Business--International Operations".

The Company expects that certain future launches of its satellites will
originate from foreign countries. Changes or instability in the social,
political or economic climate in such countries could delay the launch of the
Company's satellites and, as a result, could have a material adverse effect on
the Company's financial condition and results of operations.

CONTRACT RISKS

CONTRACTS WITH U.S. FEDERAL, STATE AND LOCAL GOVERNMENTS

U.S. government contracts, by their terms, generally can be terminated at
any time by the U.S. government, without cause, for the convenience of the U.S.
government. If a U.S. government contract is so terminated, the Company is
entitled to receive compensation for the services provided or costs incurred
through the time of termination and a negotiated amount of profit on the
contract. U.S. government contractors who fail to comply with applicable
government procurement-related statutes and regulations may also be subject to
potential contract termination, suspension or debarment from contracting with
the U.S. government. Most U.S. government contracts are also subject to
modification in the event of changes in funding, and the Company's contractual
costs and revenues are subject to adjustment as a result of audits by the
Defense Contract Audit Agency ("DCAA") and other U.S. government auditors.
Audits have been completed on incurred contract costs of the Company through
1991 and are continuing for subsequent periods. While the Company has included
an allowance in its financial statements for excess billings and contract losses
which it believes is adequate based on its interpretation of contracting
regulations and past experience, there can be no assurance that this allowance
will be adequate. See "Business--U.S. Government Contracting." U.S. government
contract awards may also be protested by competitors.

The Company has various claims pending against the U.S. government primarily
relating to equitable adjustments under certain government contracts, and may
file a claim for approximately $1 million under the Eastern Zone contract with
the GSA. The Company typically records the amounts it is seeking under these
claims as unbilled receivables on its financial statements. Adverse
determinations of these claims in excess of the Company's general operating
reserves could have a material adverse effect on the Company's results of
operations in the quarter recorded.

Many of the types of provisions governing U.S. government contracts
described above also apply to the Company's contracts with state and local
governments and their agencies. In addition, with respect to state and local
government customers, budgeting pressures and other financial constraints may
result in reductions in funding of various programs, which may affect the
ability of the Company to obtain new contracts, may cause state and local
governments to terminate existing contracts for convenience or not to renew
thereunder and may result in the extension of the procurement and contract
funding process.

CONTRACT PROFIT EXPOSURE AND DEPENDENCE ON LONG-TERM FIXED-PRICE CONTRACTS

The Company's services are provided primarily through three types of
contracts: fixed-price, time-and-material and cost-reimbursable contracts.
Approximately 28% of the Company's total revenues in 1995 were attributable to
fixed-price contracts, which require the Company to perform services under a
contract at a stipulated price. The Company derived approximately 26% of its
total revenues during the same period from time-and-material contracts, which
reimburse the Company for the number of labor hours expended at established
hourly rates negotiated in the contract, plus the cost of materials incurred.
The balance of the Company's contracts (approximately 46%) are cost-reimbursable
contracts under which the Company is reimbursed for all actual costs incurred in
performing the contract to the extent that such costs are within the contract
ceiling and allowable under the terms of the contract, plus a fee or profit. See
"Business--U.S. Government Contracting."

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The Company assumes greater financial risk on fixed-price contracts than on
either time-and-material or cost-reimbursable contracts. The financial results
of long-term fixed-price contracts are recognized using the cost-to-cost
percentage-of-completion method. As a result, revisions in revenues and profit
estimates are reflected in the period in which the conditions that require such
revisions become known and are estimable. Adjustments for profits or losses may
therefore have a material effect on results for the quarter in question. The
risks inherent in long-term fixed-price contracts include the difficulty of
forecasting costs and schedules, contract revenues that are related to
performance in accordance with contract specifications (including revenues from
satellite on-orbit performance payments) and potential for component
obsolescence in connection with long-term procurements. The Company has in the
past derived a large portion of its revenues from a limited number of customers
and programs; such reliance will have the effect of increasing the amount of any
variation that may occur as a result of such adjustments. Failure to anticipate
technical problems, estimate costs accurately or control costs during
performance of a fixed-price contract may reduce the Company's profitability or
cause a loss. See "Business--U.S. Government Contracting."

Greater risks are involved under time-and-material contracts than under
cost-reimbursable contracts because the Company assumes the responsibility for
the delivery of specified skills at a fixed hourly rate. The failure by the
Company to adequately estimate its costs in bidding for such contracts could
have a material adverse effect on the Company's business.

Although the Company believes that adequate provision for its fixed-price
and time-and-material contracts is reflected in its financial statements, no
assurance can be given that this provision is adequate or that losses on
fixed-price and time-and-material contracts will not occur in the future. See
"Business--U.S. Government Contracting."

The Company establishes operating reserves in connection with various
contracts. In March 1996, the Company increased its reserves on the INDOSTAR
program for changes in its estimated cost of completion and revised its estimate
of contract value related to its GSA Eastern Zone contract. There can be no
assurance that these reserves will be adequate or that the Company will not need
to adjust its cost and profitability estimates for its contracts, including
INDOSTAR and Eastern Zone. Any deficiency in reserves or unexpected increase in
costs could have a material adverse effect on the Company's results of
operations. The Company generally believes that the reserves it establishes for
particular contracts are adequate based on the risk inherent in the type of
contract, and the Company regularly reevaluates the adequacy of these reserves.

TECHNOLOGY RISKS ASSOCIATED WITH SPACE SYSTEMS BUSINESS

RISKS INHERENT IN HIGH TECHNOLOGY SPACE PROGRAMS

Much of the Company's current and anticipated future revenues stem from high
technology space and satellite-related programs, which develop products that are
technologically advanced systems that must function under demanding operating
conditions. These programs are dependent in many cases on the ability of the
Company to deliver its space and satellite products at an economically feasible
price, to procure a launch vehicle to successfully place a satellite in orbit
and to deploy successfully sophisticated space-based and ground-based hardware
and software systems. Even though the Company believes that it employs
sophisticated design, manufacturing and testing practices, there can be no
assurance that the Company's products will be successfully developed, launched
or operated or perform as intended.

The Company's products and services are, and will continue to be, subject to
technological change and innovation. With each new generation of satellites,
satellite manufacturers are expected to offer substantial performance
improvements at a lower effective cost. The Company's success depends on its
ability to design, manufacture and introduce innovative new products and
services on a cost-effective and timely basis. The Company anticipates that it
will incur significant expenses in the design, development and initial

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manufacture and marketing of new satellite products and services. There can be
no assurance that the Company will be able to achieve the technological advances
necessary to remain competitive and be profitable, that new products and
services will be developed and manufactured on schedule and on a cost-effective
basis, that licenses and regulatory approvals required for new products and
services will be secured, that anticipated markets will exist or develop for new
products or services, that the Company will have the financial or other
resources necessary to effect any such technological advances or to develop or
manufacture such products or services or that its existing products will not
become technologically obsolete.

The Company's INDOSTAR contract to provide a turn-key satellite system for a
complete DTH television system for Indonesia is the Company's first application
of the STARbus design and related technology to a GEO satellite environment. As
such, the Company may encounter unexpected delays in, or costs associated with,
the timely design, development, construction and deployment of the INDOSTAR
satellite due to a variety of causes, including problems related to technical
development of the system, problems associated with the manufacturing,
construction, assembly, integration or testing of the system, delays or costs
associated with regulatory compliance, changes in the technical specifications
of the INDOSTAR program, and other events beyond the control of the Company. Any
unexpected costs or delays may have a material adverse effect on the Company's
results of operations.

RISK OF LOSS DUE TO SATELLITE MALFUNCTION

Satellites are subject to significant risks, including defects, destruction
and damage that may result in total or partial loss, incorrect orbital placement
or improper commercial operation. The Company may experience product failures
and other problems in connection with its satellites and other products in the
future. The Company may derive revenues from incentive programs (or may benefit
from equity participation) that are directly related to the successful technical
performance and long-term operability of its satellite products. The failure of
the Company's satellite products to perform properly may require the Company to
incur additional costs, to forfeit part of its expected profit, to receive
reduced payments, to reduce the price of follow-on missions or to forego
potential future revenue streams. While the Company usually insures, when
economically feasible, most aspects of technical performance (including against
the loss of on-orbit revenues), the Company generally does not insure potential
costs resulting from any required remedial actions or costs or loss of revenues
due to postponement of subsequently scheduled operations or product deliveries.
No assurance exists that such insurance, if economically available, will
completely offset the negative financial effects of any performance failure.

RISKS ASSOCIATED WITH SATELLITE LAUNCHES

The Company's ability to perform under its turn-key satellite contracts
depends on the procurement of a launch vehicle from a third party (and related
insurance) and the successful launch of its satellites. In connection with its
turn-key satellite contracts, such as the INDOSTAR contract, the Company
contracts with third parties to provide launch vehicles. In the past, launch
slots have been in limited supply and the availability and pricing of launch
vehicles from foreign countries are affected by U.S. government policies and
international agreements. The inability of the Company to obtain adequate and
cost-effective launch vehicles and related insurance could have a material
adverse effect on the results of operations of the Company.

Satellite launches are subject to significant risks, including failure of
the launch vehicle, which may result in damage to or loss of satellites or the
failure of satellites to achieve their proper orbit. Four satellites
manufactured by the Company have been lost due to launch vehicle failures,
including the Company's GEMstar satellite in August 1995. In addition, satellite
launches are subject to delays for a variety of reasons, including the failure
of third parties to deliver launch vehicles on schedule or provisions in
standard launch contracts that entitle the launch provider to postpone the
launch of such satellites for a predetermined period. While the Company takes
significant precautions to prevent, and to insure against,

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the unsuccessful or delayed launch of its satellites by third parties, there can
be no assurance that the Company will be fully compensated for any loss
associated therewith and, as a result, any such failure or delay may have a
material adverse effect on the results of operations of the Company.

The Company has contracted with ArianeSpace S.A. ("ArianeSpace") for the
launch of the INDOSTAR satellite. The Company's contract for the launch of the
INDOSTAR satellite contains a provision, common in launch contracts, entitling
ArianeSpace to postpone the launch for up to one year (subject to certain
penalty payments). The delay of the deployment of the INDOSTAR satellite for any
reason (including as the result of a launch postponement) could adversely affect
the ultimate commercial operation of the INDOSTAR program, the Company's
relationship with its customer and the prospects for similar follow-on business.
As a result, the failure of ArianeSpace to launch the INDOSTAR satellite
successfully and on schedule could have a material adverse effect on the
Company's results of operations.

MOBILE INFORMATION AND COMMUNICATIONS SERVICES

CAPITAL INVESTMENT

The Company has invested and will continue to invest substantial resources
in capital equipment and other assets supporting GEMtrak and GEMnet. To date,
the Company has invested $1.1 million in the development of GEMtrak and $14.4
million in the development of satellite-based support for the second-generation
of GEMtrak. Of this amount, $6.1 million was invested in the GEMstar satellite
and recovered from insurance proceeds following that satellite's launch failure
loss; $1.0 million was expensed and the remaining $7.3 million, representing
satellite-related ground equipment and flight software, has been capitalized.
The Company's future business requirements and growth plans for GEMtrak and
GEMnet will require significant additional capital. Accordingly, the Company
expects that it will need to incur additional indebtedness or raise additional
equity capital to fund the anticipated growth in GEMtrak and GEMnet. Such growth
may also entail entering into a partnership or joint venture with one or more
third parties that would reduce the Company's equity ownership in GEMtrak and
GEMnet.

The Company has expensed all of its development efforts related to the
GEMtrak system resulting in GEMtrak project operating losses of $1.1 million
since August 1995 and intends to expend approximately $8 million for development
and testing of the GEMtrak system which it expects will result in continued
operating losses for the Mobile Information and Communications Services business
for the remainder of 1996 and 1997. The ultimate recoverability of existing and
planned investments in GEMtrak and GEMnet will depend on various factors,
including the development of a market for GEMtrak, the success of the Company's
efforts to generate sufficient business to support profitable operations and,
with regard to GEMnet, if it is continued, to obtain licenses needed to operate
the satellite system in the U.S. and in other markets and the ability to finance
the development of the satellite system supporting GEMtrak.

MARKET ACCEPTANCE

The success of GEMtrak will depend on a number of factors, including its
technical capabilities, cost, price, the cost-effectiveness of wireless data
tracking and the availability and price of alternative wireless data tracking
services. There can be no assurance that the market will demand the types of
features currently offered by or proposed to be offered by GEMtrak, that the
Company's manufacturers will continue to manufacture GEMtrak units or that
technological or other design developments will not render the units obsolete.

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REGULATORY AND LEGAL RISKS

REGULATION

The ability of the Company and its customers to pursue their business
activities is regulated by various agencies and departments of the U.S.
government. Commercial space launches initiated in the U.S. require licenses
from the U.S. Department of Transportation ("DOT"). Operation of commercial
communications satellites requires licenses from the Federal Communications
Commission ("FCC") and frequently requires the approval of foreign regulatory
authorities as well. Private remote sensing satellites require a license from
the U.S. Department of Commerce ("DOC"). Exports of space-related products,
services and technical information frequently require licenses from the State
Department or the DOC. In addition, in connection with launches, the Company may
be required to obtain from the U.S. government a technical data export license
and a hardware export license in order to transport the satellite and related
equipment to the proposed launch site. While the Company has not experienced any
material difficulties in obtaining such licenses or regulatory approvals, there
can be no assurance that the Company will continue to be successful in its
efforts to obtain necessary licenses or regulatory approvals. The inability of
the Company to secure any necessary licenses or approvals could have a material
adverse effect on its financial condition or results of operations.

The Company has been advised by its Indonesian customer that the customer
has obtained or is in a position to readily obtain all material Indonesian
regulatory approvals or coordination agreements necessary for the operation of
the INDOSTAR satellite. Any change in the political or regulatory environment in
Indonesia that results in the revocation of, or failure to obtain, such
approvals could have a material adverse effect on the Company's results of
operations.

The Company has applied for an FCC license to construct, launch and operate
a low-earth orbit constellation of small data communications satellites in the
FCC's so-called "Little LEO" proceeding. GEMtrak service will begin in the U.S.
without satellite support, using third party terrestrial wireless networks. In
the future, GEMnet will require an FCC license to support satellite-based
second-generation GEMtrak service in the U.S. Satellite service outside the
U.S. would not require an FCC license, but would require a license from local
telecommunications regulatory authorities and coordination with the
International Telecommunications Union ("ITU"). There can be no assurance that
any such licenses will be granted, or that such coordination will be successful.

PROPRIETARY INFORMATION

The Company relies upon trade secrets, know-how and continuing technological
innovation and licensing opportunities to develop and maintain its competitive
position and believes that its business is dependent on its technical and
organizational knowledge, practices and procedures. The Company claims a
proprietary interest in certain of its work products, software programs,
methodologies and know-how, including proprietory designs and know-how related
to STARbus, and some of the proprietary information is protected by
confidentiality agreements and other means. The Company also has filed a U.S.
patent application covering GEMtrak's asset monitoring systems in order to
protect its position in the unpowered mobile asset monitoring market. There can
be no assurance, however, that these measures will prevent the unauthorized
disclosure or use of the Company's technical knowledge, practices and procedures
or that others may not independently develop similar knowledge, practices or
procedures.

The U.S. government has certain proprietary rights to software programs and
other products that result from the Company's services under U.S. government
contracts or subcontracts. The U.S. government may disclose such information to
third parties, including competitors of the Company. In the case of
subcontracts, the prime contractors may also have certain rights to such
programs and products.

The Company may be the subject of claims of third parties which assert that
the Company's use of certain software programs, methodologies, procedures and
know-how infringes on the patent, copyright or

16
<PAGE>
other proprietary rights of such third parties and there can be no assurance
that the adverse resolution of one or more of these claims would not have a
material adverse effect on the Company's results of operations.

STRUCTURAL AND MARKET RISKS

ACQUISITIONS AND STRATEGIC ALLIANCES

While the Company has no present commitments or agreements as to any
specific acquisition transactions, the Company regularly evaluates potential
acquisition candidates. No assurance can be given as to whether the Company will
make acquisitions in the future, that past or future acquisitions will prove to
be successful or that the Company will successfully manage the growth
attributable to such acquisitions. Moreover, the Company may incur substantial
debt and intangible amortization expenses in making acquisitions.

The Company continues to establish strategic and marketing alliances in
order to expand its share of the commercial space and IT markets. These
alliances may not be exclusive, may be of limited duration and may not achieve
their objectives.

INFLUENCE BY EXISTING STOCKHOLDER

Upon completion of the Offerings, Dr. C.E. Velez, President and Chief
Executive Officer of the Company, will beneficially own 31.9% of the outstanding
shares (exclusive of shares beneficially owned by the ESOP) of the Company's
voting stock (30.2% if the Underwriters' over-allotment options are exercised in
full) and other executive officers, directors and the ESOP as a group will
beneficially own 13.8% of the outstanding shares of the Company's voting stock
(13.0% if the Underwriters' over-allotment options are exercised in full). See
"Principal Stockholders." Consequently, Dr. Velez and such executive officers,
directors and the ESOP as a group will continue to exercise significant
influence on the election of the directors of the Company and on the outcome of
all matters submitted to a vote of the Company's stockholders, as well as on the
Company's management, operations and policies.

Dr. Velez's influence on the affairs and actions of the Company may
discourage a future acquisition of the Company not approved by the Board of
Directors in which stockholders might otherwise receive a higher value for their
shares or which a substantial number of the Company's stockholders believe to be
in the best interests of all stockholders. As a result, stockholders who might
desire to participate in such a transaction may not have the opportunity to do
so. In addition, such influence may tend to discourage a change in control of
the Company or the removal of incumbent management. See "Description of Capital
Stock--Certain Charter Provisions."

EFFECT OF CERTAIN CHARTER PROVISIONS

The Company intends to amend the Company's Restated Articles of
Incorporation (the "Restated Charter") prior to the consummation of the
Offerings to, among other things, (i) authorize the issuance of preferred stock
without stockholder approval and upon such terms as the Board of Directors may
determine, (ii) prohibit business combinations involving the Company unless
certain conditions are met and (iii) classify the Board of Directors into three
classes consisting of an equal number of directors, or as close to equal as
possible, with each class serving staggered three-year terms. These provisions
could prohibit or delay a merger, takeover or other change in control of the
Company and therefore could discourage attempts to acquire the Company. See
"Description of Capital Stock."

DEPENDENCE ON MANAGEMENT AND OTHER KEY PERSONNEL

The Company's future success depends to a significant extent on the efforts
and abilities of its executive officers. Although the Company's senior
management has extensive experience, the loss of

17
<PAGE>
Dr. Velez or one or more of the Company's other senior executives could have a
material adverse effect on the Company's business, financial condition and
results of operations.

The Company believes that its future success also will depend significantly
upon its ability to attract, motivate and retain additional highly skilled
managerial, operational, and sales and marketing personnel. Competition for such
personnel is intense, and there can be no assurance that the Company will be
successful in attracting, assimilating and retaining the personnel it requires
to grow and operate profitably. See "Management--Executive Officers and
Directors" and "Business--Employees."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offerings, there has been no public market for the Common
Stock. Although application will be made for quotation of the Common Stock on
the NNM, there can be no assurance that an active trading market for the Common
Stock will develop or be sustained following the Offerings or that the market
price of the Common Stock will not decline below the initial public offering
price. The initial public offering price will be determined by negotiation
between the Company and the representatives of the Underwriters based upon
several factors and may not be indicative of future market prices. The price at
which the Common Stock will trade will depend upon a number of factors,
including, but not limited to, the Company's historical and anticipated
operating results and general market and economic conditions, some of which
factors are beyond the Company's control. Factors such as quarterly fluctuations
in the Company's financial and operating results, announcements by the Company
or others and developments affecting the Company, its products, its clients, the
markets in which it competes or the industry generally, also could cause the
market price of the Common Stock to fluctuate substantially. In addition, the
stock market has from time to time experienced extreme price and volume
fluctuations. These broad market fluctuations may adversely affect the market
price of the Common Stock. See "Underwriting."

DILUTION

Investors purchasing shares of Common Stock in the Offerings will incur
substantial and immediate dilution of $5.94 per share (assuming a public
offering price of $15.00 per share) in the pro forma net tangible book value of
the Common Stock from the public offering price. See "Dilution."

SHARES ELIGIBLE FOR FUTURE SALE; POTENTIAL FOR ADVERSE EFFECT ON STOCK PRICE

Sales of a substantial number of shares of Common Stock in the public market
or the prospect of such sales could adversely affect prevailing market prices
for the Common Stock and could have a material adverse effect on the Company's
ability to raise capital in the public markets. Upon completion of the
Offerings, the Company will have outstanding 7,993,885 shares of Common Stock
(assuming no exercise of the Underwriters' over-allotment option). Of these
shares, the 3,000,000 shares of Common Stock to be sold in the Offerings and
shares of Common Stock sold pursuant to the Limited Market Registration
(as hereinafter defined) will be freely tradable without restriction under the
Securities Act, except for any such shares which may be acquired by an
"affiliate" of the Company. Subject to certain "lock-up" agreements covering an
aggregate of shares held by certain existing stockholders of the Company and
the holders of the Notes, approximately shares of Common Stock are eligible
for sale in the public market pursuant to Rule 701 under the Securities Act and
an additional shares are eligible for sale in the public market subject to
compliance with the resale volume limitations and other restrictions of Rule 144
under the Securities Act. Promptly after the consummation of the Offerings, the
Company intends to file a registration statement under the Securities Act
covering the sale of 377,274 shares of Common Stock reserved for issuance under
the 1991 Plan. Upon consummation of the Offerings, there will be outstanding
options to purchase a total of 669,870 shares of Common Stock. See "Shares
Eligible for Future Sale." The Company intends to grant options to purchase
175,000 shares of Common Stock at an exercise price equal to the public offering
price.

18
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,000,000 shares of
Common Stock offered by it hereby, based upon an assumed initial public offering
price of $15.00 per share, are estimated to be $40.9 million ($47.1 million if
the Underwriters' over-allotment options are exercised in full). CTA intends to
use the net proceeds of the Offerings as follows: (i) for program investments
totalling approximately $16 million comprised of development expenses and
capital expenditures including approximately $8 million for the development of
STARbus and INDOSTAR and approximately $8 million for the development and
commercial roll-out of GEMtrak, (ii) approximately $15 million (plus accrued
interest from September 30, 1996) for repayment of the Notes and (iii) for other
capital expenditures and general corporate purposes. The actual use of the net
proceeds of the Offerings will be dependent on the timing of the Company's
funding requirements for its various projects and the availability of other
sources of funding.

In December 1993, the Company issued $15.0 million of Notes under a note
agreement (the "Note Agreement"). The Notes bear interest at 12.0% per annum,
payable quarterly. Scheduled principal repayments of the Notes commence in 1998
and are as follows: $3.0 million in each of 1998 and 1999, $4.0 million in 2000
and $5.0 million in 2001. The Company and the holders of the Notes have agreed
that, upon the consummation of the Offerings, the Company will (i) repay the
aggregate principal amount of the Notes (plus accrued interest) and (ii) issue
433,259 shares of Common Stock to the holders of the Notes in payment of
Contingent Interest that will become payable as a result of the Offerings. The
shares issued to the holders of the Notes will be subject to "lock-up
agreements" covering transactions in the shares for a period of 365 days after
the date of this Prospectus. See "Shares Eligible for Future Sale."

Pending application of the proceeds as described above, the Company intends
to invest such proceeds in government securities and other short-term
interest-bearing securities or may temporarily reduce the balance outstanding
under its Credit Facility.

DIVIDEND POLICY

The Company does not intend to pay cash dividends on the Common Stock in the
foreseeable future. The current policy of the Company's Board of Directors is to
retain all earnings, if any, to finance the operations and expansion of the
Company's business. The Company's existing Credit Facility prohibits, and the
new credit facility is expected to prohibit, the Company from paying cash
dividends. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

19
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1996 on an actual basis, and on a pro forma basis as adjusted to give effect
to (i) the issuance by the Company of 3,000,000 shares of Common Stock offered
hereby at an assumed public offering price of $15.00 per share and application
of the estimated net proceeds therefrom as described in "Use of Proceeds" and
(ii) the issuance of 433,259 shares of Common Stock to the holders of the Notes
in payment of Contingent Interest upon the consummation of the Offerings. This
table should be read in conjunction with the consolidated financial statements
and notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
-----------------------
PRO FORMA
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS EXCEPT
SHARE DATA)
<S> <C> <C>
Short-term debt: Revolving credit facility...................................... $ 20,000 $ 20,000
---------- -----------
Long-term debt: Subordinated notes.............................................. 15,000 --
---------- -----------

Stockholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares
authorized, none issued actual or pro forma as adjusted(1).................. -- --
Common stock, $.01 par value; 20,000,000 shares
authorized; 4,383,212 issued and outstanding actual;
7,816,471 issued and outstanding pro forma as adjusted(2)................... 50 78
Additional paid-in capital.................................................... 8,798 50,598
Retained earnings(3).......................................................... 22,545 20,315
Treasury stock, at cost (616,788 shares)...................................... (5,571) --
Notes receivable from employees............................................... (361) (361)
---------- -----------
Total stockholders' equity.................................................. 25,461 70,630
---------- -----------
Total capitalization............................................................ $ 60,461 $ 90,630
---------- -----------
---------- -----------
</TABLE>

- ------------------------

(1) Gives effect to the authorization of 1,000,000 shares of preferred stock
pursuant to an amendment to the Restated Charter to be effected prior to the
consummation of the Offerings. See "Description of Capital Stock--Amendments
to the Restated Charter."

(2) Does not include 670,026 shares of Common Stock issuable upon the exercise
of outstanding stock options. An aggregate of 667,453 additional shares of
Common Stock have been reserved for future grants under the 1991 Plan.

(3) The issuance of 433,259 shares to the holders of the Notes will result in a
Contingent Interest expense in the fourth quarter of 1996 of $3.9 million
($2.2 million on an after-tax basis) based upon an assumed public offering
price of $15.00 per share.

20
<PAGE>
DILUTION

The net tangible book value of the Company at June 30, 1996 was $19.7
million or approximately $4.48 per share. Net tangible book value per share
represents the amount of total tangible assets less total liabilities, divided
by the aggregate number of shares of Common Stock outstanding as of June 30,
1996. Without taking into account any changes in the Company's net tangible book
value after June 30, 1996, other than to give effect to (i) the receipt of the
net proceeds from the sale of the 3,000,000 shares of Common Stock offered
hereby, assuming an initial public offering price of $15.00 per share,
application of the estimated net proceeds therefrom as described in "Use of
Proceeds" and after deducting the estimated underwriting discount and offering
expenses to be paid by the Company and (ii) the issuance of 433,259 shares of
Common Stock to the holders of the Notes in payment of Contingent Interest that
will become payable as a result of the Offerings, the pro forma net tangible
book value of the Company at June 30, 1996 would have been $64.9 million, or
$8.29 per share. This represents an immediate increase in net tangible book
value of $3.81 per share of Common Stock to existing stockholders and an
immediate dilution to net tangible book value of approximately $6.71 per share
to new investors purchasing shares in the Offerings. See "Risk
Factors--Dilution."

The following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............................. $ 15.00
Net tangible book value per share before the Offerings.................... $ 4.48
Pro forma increase in net tangible book value per share attributable to
issuance of shares to holders of the Notes.............................. 0.87
Pro forma increase in net tangible book value per share attributable to
new investors........................................................... 2.94
Pro forma net tangible book value per share after the Offerings............. 8.29
---------
Pro forma net tangible book value dilution per share to new investors....... $ 6.71
---------
---------
</TABLE>

The following table sets forth, on a pro forma basis as of June 30, 1996,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by
existing stockholders, by the holders of the Notes receiving shares of Common
Stock upon the consummation of the Offerings and by the new investors purchasing
shares of Common Stock from the Company in the Offerings (before deducting
estimated underwriting discount and offering expenses):

<TABLE>
<CAPTION>
SHARES OWNED TOTAL CONSIDERATION PAID AVERAGE
----------------------- --------------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................................. 4,383,212 56% $ 8,848,000 15% $ 2.02
Holders of the Notes................................... 433,259 6 6,499,000 11 15.00
New investors.......................................... 3,000,000 38 45,000,000 74 15.00
---------- ----- -------------- -----
Total.................................................. 7,816,471 100% $ 60,347,000 100% $ 7.72
---------- ----- -------------- -----
---------- ----- -------------- -----
</TABLE>

The foregoing tables assume no exercise of the Underwriters' over-allotment
option and exclude shares issuable upon exercise of options outstanding at June
30, 1996. The "total consideration paid" by the holders of the Notes consists of
the issuance of 433,259 shares of Common Stock at an assumed public offering
price of $15.00 per share in payment of Contingent Interest on the Notes. As of
August 31, 1996, there were outstanding options to purchase an aggregate of
495,026 shares of Common Stock at a weighted average exercise price of $7.38 per
share. The Company intends to grant options to purchase 175,000 shares of Common
Stock at an exercise price equal to the public offering price. To the extent
that outstanding options are exercised in the future, there will be further
dilution to new investors.

21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following selected consolidated financial data for each of the years in
the five year period ended December 31, 1995 and as of December 31, 1991, 1992,
1993, 1994 and 1995 have been derived from consolidated financial statements of
the Company. The consolidated financial statements for the four years ended
December 31, 1992 through 1995 have been audited by Ernst & Young LLP,
independent auditors. The consolidated financial statements for the year ended
December 31, 1991 were audited by another national independent accounting firm.
The selected consolidated financial data for the six months ended June 30, 1995
and 1996 and as of June 30, 1995 and 1996 are derived from unaudited financial
statements. The unaudited financial statements include all adjustments which the
Company considers necessary for a fair presentation of the financial position
and the results of operations for these periods and as of such dates. Operating
results for the six months ended June 30, 1996 are not necessarily indicative of
the results that may be expected for the entire year ending December 31, 1996.
The data should be read in conjunction with the consolidated financial
statements, related notes, and other financial information included herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1991 1992(1) 1993 1994 1995 1995 1996(2)
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Contract revenues..................... $ 94,698 $ 115,109 $ 125,072 $ 143,071 $ 217,007 $ 102,852 $ 100,691
Cost of contract revenues............. 79,660 97,680 109,102 121,675 196,656 94,206 99,180
Selling, general and administrative
expenses............................ 7,479 8,574 7,169 8,950 9,798 4,105 3,905
Other expense......................... 1,657 1,259 1,492 833 318 224 639
--------- --------- --------- --------- --------- --------- ---------
Operating profit (loss)............... 5,902 7,596 7,309 11,613 10,235 4,317 (3,033)
Interest expense...................... 82 461 992 3,627 4,116 1,692 2,304
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes..... 5,820 7,135 6,317 7,986 6,119 2,625 (5,337)
Provision (benefit) for income
taxes............................... 2,314 3,252 2,779 3,434 2,448 1,123 (2,295)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing
operations.......................... 3,506 3,883 3,538 4,552 3,671 1,502 (3,042)
Income (loss) from discontinued
operations, net of income
taxes(3)............................ 355 490 1,012 (93) (1,725) (181) --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)..................... $ 3,861 $ 4,373 $ 4,550 $ 4,459 $ 1,946 $ 1,321 $ (3,042)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
EARNINGS (LOSS) PER SHARE:
Continuing operations............... $ 0.76 $ 0.82 $ 0.75 $ 0.95 $ 0.78 $ 0.31 $ (0.66)
Discontinued operations............. 0.08 0.10 0.22 (0.02) (0.37) (0.04) --
--------- --------- --------- --------- --------- --------- ---------
Earnings (loss) per share............. $ 0.84 $ 0.92 $ 0.97 $ 0.93 $ 0.41 $ 0.27 $ (0.66)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Weighted average number of shares
outstanding, including common stock
equivalents......................... 4,597 4,750 4,689 4,783 4,709 4,827 4,593

DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............. $ 1,429 $ 269 $ 1,390 $ 3,902 $ 235 $ 2,466 $ 6,504
Working capital....................... 15,476 16,332 24,987 20,638 19,713 17,476 14,590
Total assets.......................... 35,584 60,015 74,346 89,816 91,530 92,512 95,053
Short-term debt....................... 165 10,917 5,524 15,750 17,074 16,624 20,000
Long-term debt........................ 4,611 7,670 20,418 17,765 17,431 17,374 18,127
Total stockholders' equity............ 15,327 19,704 24,417 27,950 28,773 29,762 25,461
</TABLE>

- ------------------------

(1) In July 1992, the Company acquired a 79% interest in CTASS for $10.3
million, $4.9 million of which was paid in cash with the remainder financed
by the selling shareholders at an imputed interest rate of 8.5% per annum.
Principal payments on the acquisition notes of $3.0 million and $2.4 million
were paid in July 1993

22
<PAGE>
and July 1994, respectively. In July 1994, the Company acquired the
remaining CTASS common stock for $2.5 million, payable 50% in cash and 50%
in Common Stock. The Company paid the cash portion with payments of
$500,000, $375,000 and $375,000 in 1994, 1995 and 1996, respectively, and
the Common Stock portion with issuances of 57,293 shares in 1994, 39,936
shares in 1995 and 39,515 shares in 1996. The number of shares of Common
Stock issued as payment were based on the then current fair market value of
the Common Stock. The consolidated financial statements of the Company
reflect the results of operations of CTASS since July 1992.

(2) Gives effect to a reduction in reserves and operating profit due to (i) $2.8
million ($1.6 million after tax) charge related to a $6.7 million addition
to reserves for estimates of potential cost increases at program completion
on the INDOSTAR program and (ii) a $2.2 million ($1.3 million after tax)
charge on the Eastern Zone contract.

(3) During 1995, the Company discontinued the operations of its Simulation
Systems Division, which manufactured aircraft flight simulators for sale or
lease, and sold its assets to a company principally owned by one of the
Company's principal stockholders. Results of operations have been restated
for the sale of the Simulation Systems Division. See "Certain Transactions"
and Note 13 to the Consolidated Financial Statements. The assets of the
division consisted primarily of a cockpit flight simulator and various fixed
assets, which together had an aggregate book value of $3.1 million, net of
accumulated depreciation. These assets were sold in September 1995 for two
notes secured by the assets with an aggregate principal amount of $2.2
million, bearing interest at the Company's borrowing rate and a 15% minority
interest in the entity acquiring the division, which has been assigned a
value of $0.2 million.

23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS
PROSPECTUS.

OVERVIEW

CTA designs, manufactures and integrates small communications and
earth-sensing satellites, and provides advanced IT services principally to
government customers. CTA is a turn-key provider of complete satellite systems
and is preparing to enter the market for wireless data services. During the past
three years, CTA's total revenues have increased from $125.1 million in 1993 to
$217.0 million in 1995.

In 1994, the Company established its three principal business units: Space
and Telecommunications Systems, Information Technology Services and Mobile
Information and Communications Services. The Space and Telecommunications
Systems business principally designs and manufactures small LEO and GEO
satellites and related support systems and, when applicable, procures launch
services. The Information Technology Services business comprises the Company's
historical business base of providing IT services for a variety of customers.
The Mobile Information and Communications Services business has been formed to
pursue commercial applications of the Company's proprietary technology in
innovative IT and space-based or wireless solutions for a variety of
applications, including mobile asset tracking and remote fixed asset monitoring.

Approximately 66% of the Company's revenues for the six months ended June
30, 1996 and approximately 69% of its revenues in 1995 were derived from
contracts with the U.S. government (or as subcontractor to companies doing
business with the U.S. government). This percentage has declined from
approximately 95% of the Company's revenues in 1994 as the Company has expanded
its commercial and international operations.

In July 1992, the Company acquired a 79% interest in CTASS for $10.3
million, $4.9 million of which was paid in cash, with the remainder financed by
the selling shareholders at an imputed interest rate of 8.5% per annum.
Principal payments on the acquisition notes of $3.0 million and $2.4 million
were paid in July 1993 and July 1994, respectively. In July 1994, the Company
acquired the remaining CTASS common stock for $2.5 million, payable 50% in cash
and 50% in Common Stock. The Company paid the cash portion with payments of
$500,000, $375,000 and $375,000 in 1994, 1995 and 1996, respectively, and the
Common Stock portion with the issuance of 57,293 shares in 1994, 39,936 shares
in 1995 and 39,515 shares in 1996. During the past three years, the Company's
Space and Telecommunications Systems revenues have increased from $32.9 million
in 1993 to $107.6 million in 1995.

The Company's acquisition of CTASS in 1992 ended its eligibility for
government programs that assist small businesses, with the last significant
contract awarded under these programs completed in early 1996. Since 1992, the
Company has replaced contracts awarded under these programs with IT contracts
awarded under full and open competition, growing the share of IT revenue derived
from competitive awards from 19% in 1992 to an estimated 97% in 1996. Reflecting
the success of this transition, CTA's IT revenues during this period rose from
$92.1 million in 1993 to $109.4 million in 1995.

CTA has invested over $6 million in developing its STARbus small satellite
system and intends to spend an additional $8 million to complete the development
of STARbus and INDOSTAR, the first satellite in the STARbus family. In addition,
CTA is currently developing GEMtrak, an automated tracking and cargo status data
system.

24
<PAGE>
INDOSTAR and $2.2 million ($1.3 million after tax) due to changes in the
estimated contract value on the Eastern Zone contract. As a result of these
charges, the Company was required to obtain waivers from its Credit Facility
lender and the holders of the Notes. Accordingly, the Company amended the
restrictive debt covenant provisions of the Credit Facility, while at the same
time increasing the amount available under the Credit Facility. There can be no
assurance that the Company will not sustain operating losses in the future that
might require the Company to request additional covenant waivers to its Credit
Facility, its successor facility or covenants relating to future long-term debt,
or that such waivers, if requested, would be granted. As a result of the
issuance of 433,259 shares of Common Stock to the holders of Notes in payment of
Contingent Interest that will become payable as a result of the Offerings, the
Company will incur a one-time interest expense in the fourth quarter of 1996 of
approximately $3.9 million ($2.2 million after tax), based upon an assumed
public offering price of $15.00 per share, which, when combined with charges
associated with the INDOSTAR program and the Eastern Zone contract, is expected
to result in a net loss for 1996.

RESULTS OF OPERATIONS

The following tables set forth certain items in the Company's Statements of
Income as a percentage of contract revenues:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Contract revenues.......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of contract revenues.................................. 87.3 85.0 90.6 91.6 98.5
Selling, general and administrative expenses............... 5.7 6.3 4.5 4.0 3.9
Other expense.............................................. 1.2 0.6 0.2 0.2 0.6
--------- --------- --------- --------- ---------
Operating profit (loss).................................... 5.8 8.1 4.7 4.2 (3.0)
Interest expense........................................... 0.8 2.5 1.9 1.6 2.3
--------- --------- --------- --------- ---------
Income (loss) before income taxes.......................... 5.0 5.6 2.8 2.6 (5.3)
Provision (benefit) for income taxes....................... 2.2 2.4 1.1 1.1 (2.3)
--------- --------- --------- --------- ---------
Income (loss) from continuing operations................... 2.8 3.2 1.7 1.5 (3.0)
Income (loss) from discontinued operations, net of income
taxes.................................................... 0.8 (0.1) (0.8) (0.2) --
--------- --------- --------- --------- ---------
Net income (loss).......................................... 3.6% 3.1% 0.9% 1.3% (3.0)%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

25
<PAGE>
The following tables set forth certain items in the Company's Statements of
Income by business segment:

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
---------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS OF DOLLARS)
Contract revenues:
Information Technology Services.................... $ 92,133 $ 107,450 $ 109,361 $ 54,372 $ 49,727
Space and Telecommunications Systems............... 32,939 35,621 70,675 30,858 31,899
Launch Support................................... -- -- 36,971 17,622 19,065
Mobile Information and Communications Services..... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
$ 125,072 $ 143,071 $ 217,007 $ 102,852 $ 100,691
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Operating profit (loss):
Information Technology Services.................... $ 8,352 $ 10,600 $ 5,883 $ 2,825 $ 575
Space and Telecommunications Systems............... 449 1,846 4,128 980 (2,267)
Launch Support................................... -- -- 1,559 736 102
Mobile Information and Communications Services..... -- -- (1,017) -- (804)
Other expenses..................................... (1,492) (833) (318) (224) (639)
---------- ---------- ---------- ---------- ----------
$ 7,309 $ 11,613 $ 10,235 $ 4,317 $ (3,033)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>

SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995

CONTRACT REVENUES. Contract revenues declined 2.1% to $100.7 million for
the six months ended June 30, 1996 from $102.9 million for the comparable period
in 1995, as a result of a $4.6 million net decrease in IT revenues, which was
partially offset by a $2.5 million increase in Space and Telecommunications
Systems revenues.

IT contract revenues for the six months ended June 30, 1996 decreased 8.5%
to $49.7 million from $54.4 million for the comparable period in 1995. Revenues
from contracts awarded in full and open competition increased to $48.6 million
or 97.8% of IT revenues for the six months ended June 30, 1996 from $41.5
million or 76.3% for the comparable period in 1995.

In the first quarter of 1996, the Company completed its five-year prime
contract with the NAWC at China Lake, California, the last of the Company's
significant contracts awarded during its period of eligibility for small
business awards, which ended in 1992. This contract represented $10.8 million in
revenues for the six months ended June 30, 1995. Although it was ineligible to
rebid for this contract as the prime contractor, the Company is a major
subcontractor to the small business prime contractor who was awarded the NAWC
follow-on contract in April 1996, from which the Company receives approximately
45% of the contract revenues. For the six months ended June 30, 1996, the
Company received revenues of $5.0 million from the original NAWC contract and
$1.3 million in revenues from the follow-on contract. The Company revised its
estimates of the full contract value and profitability of its Eastern Zone
contract with the GSA, resulting in a reduction in revenues and operating profit
for the six months ended June 30, 1996 of $2.2 million, reflecting the Company's
current estimate of the contract's profit at completion. The Company has entered
into an agreement with a third party to assume the Company's obligations under
this contract, subject to GSA's approval and novation. If the contract novation
is completed, the Company estimates its current exposure under the contract will
be limited to approximately $1 million currently recorded as an unbilled
receivable for which the Company may have a claim against the U.S. government
and against which the Company has certain general reserves.

Total Space and Telecommunications Systems contract revenues for the six
months ended June 30, 1996 increased 5.1% to $51.0 million from $48.5 million
for the comparable period in 1995. Space and Telecommunications Systems contract
revenues exclusive of Launch Support for the six months ended

26
<PAGE>
June 30, 1996 increased 3.4% to $31.9 million from $30.9 million for the
comparable period in 1995. A $4.2 million increase (net of the $2.8 million
reduction in revenues discussed above) in the INDOSTAR contract and a $4.7
million increase in revenues attributable to the NASA Goddard Space Flight
Center Code 740 contract were offset by an $8.0 million decline in revenues due
to diminishing activity in the final stages of the SSTI contract with NASA.
Launch Support contract revenues for the six months ended June 30, 1996
increased 8.2% to $19.1 million from $17.6 million for the comparable period in
1995. All of the increase in the Launch Support revenues relates to the
launch-related activities of the INDOSTAR and SSTI programs. The Company
increased reserves for estimates of costs at program completion on the INDOSTAR
program that resulted in a $2.8 million reduction in revenues and operating
profit.

COST OF CONTRACT REVENUES. The cost of contract revenues for the six months
ended June 30, 1996 increased to $99.2 million or 98.5% of contract revenues
from $94.2 million or 91.6% for the comparable period in 1995. This increase in
cost of contract revenues as a percentage of contract revenues was driven
primarily by reduction in revenues related to reserves added to estimates at
completion on the INDOSTAR program and reduction in revenues related to changes
in the estimated contract value on the Eastern Zone contract, as well as by the
completion of several older, more profitable contracts in the Company's IT
business awarded under various small business programs. Without giving effect to
the reduction in revenues due to the INDOSTAR contract and the Eastern Zone
contract, the cost of contract revenues as a percentage of contract revenues for
the six months ended June 30, 1996 was 93.8%.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses ("SG&A") for the six months ended June 30, 1996 declined
4.9% to $3.9 million, or 3.9% of contract revenues, from $4.1 million or 4.0% of
contract revenues for the comparable period in 1995. Slightly higher than
anticipated costs in preparing and submitting bids in the 1995 period and
improved indirect cost control in 1996 accounted for the change.

OTHER EXPENSES. Other expenses for the six months ended June 30, 1996
increased to $0.6 million from $0.2 million for the comparable period in 1995.

OPERATING PROFIT (LOSS). The Company had an operating loss of $3.0 million
for the six months ended June 30, 1996 compared to an operating profit of $4.3
million for the comparable period in 1995.

INTEREST EXPENSE. Net interest expense increased to $2.3 million for the
six months ended June 30, 1996 from $1.7 million for the comparable period in
1995. This increase resulted from higher average balances on the revolving line
of credit under the Credit Facility due primarily to additional investments in
STARbus and the development of GEMtrak.

PROVISION (BENEFIT) FOR INCOME TAXES. The Company had a $2.3 million tax
benefit for the six months ended June 30, 1996 as compared to a $1.1 million tax
provision for the comparable period in 1995. This change resulted from the loss
sustained by the Company during the first half of 1996.

NET INCOME (LOSS). The Company had a net loss of $3.0 million for the six
months ended June 30, 1996 as compared to net income of $1.3 million for the
comparable period in 1995.

1995 COMPARED WITH 1994

CONTRACT REVENUES. Contract revenues increased 51.7% to $217.0 million in
1995 from $143.1 million in 1994, as a result of a $1.9 million increase in IT
revenues and a $72.0 million increase in Space and Telecommunications Systems
revenues.

IT contract revenues increased 1.8% to $109.4 million in 1995 from $107.5
million in 1994. Revenues from contracts awarded in full and open competition
increased to $89.1 million or 81.4% of IT revenues in 1995 from $66.3 million or
61.7% in 1994.

27
<PAGE>
Total Space and Telecommunications Systems contract revenues in 1995
increased 202.2% to $107.6 million from $35.6 million in 1994. Space and
Telecommunications Systems contract revenues exclusive of Launch Support
increased 98.4% to $70.7 million in 1995 from $35.6 million in 1994. This
increase in revenues is primarily due to $19.7 million from the INDOSTAR
program, $16.6 million from the NASA SSTI program and $4.3 million from the
EarthWatch satellite program. Launch Support contract revenues were $37.0
million in 1995, the first year in which the Company recognized revenues related
to launch activities.

The Mobile Information Communications Services business recorded no revenues
in 1995. This business suffered a significant setback when the Company
experienced the loss of its GEMstar satellite due to a launch failure in August
1995. The Company's total investment in the GEMnet program was $14.4 million of
which $6.1 million was recovered from insurance proceeds. The remaining GEMnet
investment relates to non-recurring engineering, ground systems and software
that management believes has continuing value in its planned GEMnet system. If
the Company is unable to develop the GEMnet concept, the Company may be required
to expense substantially all or a portion of its $7.3 million GEMnet investment.
The failure of the market to develop or of the Company to develop sufficient
revenues to support a profitable business could cause the Company to charge to
expenses some or all of its investments in assets dedicated to GEMnet and,
therefore, could have a material adverse effect on the Company's results of
operations.

COST OF CONTRACT REVENUES. Cost of contract revenues increased to $196.7
million or 90.6% of contract revenues in 1995 from $121.7 million or 85.0% of
contract revenues in 1994. This increase in cost of contract revenues as a
percentage of contract revenues resulted from approximately $1 million in start-
up costs with no related revenues recorded by the Mobile Information and
Communications Services business and lower margins on $37.0 million in Launch
Support for the INDOSTAR and SSTI programs and on new contracts awarded in 1995.
Other factors contributing to a decrease in contract margin include higher than
anticipated start-up costs on the Company's Eastern Zone contract in the IT
business and the NASA Code 740 contract in the Space and Telecommunication
Systems business, as well as the replacement of expiring high-margin contracts
with new contracts bid at lower margins.

SG&A. SG&A increased to $9.8 million or 4.5% of contract revenues from $9.0
million or 6.3% of contract revenues in 1994 due primarily to increased bidding
and proposal expenditures.

OTHER EXPENSE. Other expenses decreased to $0.3 million in 1995 from $0.8
million in 1994.

OPERATING PROFIT (LOSS). Operating profit declined 11.9% to $10.2 million
in 1995 from $11.6 million in 1994.

INTEREST EXPENSE. Net interest expense increased to $4.1 million in 1995
from $3.6 million in 1994. This increase resulted primarily from higher balances
on the line of credit under the Credit Facility due to increased investment in
space-related technologies, including the GEMnet program, and to higher average
interest rates during 1995.

PROVISION (BENEFIT) FOR INCOME TAXES. The provision for income taxes
declined to $2.4 million in 1995 from $3.4 million in 1994 as a result of a
reduction in the Company's effective tax rate.

INCOME (LOSS) FROM CONTINUING OPERATIONS. As a result of the foregoing,
income from continuing operations in 1995 decreased 19.4% to $3.7 million from
$4.6 million in 1994.

INCOME (LOSS) FROM DISCONTINUED OPERATIONS. During 1995, the Company
discontinued the operations of its Simulation Systems Division, which
manufactured aircraft flight simulators for sale or lease. Loss from
discontinued operations in 1995 was $1.7 million, net of tax benefits of $1.2
million, as compared to an operating loss for the Simulation Systems Division of
$0.1 million in 1994. The $1.7 million after-tax loss recorded in 1995 consisted
of a loss from operations of $1.2 million and a loss from disposal of $0.5

28
<PAGE>
million. The assets of the division consisted primarily of a cockpit flight
simulator and various fixed assets, which had an aggregate book value of $3.1
million, net of accumulated depreciation. These assets were sold in September
1995 for two notes secured by the assets with an aggregate principal amount of
$2.2 million, bearing interest at the Company's borrowing rate and a 15%
minority interest in the entity acquiring the division, which has been assigned
a value of $0.2 million.

NET INCOME (LOSS). Net income in 1995 decreased 56.4% to $1.9 million from
$4.5 million in 1994.

1994 COMPARED WITH 1993

CONTRACT REVENUES. Contract revenues increased 14.4% to $143.1 million in
1994 from $125.1 million in 1993, as a result of a $15.3 million increase in IT
revenues and a $2.7 million increase in Space and Telecommunications Systems
revenues.

Contract revenues for the IT business increased 16.6% to $107.5 million in
1994 from $92.1 million in 1993 due primarily to $9.5 million in revenues from
the Company's Eastern Zone contract, which was awarded in April 1994. Revenues
from contracts awarded in full and open competition increased to $66.3 million
or 61.7% of IT revenues in 1994 from $28.6 million or 31.1% in 1993.

Space and Telecommunications Systems revenues increased 8.1% to $35.6
million in 1994 from $32.9 million in 1993, due primarily to increased activity
under the INDOSTAR contract in 1994.

COST OF CONTRACT REVENUES. The cost of contract revenues increased to
$121.7 million in 1994 from $109.1 million in 1993 and as a percentage of
contract revenues decreased to 85.0% of contract revenues in 1994 from 87.3% of
contract revenues in 1993. The decrease in cost of contract revenues as a
percentage of contract revenues resulted primarily from an increase in contract
revenues in 1994 without a corresponding increase in fixed costs and a
cumulative effect adjustment of approximately $1 million for refinements in
profit estimates on certain IT contracts in process at the beginning of the
year.

SG&A. SG&A increased in 1994 to $9.0 million or 6.3% of contract revenues
from $7.2 million or 5.7% of contract revenues in 1993.

OTHER EXPENSE. Other expenses decreased to $0.8 million in 1994 from $1.5
million in 1993, due primarily to lower unallocable expenses in 1994 and the
reversal of $0.6 million of certain contract reserves and allowances in 1994.

OPERATING PROFIT (LOSS). Operating profit increased 58.9% to $11.6 million
in 1994 from $7.3 million in 1993.

INTEREST EXPENSE. Net interest expense increased to $3.6 million in 1994
from $1.0 million in 1993, due primarily to the Company's issuance of $15.0
million aggregate principal amount of the Notes in December 1993.

PROVISION (BENEFIT) FOR INCOME TAXES. The provision for income taxes
increased to $3.4 million in 1994 from $2.8 million in 1993, due primarily to
changes in the allocation of taxable income among states with different tax
rates.

INCOME (LOSS) FROM CONTINUING OPERATIONS. Income from continuing operations
in 1994 increased 28.7% to $4.6 million from $3.5 million in 1993.

INCOME (LOSS) FROM DISCONTINUED OPERATIONS. Operation of the Company's
Simulation Systems Division, which was discontinued during 1995, produced an
after-tax loss of $0.1 million in 1994, as compared to an after-tax profit of
$1.0 million in 1993.

NET INCOME (LOSS). Net income in 1994 decreased 2.0% to $4.5 million from
$4.6 million in 1993.

29
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

The Company's net income (loss) was ($3.0 million) for the six months ended
June 30, 1996 and $1.9 million, $4.5 million and $4.6 million in 1995, 1994 and
1993, respectively. Its cash flow provided by (used in) operating activities was
$5.8 million for the six months ended June 30, 1996 and $2.4 million, $1.4
million and ($1.1 million) in 1995, 1994 and 1993, respectively. The principal
factors accounting for the provision (use) of cash for the six months ended June
30, 1996 were $2.0 million of depreciation and amortization expense and changes
in working capital accounts generating $6.3 million of cash. The principal
factors accounting for the provision (use) of cash in 1995 were a $0.7 million
loss on the disposal of the Simulation Systems Division, $3.3 million of
depreciation and amortization expense, ($1.0 million) provision for receivable
allowances, $1.1 million of accrued interest and changes in working capital
accounts using $4.0 million of cash. The principal factors accounting for the
provision (use) of cash in 1994 were $2.2 million of depreciation and
amortization expense, $1.0 million accrued interest, $0.7 million other non cash
expenses and changes in working capital accounts using $6.8 million of cash. The
principal factors accounting for the provision (use) of cash in 1993 were $3.0
million of depreciation and amortization expense, $1.1 million provision for
receivable allowances, $0.8 million other non cash expenses and changes in
working capital accounts using $10.5 million of cash.

Cash used for investing activities totaled $2.8 million for the six months
ended June 30, 1996 and $5.2 million, $6.4 million and $4.2 million in 1995,
1994 and 1993, respectively. The changes from period to period primarily relate
to fluctuations in the acquisition of furniture and equipment and costs incurred
for software development for sale to commercial customers. Additions to
furniture and equipment were $2.8 million for the six months ended June 30, 1996
and $4.3 million, $5.1 million and $3.7 million in 1995, 1994 and 1993,
respectively. Software development expenditures were $0.1 million for the six
months ended June 30, 1996 and $0.8 million in each of the years 1995 and 1994.
The Company had no software development expenditures in 1993. Information on the
allocation of capital expenditures and other identifiable assets between
businesses is provided in Note 15 to the Consolidated Financial Statements.

Cash from financing activities of $3.3 million for the six months ended June
30, 1996 and ($0.9 million), $7.5 million and $6.4 million in 1995, 1994 and
1993, respectively, are primarily provided by borrowings under the Credit
Facility and proceeds from the issuance of the Notes in December 1993, and were
offset by the repayment of acquisition notes, for the purchase of treasury stock
for the employee stock purchase plan and for the payment of shares of Common
Stock for the remaining minority interest in CTASS. Net purchases of treasury
stock were $0.3 million for the six months ended June 30, 1996 and $2.0 million,
$2.2 million and $0.2 million in 1995, 1994 and 1993, respectively.

In December 1993, the Company entered into the Note Agreement providing for
the issuance of $15.0 million in aggregate principal amount of the Notes. The
Notes bear interest at 12.0% per annum, payable quarterly. The Company will use
approximately $15 million of the net proceeds of the Offerings to repay the
Notes (plus accrued interest from September 30, 1996) and will issue 433,259
shares of Common Stock to the holders of the Notes in payment of Contingent
Interest that will become payable as a result of the Offerings. See "Use of
Proceeds." As a result of the issuance of the 433,259 shares, the Company will
record a one-time interest expense of approximately $3.9 million ($2.2 million
after tax) in the fourth quarter of 1996.

The Credit Facility provides the availability to borrow up to $32.0 million,
which includes letters of credit of up to $10.0 million. In addition, the Credit
Facility requires the Company to comply with certain restrictive covenants,
including maintaining a minimum tangible net worth, current ratio, interest
coverage ratio and limiting capital expenditures to no more than $6.0 million in
a year, and which prohibit the payment of dividends and the incurrence of
additional debt. The Credit Facility expires on December 9, 1996. The Company
has entered into negotiations for a $50.0 million secured credit facility to
replace the Credit Facility.

30
<PAGE>
The average daily loan balances under the Credit Facility were $20.3 million
for the six months ended June 30, 1996 and $14.2 million, $13.6 million and $9.2
million for 1995, 1994 and 1993, respectively. The weighted average interest
rate was 6.2%, 6.1%, 7.6% and 6.8% for 1993, 1994, 1995, and the six months
ended June 30, 1996, respectively. At August 31, 1996, $22.0 million was
outstanding under the Credit Facility and there were no letters of credit
outstanding.

Due to certain adjustments to profit recorded in the first quarter of 1996,
the Company was not, as of March 31, 1996, in compliance with certain
restrictive debt covenants of the Credit Facility or the Note Agreement.
Accordingly, the Company amended the restrictive debt covenant provisions of the
Credit Facility, while at the same time increasing the amount available under
the Credit Facility. Similarly, due to the adjustments in profit, the Company
sought and received 90-day waivers, through June 30, 1996, to certain of the
restrictive debt covenants contained in the Note Agreement from the holders of
the Notes. Since that time, the Company has received additional 90-day waivers
effective through September 30, 1996, to the applicable restrictive debt
covenants of the Note Agreement. As of June 30, 1996, the Company was in full
compliance with the terms of the Credit Facility, as amended. However, there can
be no assurance that the Company will continue to be in compliance therewith in
the future. See "Risk Factors--Liquidity and Capital Requirements."

The Company expects funds for capital expenditures for 1996 to be provided
mainly from cash flow from operations, borrowings under its Credit Facility and
the net proceeds of the Offerings. Planned capital expenditures for 1996 are
$4.3 million, of which $2.5 million relates to planned expenditures for INDOSTAR
and $1.8 million for laboratory equipment, computer systems, software and
furniture and leasehold improvements to maintain and improve the Company's
facilities and technological base. It is estimated that up to an additional $1.0
million could be spent in the second half of 1996 if the Company is awarded
certain contracts. For the six months ended June 30, 1996, the Company's capital
expenditures totalled $2.8 million.

The Company's future business requirements and growth plans will require
significant additional capital. While the Company believes that working capital,
cash flow from operations, available bank borrowings and the net proceeds of the
Offerings will provide adequate funds for continued operations through the end
of 1997, additional sources of capital will be required to continue to fund the
Company's future business requirements and growth plans, including its strategic
initiatives of expanding its Space and Telecommunications Systems and its Mobile
Information and Communications Services businesses. Accordingly, the Company
expects that it will need to incur indebtedness or raise additional equity
capital to fund its anticipated growth. There can be no assurance that the
Company will be able to obtain such financing on favorable terms or at all.

31
<PAGE>
BUSINESS

CTA designs, manufactures and integrates small communications and
earth-sensing satellites, and provides advanced IT services principally to
government customers. The convergence of CTA's unique strengths in space,
information systems and communications technologies has positioned the Company
to address space-based telecommunications markets as a turn-key provider of
complete satellite systems and has opened opportunities for the Company as a
wireless data service provider. In addition, the Company is well-positioned for
continued growth in the civil and commercial IT services markets. During the
past three years, CTA's total revenues have increased from $125.1 million in
1993 to $217.0 million in 1995. At June 30, 1996, the Company had total backlog
of approximately $535 million.

The Company's satellites perform a variety of commercial, scientific and
military missions, including communications, DBS and space-based imaging. CTA
satellites have a record of 100% mission success after reaching orbit. As a
complete space systems manufacturer, the Company also designs and manufactures
environmental monitoring sensors, advanced payloads for NASA, real time,
high-speed processors for meteorological satellite data and mission control and
other specialized ground data and communications systems.

Combining its strengths in space systems and IT, CTA is currently developing
GEMtrak, an automated tracking and cargo status data system for unpowered mobile
assets such as truck trailers, railcars and containers. A trucking industry
source has estimated that there are 4.5 million truck trailers in the U.S.
alone. The Company believes that GEMtrak will reduce trailer monitoring and
rental costs, and offer fleet owners marketing and revenue enhancement
opportunities by providing positive cargo track-and-trace, active manifest
control, intrusion sensing and alert, remote asset status monitoring and
enhanced asset utilization.

COMPANY HISTORY

The Company was founded in 1979 as Computer Technology Associates
Incorporated, specializing in consulting services related to the evaluation of
computer systems embedded in larger systems such as spacecraft, missiles and
aircraft. In the mid-1980's, the Company's consulting business expanded into
systems integration of avionics, command and control, and other decision support
systems. The Company established major relationships with U.S. military
operations at the DOD's Cheyenne Mountain Complex, the China Lake facility of
the U.S. Navy (the "Navy"), NASA's Goddard Space Flight Center (the "GSFC") and
the Air Force's Consolidated Space Operations Center. In 1992, the Company's
acquisition of CTASS ended its eligibility for government programs that assist
small businesses, with the last significant contract awarded under these
programs completed in early 1996. Since 1992, the Company has replaced

32
<PAGE>
contracts awarded under these programs with contracts awarded under full and
open competition, growing the share of IT revenues derived from competitive
awards from 19% in 1992 to an estimated 97% in 1996. Reflecting the success of
this transition, CTA's IT revenues during this period rose from $92.1 million in
1993 to $109.4 million in 1995. CTA is currently preparing or has outstanding
bids for 37 contracts with an estimated total value exceeding $1 billion.

In the 1990's, the Company targeted U.S. government IT contracts that have
allowed it to broaden the Company's base of skills to include a number of
disciplines equally applicable to the civil federal and state IT markets. In
1995, the Company established strategic alliances with certain specialized
software companies that enabled it to enter the commercial IT business and win
contracts with commercial customers such as Reynolds Metals and Allied-Signal.

In 1992, the Company acquired a 79% interest in CTASS to expand its business
of providing IT services related to space systems to providing full turn-key
space systems. In 1994, CTA acquired the remaining minority interest in CTASS.
CTASS is a pioneer of small satellite-based store-and-forward technology, which
it originally developed to interrogate dispersed buoys equipped with acoustic
sensors. In 1993, the Company entered the commercial GEO communications
satellite market with CTASS' award of the contract for the INDOSTAR turn-key DTH
system from PT MediaCitra Indostar. The INDOSTAR program is scheduled to begin
service in 1997. The contract provides for the Company to build a small,
three-axis stabilized commercial communications satellite and a complete
facility in Jakarta, including broadcast and subscriber management software,
communications uplinking systems and hardware/software systems for spacecraft
telemetry, tracking and control. In addition, CTA is arranging for launch and
insurance services and international regulatory approvals.

In 1995, the Company combined its skills in space-based communications and
large-scale systems integration to develop GEMnet, a system to be comprised of
the GEMstar satellite and the GEMtrak automatic tracking and cargo status
system. Although the GEMnet project suffered the loss of an experimental
satellite due to a launch failure in 1995, which was partially covered by
insurance, the Company has responded by extending the GEMtrak system to support
multiple wireless data systems, permitting immediate service while retaining the
flexibility to support the system at a later date with other wireless media,
including future LEO satellite constellations.

CORPORATE ORGANIZATION AND STRATEGY

In 1994, the Company established its three principal business units: Space
and Telecommunications Systems, Information Technology Services and Mobile
Information and Communications Services. The Space and Telecommunications
Systems business principally designs and manufactures small LEO and GEO
satellites and related support systems. The Information Technology Services
business comprises the Company's historical business base of providing IT
services for a variety of customers. The Mobile Information and Communications
Services business unit has been formed to pursue commercial applications of the
Company's proprietary technology in innovative IT and space-based or wireless
solutions to a variety of applications, including mobile asset tracking and
remote fixed asset monitoring.

[LOGO]

33
<PAGE>
CTA intends to become a vertically integrated provider of space-based
communications services. By leveraging its unique strengths in space, IT and
communications technologies, the Company seeks to serve the space-based
telecommunications markets as a turn-key provider of complete satellite systems
and pursue opportunities as a wireless data service provider.

SPACE AND TELECOMMUNICATIONS SYSTEMS

CTASS has grown from $32.9 million in revenues in 1993, its first full year
of operations as a subsidiary of the Company, to $70.7 million in revenues in
1995 and has become a complete space systems manufacturer focused on the design,
manufacturing and integration of small communications and earth-sensing
satellites.

CTA is the world's leading supplier of small LEO satellite systems and an
emerging competitor in the market for small GEO satellite systems. CTA has
successfully designed, built and delivered 27 satellites over the past eleven
years with seven additional satellites currently under construction. During the
next twelve months, the Company is scheduled to deliver three commercial
satellites, one satellite for the Air Force and one satellite for NASA. CTA
satellites have a record of 100% mission success upon reaching orbit. The
Company believes that, due to its focus on small space systems and its
streamlined management overhead, its cost structure is relatively low as
compared to its competitors, and that it is able to deliver completed systems
faster than most of its competitors. The Company has unique small satellite
products and "on the shelf" designs, along with a hardware inventory that allows
rapid delivery, reduces schedule risk and reduces costs. The Company seeks to
continue to develop and prove new technologies as part of U.S. government
satellite systems and then transfer these new technologies to commercial
satellite designs. The Company was one of two prime contractors selected by NASA
for the SSTI, and INDOSTAR will be the first small DTH satellite. The Company
designed and demonstrated the world's first LEO constellation of communications
satellites and Company-built satellites for EarthWatch are expected to be the
first commercial high resolution remote sensing satellite(s). Other significant
space technology innovations include a low-cost reaction wheel, the first use of
the Global Positioning System ("GPS") for small satellite attitude
determination, implementation of commercial battery technology, use of
lightweight composites for key structural components, digital solid state memory
and space-borne encryption technology.

CTA has invested significant resources developing STARbus, a technologically
advanced, multi-purpose satellite bus that can be configured to support DTH
television, high-bandwidth data transmission or voice communications payloads.
INDOSTAR, the first satellite in the STARbus family, is expected to be launched
in mid-1997 to provide DTH television in Indonesia.

SPACE AND TELECOMMUNICATIONS SYSTEMS--INDUSTRY AND TECHNOLOGY OVERVIEW

Improvements in space technology have resulted in modern communications
satellites with power, capacity, switching capabilities and longevity
significantly greater than those of their predecessors. These improvements in
performance, together with satellites' inherent geographic coverage and
technical advantages, have made satellite-based communications increasingly
competitive with other communications technologies, broadening the market for
satellite services such as telephony, support for cable and network television,
broadband data transmission, paging, DTH broadcasting, earth-sensing and
position location.

Large commercial communications satellites generate six to thirteen
kilowatts of power, weigh 7,000 to 11,000 pounds and typically cost over $100
million. Small commercial communications satellites, in contrast, generate up to
four kilowatts of power, weigh 3,000 pounds or less at launch and typically cost
less than $50 million. The Company believes that smaller satellites will capture
an increasing share of both the commercial and government satellite market
because technological and market changes have made their advantages more
compelling.

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<PAGE>
COMMERCIAL

Advanced communications technologies, particularly digital signal
compression, have enabled satellite systems to emerge as an economically
attractive solution to the world's rapidly expanding communications needs. The
attractive economics of space-based communications systems, driven by their
expansive geographic coverage, have resulted in substantial growth in demand for
satellites. VIA SATELLITE, a space-industry periodical, forecasts that over $54
billion will be invested in building and launching commercial communications
satellite systems over the next four years. The Company believes that demand for
smaller satellites will increase even more rapidly, driven by their lower cost,
faster cycle time from contract award to orbit and sharper mission focus. U.S.
government agencies have recently been reorienting their satellite programs
toward the use of small satellites in response to changing mission requirements
and budget pressures, while demand for real-time information continues to
expand. Moreover, a group of small satellites can deliver the functionality of a
single larger one at equivalent overall cost, but with reduced launch and
operational risks, and the added ability to adapt hardware functionality
incrementally in response to changing user needs, by changing the designs of
later satellites in the series. In addition, less developed countries and
emerging communications businesses are beginning to evaluate small satellites as
entry level systems that address immediate communications needs quickly and
inexpensively, while providing flexibility to add capacity and capabilities over
time as demand evolves and technology advances.

GOVERNMENT

Many of the same technological and market changes that make small satellites
more attractive to commercial customers also are occurring in the government
satellite market. The report of the Small Satellite Review Panel to the Director
of Central Intelligence in June 1996 called for a shift in the architecture of
the nation's space reconnaissance assets from one based on very large-scale
systems focused on the threat of the former Soviet Union across the northern
polar region to an array of smaller, less expensive spacecraft in larger numbers
with equivalent or superior total capacity that can acquire relevant data
anywhere in the world. The panel recommended an array of satellites 20% to 25%
of the weight of current reconnaissance satellites, with 40% to 50% of their
capabilities. In addition to lowering costs, such an array would be more robust,
with less operational capability at risk for any given satellite, and more
flexible, with a much greater capability to rebalance the system from time to
time to achieve a different mix of capabilities.

NASA is also shifting its procurement priorities toward the development of
small satellites that permit incorporation of advanced technologies as they
develop rather than building a larger spacecraft requiring earlier design
commitments. As a key component of NASA's announced plan to develop "smaller,
faster, cheaper" satellites, NASA's SSTI will develop and apply advanced
miniaturization, design and production technology for spacecraft design and
instrumentation to reduce the size of satellites and the cost of space missions.
The major goals of the SSTI are to increase the capabilities of small satellites
and to reduce the cost and development time of space missions for science and
commercial applications.

As result of this broadening of national intelligence priorities and
increasing governmental budgetary constraints, CTA expects that U.S. government
expenditures on small satellites will grow from $300 million in 1995 to $900
million in 2000.

SPACE AND TELECOMMUNICATIONS SYSTEMS--BUSINESS STRATEGY

The principal strategies that CTA is pursuing to grow its share of the small
space systems market include:

OFFERING TURN-KEY SATELLITE SYSTEMS. To enhance its competitive position,
CTA is combining its space, communications and IT expertise to provide full
turn-key satellite systems to its commercial customers, including delivery of
the satellite on orbit and the design, procurement and installation of all of
the necessary ground control and communications equipment. The Company believes
that turn-key satellite

35
<PAGE>
systems will be particularly attractive to less-developed countries and emerging
communications businesses that do not otherwise have the experience or resources
to coordinate the launch and support of a satellite.

MARKETING SPACECRAFT BASED ON THE MULTI-PURPOSE STARBUS PLATFORM. CTA has
developed STARbus, a technologically advanced, multi-purpose satellite bus that
can be configured to support DTH television, high-bandwidth data transmission or
voice communications payloads. The Company expects that the low cost and
technical superiority of this flexible design, which is capable of generating up
to 3.5 kilowatts of power, will enable the Company to adapt it to a variety of
payloads and thereby capture additional market share in a growing segment of
commercial communications satellite industry, supporting a range of missions
from both LEO and GEO and supporting video, voice and data services.

FOCUSING ON "SMALLER, FASTER, CHEAPER" SATELLITE SYSTEMS. CTA is focused on
lowering the cost, shortening the cycle time from award to launch and adding
advanced technology to enable the Company to win an increasing share of what the
Company believes will be a growing market for smaller satellites. The Company's
strategy is to use "on-the-shelf" designs, maintain inventory of long lead-time,
critical components, use common parts in multiple designs and build on its
record of technical innovation.

LEVERAGING AN ALLIANCE WITH A LEADING SATELLITE INDUSTRY PARTICIPANT TO
EXPAND MARKET PRESENCE. CTA has established a marketing alliance with a leading
satellite industry participant. The Company anticipates that this alliance will
expand the Company's market presence around the world, enhance its competitive
stature and provide access to new customers.

PARTICIPATING IN SATELLITE-BASED SERVICES BUSINESSES THROUGH PARTNERSHIPS
WITH COMMERCIAL CUSTOMERS. The Company is participating in and will seek to
expand into space-based communications services in partnership with commercial
satellite service customers such as PT MediaCitra Indostar and EarthWatch.

SPACE AND TELECOMMUNICATIONS SYSTEMS--CONTRACTS AND PROGRAMS

Some of the Company's key Space and Telecommunications Systems programs are
described below. Total contract values include both realized and unrealized
revenues.

COMMERCIAL

INDOSTAR. In December 1993, the Company was awarded a turn-key $127 million
contract by PT MediaCitra Indostar, a private Indonesian firm, to design,
develop, launch and support INDOSTAR, a complete DTH entertainment and
educational, satellite-based television system for Indonesia. The INDOSTAR
satellite will be the first implementation of STARbus, the Company's three-axis
stabilized small GEO platform. As a turn-key provider for the INDOSTAR program,
the Company is performing all systems engineering, handling both domestic and
international regulatory compliance, delivering all ground systems equipment,
constructing the spacecraft, arranging for the launch and launch insurance and
providing continued support through a comprehensive operations and maintenance
program. INDOSTAR is currently scheduled for completion in early 1997 and for
launch in mid-1997. The contract is fixed-price for the satellite system and a
cost-plus contract for launch, insurance and other services. In 1995, INDOSTAR
generated revenues of $58.1 million, or 26.7% of the Company's total revenues.
Revenues generated during the six months ended June 30, 1996 from the INDOSTAR
program were $30.8 million, or 30.6% of the Company's total revenues during that
period.

EARTHWATCH. In January 1995, the Company was awarded a contract for the
development of two satellites, EarlyBird 1 and EarlyBird 2, for EarthWatch. It
is expected that these two 700-pound satellites will form the first commercial
constellation of satellites capable of collecting high-resolution digital
imagery. These satellites are designed to provide three-meter resolution
panchromatic imagery and fifteen-meter resolution multi-spectral imagery for
sale to government and commercial customers. EarlyBird 1 is scheduled for
completion in late 1996 and for launch in early 1997. EarlyBird 2 is scheduled
for completion in mid-1997. As part of this program, the Company also is
delivering three telemetry, tracking and

36
<PAGE>
command ground stations to be deployed in 1997 in Alaska, Colorado and Europe.
The contract is a fixed-price contract and has a total value of approximately $8
million, of which $4 million is payable in the form of preferred equity in
EarthWatch.

GOVERNMENT

NASA

SSTI "CLARK." In June 1994, NASA awarded the Company a contract to develop
the SSTI "Clark" satellite. The 690-pound Clark satellite employs technologies
not currently in general use on board small satellites, including an advanced
attitude control system ("ACS") and solar arrays using new designs and
materials. Key missions of this satellite will include high resolution imaging,
mapping and monitoring of pollutants in the atmosphere and measuring the
radiation of solar flares in space. The Clark satellite is scheduled for
completion in late 1996 and launch in early 1997. The Clark contract is a
cost-plus-award-fee contract and has a total value of $51 million.

NASA CODE 740. In June 1995, NASA awarded the Company a multi-year contract
to support the GSFC Code 740 with hardware, software, ACS development,
integration and launch support for Small Explorer Satellites ("SMEX"), Get Away
Special ("GAS"), Hitchhiker and Spartan spacecraft. Under this contract, CTA
acts as the prime contractor providing overall program management, electrical
design and fabrication and ACS design. For the SMEX program, the Company is
developing the design, fabrication, ACS and software for the Transition Region
and Coronal Explorer ("TRACE"), which will observe the sun's corona. For the GAS
and Hitchhiker programs, the Company's central activities include the
development of the mechanical fabrication and launch preparation for STS-77 and
STS-78, which will deploy MightySat-1. For SPARTAN missions, the Company's major
functions include the fabrication, integration and test support for mission 207,
post-launch support for mission 206, planning support for the new mission 201-4
and system concept and design for SPARTAN Lite and SPARTAN 400. The Code 740
contract is a cost-plus-award-fee contract, has a total value of $77 million and
is scheduled for completion in 2000.

AIR FORCE SPACE DIVISION SPACE TEST PROGRAM. Under its Space Division Space
Test Program, the Air Force procures experimental satellites for the three main
branches of the DOD. This program has resulted in several key opportunities for
CTA, including:

STEP. In May 1990, the Company received an award as a subcontractor to TRW
to produce up to six satellite buses for the Air Force's STEP, a program in
which the Air Force launches and operates standardized satellites on behalf
of various branches of the DOD. The Company recently completed its work on
the fifth satellite in this series, a 900-pound satellite, that was
delivered in July 1996 and is scheduled for launch in mid-1997. The STEP
contract is a fixed-price contract and has a total value of $36 million.

TSX-5. In July 1996, following the final STEP satellite, the Air Force
recompeted STEP and the Company, in July 1996, was awarded the prime
contract to develop and launch the TSX-5 satellite, the successor to the
STEP series. The 735-pound TSX-5 will perform a series of missions in orbit,
including the collection and high-speed transmission of Earth imaging data
and radiation measurements. The TSX-5 satellite is scheduled for completion
and for launch in the second half of 1998. The TSX-5 contract is a
fixed-price-incentive-fee contract and has a total value of $25 million.

REX-11. In September 1993, the Air Force Space Division Space Test Program
awarded the Company a contract to build the 280-pound REX-II satellite. This
satellite is the second "radiation experiment" satellite and the latest in a
series of small, cost-effective satellites CTA has built for the Air Force,
following five previous Air Force-sponsored satellites of the same class.
The REX-II satellite was completed in September 1995 and was successfully
placed on orbit by a PEGASUS XL Rocket. The REX-II contract was a
fixed-price contract and had a total value of $4 million.

37
<PAGE>
MIGHTYSAT-1. In April 1995, the Air Force Phillips Laboratory awarded the
Company a contract to build MightySat-1, a 150-pound satellite designed to
conduct experiments. Construction of MightySat-1 was completed in September 1996
and the satellite is scheduled for launch on the Space Shuttle in 1997. The
MightySat-1 contract is a fixed-price contract and has a total value of $3
million.

REMOTE SENSING BUOYS. The Company has developed three classes of
cost-effective, earth-based systems with remote sensing, data gathering and
dissemination capability: (i) an air-deployed geobuoy sensor system, which is
launched from an aircraft, penetrates the surface of Arctic ice and reports
seismic signals detected by the system's geophone to monitoring aircraft, (ii)
an advanced ocean meteorological drifting buoy with a state-of-the-art sonic
anemometer, improved temperature and barometric sensors and simplified buoy
flotation for reduced drag and (iii) a series of buoys designed for deployment
on the surface of fragmented Arctic ice.

SPACE AND TELECOMMUNICATIONS SYSTEMS--COMPETITION

INFORMATION TECHNOLOGY SERVICES

The Company provides its customers with a full range of IT services, with
emphasis on large-scale network integration and management, information systems
security, mainframe to client/server migration, relational database engineering,
EDI and real-time embedded computer systems. CTA continues to establish
marketing alliances with a number of small software providers to combine
software applications for specialized areas such as manufacturing process
control and large-scale electronic document management and composition with
CTA's core competency in large-scale systems integration and its recognized
program management skills enabling it to offer complete turn-key systems
solutions to commercial customers. The Company has successfully established a
leading position in the rapidly growing market for Year 2000 Conversions based
on its unique combination of direct Year 2000 Conversion experience and use of
automated tools. To date, substantially all of the Company's IT revenues have
been derived from contracts with the U.S. government. CTA's IT revenues
increased from $92.1 million in 1993 to $109.4 million in 1995.

INFORMATION TECHNOLOGY SERVICES--INDUSTRY OVERVIEW

GOVERNMENT

The U.S. government is the largest single buyer of IT services in the world.
Federal Sources, an independent market research firm, estimates that the
government IT support services market in 1996 will be $9 billion, growing at a
rate of 6% per annum.

The Year 2000 Conversion market developed because billions of lines of
legacy computer code, some of it dating from as early as the 1960s, were not
written to address the now-imminent century date change, and still compute the
passage of time with reference only to the last two digits of the years in
question. A

38
<PAGE>
large proportion of mainframe computers rely on computer code that utilizes
two-digit fields instead of four digit fields to distinguish a calendar year.
The Gartner Group, a market research firm, estimates that the U.S. federal and
state government market for Year 2000 Conversion will exceed $38 billion over
the next four years.

COMMERCIAL

Within the broad market for IT services, the Company specifically provides
professional services (including consulting, custom software development, and
software and database maintenance) and systems integration. INPUT, a market
research firm, estimates that the professional services segment of the IT
services market was $26 billion in the U.S. in 1995, which represents an
increase of 13% over 1994, and that the systems integration segment of the IT
services market was $12 billion in 1995, which represents an increase of 11%
over 1994. INPUT estimates that the overall commercial IT services market will
grow at an average annual rate of 14% over the next five years.

INFORMATION TECHNOLOGY SERVICES--BUSINESS STRATEGY

The principal strategies that CTA is pursuing to expand its IT services
business include:

INCREASING PENETRATION OF EXISTING CUSTOMER BASE. CTA's focus on customer
satisfaction and technical excellence have made its existing IT customer base a
promising field for future IT services expansion. Due to its long-term incumbent
position as a key systems integrator for some of the nation's most complex
information networks, the Company has gained a unique and profound understanding
of those systems that the Company believes provide it with a substantial
advantage in terms of cost, technical expertise and demonstrated past
performance in competing for future awards. The Company believes that its Year
2000 Conversion initiative will provide CTA with similar competitive advantages
with respect to a wide range of new customers as a result of the in-depth
knowledge of the architecture of its Year 2000 Conversion customers' legacy
systems that the Company will gain in the course of performing the necessary
conversion work.

TARGETING "NEAREST NEIGHBOR" MARKETS. The Company continually seeks to
transfer its IT technical and marketing expertise developed over many years of
successful competition in the DOD market to the U.S. civil agencies that have
similar IT systems needs, such as NASA, the FAA and the FBI and to market its
experience supporting federal government functions to state government and
commercial customers.

PENETRATING NEW MARKETS BY LEVERAGING CORE COMPETENCIES. CTA seeks out and
exploits opportunities to market the expertise it has gained in past IT
assignments to new customers. CTA's experience in Year 2000 Conversions and its
expertise in information systems security measures have proven to be key factors
differentiating the Company in competitive bidding situations, and could serve
to establish a relationship with an expanded base of customers that can be used
for the marketing the Company's expertise in additional areas such as
large-scale client/server migration and electronic document management.

ESTABLISHING MARKETING ALLIANCES TO OFFER COMPLETE SOLUTIONS. CTA continues
to establish marketing alliances with a number of small software providers to
combine software applications for specialized areas, such as manufacturing
process control and large-scale document composition and management, with CTA's
core competency in large-scale systems integration and its recognized program
management skills to offer complete, turn-key systems solutions to commercial
customers.

ACQUIRING STRATEGIC IT SERVICES BUSINESSES. The Company intends to pursue
acquisitions that will expand the Company's commercial IT services customer base
and provide specialized capabilities that enhance the Company's penetration of
the commercial IT services market.

INFORMATION TECHNOLOGY SERVICES--CONTRACTS AND PROGRAMS

Some of the Company's key IT contracts and programs are described below.
Total contract values include both realized and unrealized revenues.

39
<PAGE>
U.S. GOVERNMENT--DOD

RANGE SYSTEMS MANAGEMENT. In 1993, the Company was awarded the Range
Instrumentation Development ("RID") contract, pursuant to which the Company
supports a wide variety of aircraft range system activities for the NAWC at
Edwards Air Force Base, including software development, test and evaluation,
system integration and fabrication of electronic threat simulators. The RID
contract is a cost-plus-award-fee contract (with an average award fee score of
in excess of 90%), has a total value of $88 million and is scheduled for
completion in December 1998.

AVIONICS SYSTEMS INTEGRATION. The Company participates in the design,
development, fabrication, modification and testing of hardware for the NAWC at
China Lake, California, performing a wide range of support activities. These
activities include systems engineering, systems analysis, software development,
configuration management, verification and validation, maintenance and operation
services for various naval aircraft and the development and maintenance of
large-scale hybrid simulators (which integrate computer simulations with actual
aircraft avionics). The Company has performed this work since its first NAWC
contract, awarded in 1985. In 1995, this contract was recompeted under a program
reserved for small businesses and the Company successfully teamed with a small
business contractor, which was awarded the prime contract. The current NAWC
contract is a cost-plus-award-fee contract (with an average award fee score in
excess of 90%), has a total value of $33 million and is scheduled for completion
in March 2000.

NETWORK MANAGEMENT. In 1993, the Air Force's Electronic Systems Center at
Hanscom Air Force Base in Bedford, Massachusetts awarded CTA the Technical
Engineering and Management Support IV ("TEMS IV") contract pursuant to which the
Company provides technical engineering and management support to various DOD
command and control system procurement programs, including the Integrated
Tactical Warning and Attack Assessment System, during all phases of the
procurement cycle. The TEMS IV contract is a time-and-materials contract, has a
total value of $54 million and is scheduled for completion in June 1998.

INFORMATION SYSTEMS SECURITY. The Company, as a subcontractor to SAIC, is a
member of the team awarded the Center for Information Systems Security contract
in 1995 by the Defense Information Systems Agency. Under this five-year omnibus
security engineering contract, the Company will continue to provide technical
support to information systems security activities within the DOD and other U.S.
government departments and agencies. Activities under this contract include
designing and implementing the measures necessary to detect, document and
counter a wide range of threats to on-line and stored information. The
Information Systems Security contract is a time-and-materials contract, has a
total value of $8 million and is scheduled for completion in July 2000.

AIR FORCE WARNING SYSTEM INTEGRATION. Under the Air Force Warning System
Integration contract, the Company provides engineering support at the Air Force
Electronic Systems Center for the procurement, installation and testing of
systems comprising the national attack warning/attack assessment network. This
contract is a sole source, three-year contract awarded in 1993 as a follow-on to
the Company's system design and analysis contract awarded in 1987. The Air Force
Warning System Integration contract is a time-and-materials contract, has a
total value of $22 million and is scheduled for completion in November 1996.

DEIS. In 1995, CTA won a subcontract from Unisys to provide a variety of
services, including business process re-engineering, systems development and
installation and support for the Defense Information System Agency of the DOD.
Under this program, called the Defense Enterprise Integration Services ("DEIS")
program, CTA is currently performing engineering and integration services to
implement the Cheyenne Mountain Training and Simulation System, assisting the
Space and Warning Systems Center in the planning, scheduling, conduct and
reporting of software testing and providing support to Air Force Space Command
for the Command, Control, Communications and Computer Upgrade program.

40
<PAGE>
The DEIS contract is a time-and-materials contract, has a total value of $16
million and is scheduled for completion in November 2000. In 1996, CTA won a
follow-on DEIS contract as a subcontractor to CSC. This contract is also a
time-and-materials contract and is scheduled for completion in August 2001.

U.S. GOVERNMENT--CIVILIAN AGENCIES

NASA. For NASA, the Company provides services under several contracts
related to the design, development, integration and testing of space systems.

(i) Since 1988, the Company has provided a wide range of systems
engineering services to the GSFC as a subcontractor to CSC under the Systems
Engineering and Analysis ("SEAS") contract. These services included Hubble
Space Telescope ground system testing, communications standards development,
prototyping and business process re-engineering. In 1992, NASA exercised its
option under the SEAS contract to have CTA continue to provide these
services to GSFC. The SEAS contract is a time-and-materials contract, had a
total value of $17 million and is scheduled for completion in July 1997.

(ii) In 1994, NASA awarded two contracts, the Earth Observing System
Data and Information ("EOS/DIS") and the Tropical Rainfall Measurement
Mission ("TRMM") contracts, under which CTA acts as subcontractor to support
research, development and operations of major ground systems. The EOS/DIS
contract, under which CTA is a subcontractor to Intermetrics, Inc., is a
cost-plus-award-fee contract, has a total value of $14 million and is
scheduled for completion in June 2004. The TRMM contract, under which CTA is
a subcontractor to General Sciences Corporation, is a cost-plus-fixed-fee
contract, has a total value of $1.3 million and is scheduled for completion
in 1998.

(iii) Since 1994, the Company has acted as subcontractor on a McDonnell
Douglas contract to provide Space Shuttle payload analysis and integration,
and design, development and testing of NASA-wide management information
systems. This contract is a cost-plus-award-fee contract, has a total value
of $4 million and is scheduled for completion in 1997.

FEDERAL AVIATION ADMINISTRATION. For the FAA, the Company provides services
related to the design, development, integration and test of the U.S. air traffic
control ("ATC") system and has been supporting the FAA automation programs since
1982. Currently, the Company is performing on the following programs for the
FAA:

(i) providing engineering support to the FAA as a subcontractor to TRW
under the AUA Technical Assistance contract in implementing its programs to
replace the ATC system. This contract is a time-and-materials contract, has
a total value of $40 million and is scheduled for completion in December
2002.

(ii) providing support to the FAA as a subcontractor to TRW under the
ASD SETA contract for the overall architectural design and evolution of the
National Airspace System. This contract is a time-and-materials contract,
has a total value of $17 million and is scheduled for completion in
September 2001.

(iii) assisting the FAA, as a subcontractor to TRW under the Weather
Technical Assistance contract in the areas of program engineering, hardware
and software engineering, program and project management, system test and
evaluation, system implementation and human factors. This contract is a
cost-plus-fixed-fee contract, has a total value of $3 million and is
scheduled for completion in March 2000.

(iv) providing engineering and management support services to the FAA as
a subcontractor to SRC under the ANN Technical Assistance contract. This
contract is a cost-plus-award-fee contract, has a total value of $5 million
and is scheduled for completion in September 2000.

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<PAGE>
DEPARTMENT OF JUSTICE. In February 1994, the DOJ awarded the Company a
contract to assist the FBI in its program to streamline, consolidate and
automate its Criminal Justice Information System, which serves over 80,000 law
enforcement users. Under this seven-year contract, CTA is assisting the FBI in
virtually every aspect of the engineering process, from procurement of new
information systems to the re-engineering of the processes that this system
supports. The DOJ contract is a combined fixed-price and cost-plus contract, has
a total value of $40 million and is scheduled for completion in September 2001.

TREASURY DEPARTMENT. Under a contract awarded in 1995, CTA provides system
engineering and technical analysis support to the Treasury Department, primarily
for the Internal Revenue Service's computer-based information processing system
modernization effort. CTA's support functions include engineering services and
telecommunication and security services. In the longer term, CTA will be
developing and assessing advanced user interface concepts, technologies and
prototypes (such as hypertext and speech recognition) and assessing and
recommending tools and environments to support future software development. This
contract is a time-and-materials contract, has a total value of $40 million and
is scheduled for completion in June 2000.

GENERAL SERVICES ADMINISTRATION. The Company performs under two contracts
with the GSA.

(i) The Company provides support for the Federal Supply Service's
central offices, its eleven regional offices and its various commodity
centers and depots. CTA's support includes system analysis and design,
software engineering and development, system integration and test, mainframe
to client server migration, training, database development and maintenance,
local and wide area network implementations, 24-hour per day user assistance
and Internet implementations of electronic commerce. The Federal Supply
Service contract is a time-and-materials contract, has a total value of $27
million and is scheduled for completion in September 1996. The Company
recently was awarded the follow-on contract to the original Federal Supply
Service contract that was awarded to the Company in 1992. This contract,
which is scheduled to commence at the expiration of the first contract, has
a total value of $31 million and is scheduled for completion in September
2001.

(ii) Under a five-year contract awarded in 1994, the Company provides
business applications software support to U.S. government agencies within
the GSA's Eastern Zone. Services provided by the Company under this contract
include field software support, software maintenance, software testing,
software independent verification and validation, software configuration
management, software documentation development and user training. The
Eastern Zone contract is a time-and-materials contract, has a total value of
$26 million and is scheduled for completion in April 1999. The Company has
entered into an agreement with a third party to assume the Company's
obligations under this contract, subject to the approval and novation by the
GSA.

STATE GOVERNMENT AND COMMERCIAL

YEAR 2000 CONVERSION. The Company has established a leading position in
federal and state government Year 2000 Conversions with a completed contract for
the Department of Veterans Affairs Austin Automation Center, which the Company
believes is the only completed U.S. government agency Year 2000 Conversion to
date, and ongoing projects with the GSA and the Air Force. CTA has expanded its
position with the recent award of a $22 million contract from the State of
Nebraska for Year 2000 Conversion of all of the State's mainframe application
software and databases. CTA has developed a partnership with Viasoft Inc., a
leading provider of date change conversion software tools, and is applying
Viasoft's state-of-the-art tools to the Year 2000 Conversion problem. In
addition, CTA's existing contracts with GSA, the Department of Veterans Affairs
and the Navy allow other federal agencies to employ CTA for Year 2000
Conversions without lengthy competitions. To support its Year 2000 Conversion
efforts, the Company is planning to establish conversion centers that will
enable the Company to perform these conversions in a manner that will minimize
disruptions for its customers. CTA is currently preparing to bid or has

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<PAGE>
outstanding bids for 15 contracts with an estimated total value of over $350
million for state Year 2000 Conversion contracts and one contract with an
estimated total value of $13 million for a federal Year 2000 Conversion.

SYSTEMS ENGINEERING. In June 1996, the Company was awarded a contract by
USAA, a San Antonio, Texas-based insurer, to provide technical and engineering
support to the USAA Information Technology Division. The Company's functions
include (i) program control, including resource forecasting and tracking and
scheduling, (ii) systems engineering, including configuration management,
systems requirements management and test planning and execution, (iii)
procurement support, including the development of procurement strategies,
evaluation criteria and requests for proposals and (iv) development of cost
estimates for USAA procurement. The USAA contract is a time-and-materials
contract, and is scheduled for completion in March 2000.

EMERGING COMMERCIAL PROGRAMS. Through alliances with specialized software
companies such as Manugistics Group, Inc. and Xyvision, Inc., the Company has
initiated the development of its commercial IT business. Commercial contracts
that have been awarded to the Company through these alliances include a contract
with Reynolds Metals Corporation awarded in June 1995 to provide a fully
integrated automated production scheduling system to be used to coordinate
production activities at Reynolds Metals' Listerfield, Alabama aluminum plant
and a contract with Allied Signal Inc. to produce documents using standard
generalized mark-up language and document composition technology.

INFORMATION TECHNOLOGY SERVICES--CUSTOMERS

To date, substantially all of CTA's IT revenues have been derived from
contracts with the U.S. government. The Company's current IT customers include
the Air Force, the DOJ, the Department of Veterans Affairs, the FAA, the GSA,
NASA, the Navy, the NOAA, the Treasury Department and the State of Nebraska.

The respective percentages of the Company's total IT revenues attributable
to services performed for the DOD and for civil government customers in 1995,
1994 and 1993 are set forth below:

<TABLE>
<CAPTION>
YEAR DOD CIVIL GOVERNMENT
- --------- --------- -------------------
<S> <C> <C>
1995 58% 42%
1994 50% 50%
1993 53% 47%
</TABLE>

IT business customers to whom sales in the aggregate for 1995 exceeded 10%
of total IT revenues are shown below:

<TABLE>
<CAPTION>
PERCENTAGE
CLIENT OF 1995 IT REVENUES
- ---------------------------------------------------------------------- ---------------------------
<S> <C>
Naval Air Warfare Center (Navy)....................................... 29%
Electronic Systems Center (Air Force)................................. 18
GSA................................................................... 18
</TABLE>

INFORMATION TECHNOLOGY SERVICES--COMPETITION

The IT services industry in which the Company operates is highly fragmented
with no single company or small group of companies in a dominant position. The
Company's competitors include large, diversified firms with substantially
greater financial resources and larger technical staffs than the Company, such
as BDM, Cap Gemini, CSC, EDS, Lockheed Martin, PRC, SAIC, as well as firms that
receive preferences under government programs for small businesses. The firms
that compete with the Company include consulting firms, computer services firms,
applications software companies and accounting firms, as well as the computer
service arms of computer manufacturing companies and defense and aerospace
firms. In

43
<PAGE>
addition, the internal staffs of client organizations, non-profit federal
contract research centers and universities are, in effect, competitors of the
Company. See "Risk Factors--Competition."

The primary competitive factors in the information services industry include
technical, management and marketing competence, as well as price. The Company
competes for commercial work by identification of unique market niches in which
the Company believes it has superior technical products. The Company expects to
compete successfully based on the quality of its products and services, its
emphasis on client satisfaction, the technical expertise of its staff and the
price at which its products and services are delivered. Such expectation is
based on the judgment and experience of the Company's senior management.

MOBILE INFORMATION AND COMMUNICATIONS SERVICES

As part of its strategy to leverage its expertise in information systems and
small satellite technologies to enter into selected value-added wireless service
opportunities, CTA is currently developing GEMtrak, an automated tracking and
cargo status data system for unpowered mobile assets such as truck trailers,
railcars and containers. CTA expects to invest approximately $8 million in
developing and rolling out its GEMtrak business over the next two years.

The COMMERCIAL CARRIER JOURNAL's Census of the Professional Truck Fleet
Market estimates that there are 4.5 million truck trailers in the U.S. alone.
Carriers recently have turned to wireless information systems to provide better
information about customer deliveries. However, existing systems do not
currently enable carriers to track their trailers or provide readily available
information to customers concerning unpowered mobile assets. GEMtrak, in
contrast, has been designed to serve as an automated data collection and cargo
oversight system that reduces the errors and delays that can occur through a
system dependent on physical trailer counts and communications between drivers
and operation centers. The Company believes that by providing carriers with more
accurate and timely information about trailer location, availability and status,
GEMtrak will reduce trailer monitoring and rental costs, and offer fleet owners
marketing and revenue enhancement opportunities.

The Company has completed the development of the hardware and software
required to operate the system and provide the information management reports to
be used by the trailer fleet operators, and the GEMtrak system is currently
being beta tested by three different carriers, each in a different market
segment (i.e. truckload, less than truckload and specialty). The Company is
negotiating reseller agreements with AT&T Wireless Services and RAM Mobile Data
Systems to provide GEMtrak coverage over substantially all of the contiguous
U.S. using those companies' established wireless data networks. The Company
expects to initiate several pilot programs over the next six to nine months
under which several hundred units will be placed in service each of several
national trucking company fleets, with full commercial roll-out scheduled for
the second half of 1997. The Company expects that its GEMtrak trailer
communication unit will be priced at between $ and $ per unit,
when purchased in volume, depending on features, with anticipated monthly
service charges of between $ and $ per unit per month, depending on
the level of service selected.

Although the GEMnet project suffered the loss of an experimental satellite
in a launch failure in 1995, the Company has responded by extending the GEMtrak
system to support multiple wireless data systems, permitting immediate service
while retaining the flexibility to support the system at a later date with other
wireless media, including future LEO satellite constellations. The Company's
investment in GEMnet was $13.4 million at the launch of the experimental
satellite, of which the Company recovered $6.1 million in insurance proceeds.
The remaining GEMnet investment of $7.3 million is carried by the Company as an
asset and relates to non-recurring engineering, ground systems and software that
management believes has continuing value in its planned GEMnet system. If the
Company is unable to develop the GEMnet concept, the Company may have to expense
substantially all or a portion of its $7.3 million GEMnet investment.

44
<PAGE>
The Company anticipates that the GEMtrak system will face competition from
numerous existing and potential alternative communications products and services
provided by various companies including AMSC, HighwayMaster, Orbcomm, Qualcomm
and StarSys. There are a number of other companies that are developing LEO
systems, some of which would likely be direct competitors of the Company in this
market. See "Risk Factors--Mobile Information and Communications Services."

U.S. GOVERNMENT CONTRACTING

TYPES OF CONTRACTS. The Company's services are provided primarily through
three types of contracts: fixed-price, time-and-material and cost-reimbursable
contracts. Fixed-price contracts require the Company to perform services under
the contract at a stipulated price. Time-and-material contracts reimburse the
Company for the number of labor hours expended at established hourly rates
negotiated in the contract and the cost of materials incurred. Cost-reimbursable
contracts reimburse the Company for all actual costs incurred in performing the
contract, to the extent that such costs are within a specified maximum and
allowable under the terms of the contract, plus a fee or profit. See "Risk
Factors--Contract Profit Exposure and Dependence on Long-Term Fixed-Price
Contracts."

The following table shows the approximate percentage of revenue by contract
type recognized by the Company during the indicated periods:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
TYPE OF CONTRACT 1993 1994 1995 1995 1996
- ------------------------------------------------ ----- ----- ----- ----- -----------
Fixed-price..................................... 26% 10% 28% 25% 34%
Time-and-material............................... 35 54 26 28 26
Cost-reimbursable............................... 39 36 46 47 40
--- --- --- --- ---
Total......................................... 100% 100% 100% 100% 100%
--- --- --- --- ---
--- --- --- --- ---

<CAPTION>
<S> <C>
TYPE OF CONTRACT
- ------------------------------------------------
Fixed-price.....................................
Time-and-material...............................
Cost-reimbursable...............................
Total.........................................
</TABLE>

The Company's fixed-price contracts include firm fixed-price ("FFP") and
fixed-price incentive ("FPI") contracts. The Company assumes greater financial
risks and has potentially greater profit margins on FFP contracts than on FPI
contracts because full responsibility is placed on the Company in FFP contracts
to provide stipulated services for a firm price. An FPI contract provides for an
adjustment to profit based upon how effectively the Company controls costs.
Under an FPI contract, the Company and the customer agree to share any overrun
or underrun realized when the final cost is different than the established
target cost. In the case of an overrun, the Company and the customer share up to
the established ceiling price at which point the Company bears the total risk.
Both of these types of contracts provide the incentive of higher profits when
costs are controlled, along with the associated risk of lower profits when
target costs are exceeded or ultimate loss when costs exceed the ceiling price.
For the six months ended June 30, 1996 and 1995, 4.1% and 6.8%, respectively, of
the Company's contract revenues derived from fixed-price contracts were FPI and
the remainder FFP.

GOVERNMENT CONTRACT REQUIREMENTS. Many of the government programs in which
the Company participates as a contractor or subcontractor may extend for several
years, but they are normally funded on an annual basis. The Company's U.S.
government contracts and subcontracts are subject to modification, curtailment
and termination in the event of changes in government funding. Accordingly, all
of the Company's contracts and subcontracts involving the U.S. government may be
terminated at any time by the U.S. government, without cause, for the
convenience of the U.S. government. If a U.S. government contract is terminated
for convenience, the Company would be entitled to receive compensation for the
services provided or costs incurred at the time of termination and a negotiated
amount of the profit on the contract. See "Risk Factors--Dependence on U.S.
Government Contracts."

Among the factors that could materially adversely affect the Company's U.S.
government contracting business are budgetary constraints, changes in fiscal
policies or available funding, reduction of defense or

45
<PAGE>
aerospace spending, changes in U.S. government programs or requirements,
curtailment of the U.S. government's use of technology services firms, the
adoption of new laws or regulations, technological developments and general
economic conditions. In addition, increased competition and U.S. government
budget constraints in the defense area, and in areas not related to defense, may
limit future growth in Company revenues from U.S. government agencies and
contractors. See "Risk Factors--Concentration of Customers."

The Company's costs and revenues under government contracts are subject to
adjustment as a result of annual audits performed by the DCAA on behalf of the
DOD. Audits of the Company by the DCAA and other agencies have been completed
for all years through 1991 without material adjustment. See "Risk
Factors--Contracts with U.S. Federal, State and Local Governments."

RESEARCH AND DEVELOPMENT

The Company's research and development programs seek to develop new products
and services that will improve the Company's ability to meet the current and
future needs of its customers. Through its research and development programs,
CTA continues to broaden its capability and skills, as exemplified by its
innovations in small satellite technologies such as a low-cost reaction wheel,
the use of GPS for attitude determination, the adaptation of commercial battery
technology, the development of composite structures, the development of Digital
Solid State Memory and the use of space borne encryption. Also in the satellite
arena, CTA has developed a new generation of lightweight satellites, the most
stable gravity gradient satellite, the first LEO constellation of communications
satellites, the first commercial imaging remote sensing satellites and the first
small DBS satellite.

The Company's research and development programs are funded through a
combination of Independent Research and Development ("IRAD") and Contract
Research and Development ("Contract R&D"):

IRAD. IRAD refers to research and development costs that are not sponsored
by, or required in performance of, a contract or grant. IRAD projects are
designed to enhance the performance and effectiveness of the Company's
day-to-day engineering operations. The Company has developed tools and
methodologies for efficient software development including automated code
generators that may have future commercial applications. To date, product
development related revenues have not been significant. No other party has an
interest in any future revenues derived from potential IRAD products. The
Company's selling, general and administrative expenses include IRAD of $0.8
million for the six month period ended June 30, 1996 and $2.6 million, $0.9
million and $1.1 million for 1995, 1994 and 1993, respectively. The significant
increase in 1995 stems from IRAD work performed related to the Company's
INDOSTAR contract.

CONTRACT R&D. Contract R&D projects are specifically contracted for and
funded by the federal government. The primary purpose of Contract R&D programs
is to advance scientific and technical knowledge and to apply that knowledge to
achieve specific goals of the agency providing the funding. The Company is
currently performing Contract R&D for the Advanced Research Projects Agency
("ARPA"), an agency of the DOD. The Company-funded development of ProcessTOOLS
is being augmented by ARPA for the application of ProcessTOOLS to ARPA's Agile
Manufacturing and Maritech Programs. The Company expended $0.9 million for the
six months ended June 30, 1996 and $3.0 million and $3.6 million in 1995 and
1993, respectively. No expenditures were made in 1994. The Company intends to
pursue additional funding sources in the future. Certain future Contract R&D
programs may provide that the Company expend non-reimbursable funds as a
condition of sharing the benefits of the research with the sponsoring agency or
customer. The Company expended no such funds for the six months ended June 30,
1996, and in 1995 or 1994 and $0.1 million in 1993.

Under the terms of most Contract R&D programs, the Company generally has
interests in any future revenues derived from products eventually arising from
the research, depending in part on the terms and conditions of the individual
Contract R&D program. To the extent that Contract R&D programs with the

46
<PAGE>
U.S. government lead to a marketable product or process, the Company generally
will own the right to such product or process and may acquire patent protection,
subject to the government's right to use such product or process on a
royalty-free basis. No such revenue from any such product or process has been
realized to date.

BACKLOG

The Company's total backlog was approximately $535 million at June 30, 1996
and $511 million, $453 million and $293 million at December 31, 1995, 1994 and
1993, respectively. The Company's backlog is comprised of the unrealized
portions of the Company's U.S. government contracts, U.S. government-related
contracts and commercial contracts. Backlog for government and
government-related contracts consists of either funded or unfunded backlog.
Funded backlog consists of the dollar portion of contracts that is currently
appropriated by the government client or other clients and allocated to the
contract by the purchasing government agency or otherwise authorized for payment
by the client upon completion of a specified portion of work. Unfunded backlog
consists of the total unrealized award value of the contract less the contract
value funded by the customer, and includes multi-year incrementally funded
contracts, delivery orders, and task orders which remain at the customers'
discretion to fund. Unfunded government backlog comprised approximately 80% of
total backlog at June 30, 1996, as compared to approximately 79% of total
backlog at December 31, 1995. Commercial and other backlog comprised
approximately 10% of total backlog at June 30, 1996 as compared to approximately
9% of total backlog at December 31, 1995. There can be no assurance that the
Company's backlog will be converted into revenues. See "Risk Factors--Backlog."

The total backlog at December 31, 1993, 1994, and 1995, and June 30, 1995
and 1996, for the Company and for each of the Space and Telecommunications
Systems and IT businesses is set forth below:

THE COMPANY
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Government
Funded.............................. $ 36 $ 66 $ 61 $ 53 $ 55
Unfunded............................ 256 367 406 416 427
Commercial and Other.................... 1 20 44 80 53
--------- --------- --------- --------- ---------
Total................................. $ 293 $ 453 $ 511 549 $ 535
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

SPACE AND TELECOMMUNICATIONS SYSTEMS
<S> <C> <C> <C> <C> <C>
Government
Funded.............................. $ 6 $ 11 $ 9 $ 11 $ 10
Unfunded............................ 15 25 80 101 94
Commercial and Other.................... 1 20 44 80 31
--------- --------- --------- --------- ---------
Total................................. $ 22 $ 56 $ 133 $ 192 $ 135
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<CAPTION>

INFORMATION TECHNOLOGY SERVICES
<S> <C> <C> <C> <C> <C>
Government
Funded.............................. $ 29 $ 55 $ 52 $ 42 $ 47
Unfunded............................ 241 342 326 315 331
Commercial and Other.................... 0 0 0 0 22
--------- --------- --------- --------- ---------
Total................................. $ 270 $ 397 $ 378 $ 357 $ 400
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

47
<PAGE>
The RID contract and the NASA Code 740 contract represented approximately
12% and 13% of total backlog at June 30, 1996. Approximately $30 million or 6%
of total backlog at June 30, 1996 was related to the INDOSTAR contract. The
Company expects that approximately 50% of the Company's total backlog as of June
30, 1996 will result in revenues in the twelve month period ending June 30,
1997. The Company's total backlog of $549 million as of June 30, 1995 included
$52 million attributable to the Company's Eastern Zone contract, whereas total
backlog as of June 30, 1996 included approximately $3 million attributable to
the Eastern Zone contract. In March 1996, the Company reduced its estimate of
the contract value and profitability of its Eastern Zone contract, resulting in
an approximate $43 million reduction in unfunded backlog at June 30, 1996. In
addition, the Company has entered into an agreement with a third party to assume
the Company's obligations under this contract, subject to the GSA's approval and
novation.

Although unfunded backlog can include up to the stated award value of the
contract including renewals or extensions that have been priced but still remain
at the discretion of the customer whether to fund, the Company, to be
conservative, often recognizes only a portion of stated award values on multi-
year contracts into its backlog records. Because many of the Company's contracts
are multi-year contracts, total backlog may include revenues expected to be
realized several years into the future. The unfunded backlog may not be an
indicator of future contract revenues or earnings because there is no assurance
that the unfunded portion of the Company's backlog will be funded. In addition,
most of the contracts included in backlog are subject to termination for the
convenience of the government customer. See "Risk Factors--Backlog."

INTERNATIONAL OPERATIONS

The Company recognized revenues from PT MediaCitra Indostar of $30.8 million
(30.6% of total revenues) for the six months ended June 30, 1996 as compared to
$58.1 million (26.8% of total revenues) in 1995, $7.9 million (5.5% of total
revenues) in 1994 and $0.7 million (0.6% of total revenues) in 1993.

PROPRIETARY INFORMATION

The Company relies upon trade secrets, know-how and continuing technological
innovation and licensing opportunities to develop and maintain its competitive
position and believes that its business is dependent on its technical and
organizational knowledge, practices and procedures. The Company claims a
proprietary interest in certain of its work products, software programs,
methodologies and know-how, including proprietary designs and know-how related
to STARbus, and some of the proprietary information is protected by
confidentiality agreements and other means. The Company also has filed a U.S.
patent application covering GEMtrak's asset monitoring systems in order to
protect its position in the unpowered mobile asset monitoring market. There can
be no assurance, however, that these measures will prevent the unauthorized
disclosure or use of the Company's technical knowledge, practices and procedures
or that others may not independently develop similar knowledge, practices or
procedures. See "Risk Factors-- Proprietary Information."

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<PAGE>
The Company may be the subject of claims of third parties which assert that
the Company's use of certain software programs, methodologies, procedures and
know-how infringes on the patent, copyright or other proprietary rights of such
third parties. See "Risk Factors--Proprietary Information."

REGULATION

Exports of space-related products, services and technical information
frequently require licenses from the Department of State or the DOC. In
addition, in connection with launches, the Company may be required to obtain
from the U.S. government a technical data export license and a hardware export
license in order to transport the satellite and related equipment to the
proposed launch site.

The Company has been advised by its Indonesian customer that the customer
has obtained or is in a position to readily obtain all material Indonesian
regulatory approvals or coordination agreements necessary for the operation of
the INDOSTAR satellite. Any change in the political and regulatory environment
in Indonesia that results in the revocation of, or failure to obtain, such
approvals could have a material adverse effect on the Company's results of
operations.

The Company has applied for an FCC license to construct, launch and operate
a low-earth orbit constellation of small data communications satellites in the
FCC's so-called "Little LEO" proceeding. Although GEMtrak service will begin in
the U.S. without satellite support, it will use third party terrestrial wireless
networks. In the future, GEMnet will require an FCC license to support
satellite-based second-generation GEMtrak service in the U.S. Satellite service
outside the U.S. would not require an FCC license, but would require a license
from local telecommunications regulatory authorities and coordination with the
ITU. There can be no assurance that any such licenses will be granted, or that
such coordination will be successful.

EMPLOYEES

At August 30, 1996, the Company had 1,323 full-time and 92 part-time
employees, approximately 83% of whom are in technical engineering and 17% are in
management and support positions. Approximately 92% of the Company's
professional staff possess bachelor degrees, with 34% holding advanced degrees
including 15% with doctoral degrees. None of the Company's employees is
represented by a labor union, and the Company considers its relations with its
employees to be good.

The Company believes that its future success will depend in large part upon
the continued service of its senior management personnel, and upon the Company's
continuing ability to attract and retain highly qualified managerial
operational, technical and sales and marketing personnel. Competition for highly
qualified personnel is intense and there can be no assurance that the Company
will be able to retain its key personnel or that it will be able to attract and
retain additional qualified personnel in the future.

FACILITIES

The Company leases its 49,451 square foot corporate headquarters in
Rockville, Maryland under a lease expiring in 1999. The Company currently owns a
3.5% fixed ownership interest in the partnership that owns the corporate
headquarters building. In addition, the Company has principal leased facilities
in Ridgecrest, California; Colorado Springs, Colorado; McLean, Virginia and
Bedford, Massachusetts. The Company believes that these properties are adequate
to serve the Company's present business operations. The Company believes that if
it were unable to renew the leases on any of its facilities, other suitable
facilities would be available to meet the Company's needs.

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<PAGE>
LEGAL PROCEEDINGS AND CERTAIN CLAIMS

The Company is currently involved in certain legal proceedings incidental to
the ordinary course of its business. The Company does not believe that any
liabilities relating to the legal proceedings to which it is a party are likely
to be, individually or in the aggregate, material to its consolidated financial
position or results of operations.

The Company has applied for registered trademarks covering the names
GEMtrak-TM-, GEMnet-TM-, GEMnode-TM-, GEMtags-TM-, GEMmail-TM- and GEMstar-TM-.
A third party has filed an objection challenging the Company's "GEM" mark in
connection with satellite-based services. At present, such proceeding is in its
preliminary phases and no evaluation as to its probable outcome is possible at
this time.

50
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information regarding the directors
and executive officers of the Company as of September 9, 1996:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------------------- --------- ----------------------------------------------------
<S> <C> <C>

C.E. Velez.......................................... 56 President, Chief Executive Officer and Chairman of
the Board

Ricardo de Bastos................................... 58 President-Space and Telecommunications Systems and
Director

Raymond V. McMillan................................. 63 President-Information Technology Services and
Director

George S. Sebestyen................................. 63 President-CTASS

Gregory H. Wagner................................... 48 Executive Vice President, Chief Financial Officer
and Treasurer

Terry J. Piddington................................. 53 Executive Vice President

Emanuel J. Fthenakis(1)............................. 67 Director

Harvey D. Kushner(1)................................ 65 Director

George W. Morgenthaler(2)........................... 69 Director

James M. Papada, III(2)............................. 48 Director

Arturo Silvestrini(2)............................... 65 Director

John L. Slack(2).................................... 58 Director

John W. Townsend, Jr.(1)............................ 72 Director
</TABLE>

- ------------------------

(1) Member of the Compensation Committee of the Board of Directors.

(2) Member of the Audit Committee of the Board of Directors.

Dr. C.E. "Tom" Velez, a founder of the Company, has been President and
Chairman of the Board since the Company's organization in 1979. Prior to
founding the Company, Dr. Velez was employed by Martin Marietta Aerospace for
three years as Director, Software Engineering Research and Development, and was
previously employed at the NASA Goddard Space Flight Center for 12 years in
various positions including Chief of the Systems Development and Analysis
Branch. Dr. Velez is also a director of Constellation and EarthWatch.

Ricardo de Bastos has been Executive Vice President of the Company since
April 1996 and as a Director of the Company since August 1996. Prior to joining
CTA, he was employed for more than 36 years by Astro Space which has been a
division of RCA, General Electric and Martin Marietta and is currently a
division of Lockheed Martin. His last assignment was as Executive Vice President
of Lockheed Martin Astro Space Commercial Company.

Raymond V. McMillan has been a Director of the Company since August 1996 and
President of Information Technology Services since April 1996 and before that
had been Executive Vice President of the Company since February 1991. From 1988
to 1991, he was a Vice President of the Company. From

51
<PAGE>
1984 to 1987, he was a Brigadier General in the Air Force responsible for
management of the integration and test of the DOD's Integrated Tactical Warning
and Attack Assessment System.

George S. Sebestyen is President of CTASS, a company he founded in 1978.
Prior to 1978, Dr. Sebestyen was Vice President and General Manager of the Navy
Systems and Advanced Projects Division of the Boeing Aerospace Company.

Gregory H. Wagner has been Executive Vice President and Chief Financial
Officer and Treasurer of the Company since November, 1992. From 1988 to 1992, he
was Vice President of Finance of the Company. Mr. Wagner was previously employed
with Martin Marietta Aerospace for ten years in various positions, most recently
as Director of Business Management.

Terry J. Piddington has been Executive Vice President of the Company since
February 1987. From 1985 to 1987, he was a Vice President of the Company's
Systems Engineering Services Division.

Emanuel J. Fthenakis has been a Director of the Company since August 1992.
From 1971 to 1991, he was employed by Fairchild Industries, serving as CEO from
1985 to 1991 and Chairman of the Board from 1986 to 1991. He currently owns a
consulting firm, CEF Corporation.

Harvey D. Kushner has been a Director of the Company since July 1989. Mr.
Kushner formed Kushner Management Planning Corporation in 1988 which is a
professional services firm advising in management, business and technology
development. From 1987 to 1988, he was an officer of Atlantic Research
Corporation. Prior to 1987, Mr. Kushner had been employed by the ORI Group for
33 years, having served as Chairman of the Board of Directors, Chief Executive
Officer, and President for 20 years.

George W. Morgenthaler has been a Director of the Company since August 1991.
From 1986 to the present, he has served on the faculty of the University of
Colorado at Boulder as Professor, Aerospace Engineering Sciences. He previously
served four years as Department Chairman and Associate Dean of the College of
Engineering and Applied Science. From 1960 to 1986, he was with Martin Marietta;
his last position was as Vice President of Energy, Technology and Special
Products. He is on the Board of Directors of Dynamic Materials Corp., a Nasdaq
company.

James M. Papada, III has been a Director of the Company since August 1996.
Since prior to 1991, he has been a senior partner in the corporate department of
the law firm of Stradley, Ronon, Stevens & Young, a limited liability
partnership in Philadelphia, Pennsylvania, specializing in merger and
acquisition transactions. He is also the Chairman of the Board of Technitrol,
Inc., a multi-national, diversified manufacturing company listed on the American
Stock Exchange. He is also a Director of ParaChem Southern, Inc., a manufacturer
of specialty chemical products. From February 1983 until December 1987, Mr.
Papada was President and Chief Operating Officer of Hordis Brothers, Inc., a
privately held glass fabricator.

Arturo Silvestrini has been a Director of the Company since August 1991.
Since November, 1991 he has been President and CEO of Earth Observation
Satellite Corporation. From 1965 to 1991, he was with Computer Sciences
Corporation, most recently as Senior Vice President for European operations.

John L. Slack has been a Director of the Company since August 1991. From
1977 to 1980, he was Vice President, Command and Information Systems of Martin
Marietta. In 1985, he began a systems engineering and professional services
firm. Mr. Slack is currently a Director, President and CEO of DBA Systems, Inc.

John W. Townsend, Jr. has been a Director of the Company since August 1991.
From 1987 to 1990, he was Director of the National Aeronautics and Space
Administration's Goddard Space Flight Center. He was formerly a member of the
advisory board of Loral Corporation.

Executive officers are reviewed annually by the Board of Directors and serve
at the pleasure of the Board.

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<PAGE>
BOARD OF DIRECTORS

The Company's Board of Directors is comprised of ten directors. The Board of
Directors is expected to be divided into three separate classes, with each class
consisting of an equal number of directors (or as close to equal as possible).
It is expected that each class of directors will be elected for a term of three
years, with the term of the directors in each class expiring in successive
years.

COMMITTEES

The Compensation Committee of the Board of Directors consists of Messrs.
Kushner, Fthenakis and Townsend. The Compensation Committee determines the
compensation of the President and Chief Executive Officer and reviews
recommendations of the President and Chief Executive Officer concerning
compensation for other executives and incentive compensation of employees of the
Company, subject to ratification by the full Board of Directors. The
Compensation Committee also administers the 1991 Plan and the ESOP.

The Audit Committee of the Board of Directors consists of Messrs. Slack,
Morgenthaler, Papada and Silvestrini. The Audit Committee reviews the results
and scope of the audit and other services provided by the Company's independent
auditors, as well as the Company's accounting principles and its system of
internal controls, and reports the results of these reviews to management and to
the full Board of Directors.

DIRECTORS' ANNUAL COMPENSATION

Outside directors receive an annual retainer fee of $10,000, payable in
quarterly installments in shares of Common Stock, a fee of $1,000 for each
directors' meeting attended and a fee of $500 for each meeting of a committee of
the Board of Directors attended. Directors' fees for Board meetings or Board
committee meetings are payable at a director's election in cash or shares of
Common Stock and, if paid in Common Stock, the director is granted options to
purchase an equal number of shares of Common Stock. Directors may receive
additional compensation for consulting services provided to the Company. From
August 1995 to August 1996, outside directors received an annual retainer fee of
$2,000, a fee of $2,000 for each meeting attended and a fee of $1,000 for each
meeting of a committee of the Board attended. Directors' fees for Board meetings
or Board committee meetings attended were payable at a director's election in
cash or Common Stock.

At the beginning of their term in August 1995, outside directors were
offered stock options by the Company to purchase up to $10,000 worth of Common
Stock at the prevailing price at which shares were sold in the Limited Market at
the time of exercise. Upon the purchase of shares pursuant to such options, each
director was granted an additional option for a number of shares equal to the
number of shares purchased under the initial option. The second option is
exercisable after two years and at an exercise price equal to the market price
on the date such second option is granted. In August 1995, Dr. Townsend and Mr.
Kushner accepted the offer.

CONSULTING ARRANGEMENTS WITH DIRECTORS

The Company paid Mr. Kushner $19,414 in 1995 and $8,750 in 1996 to date for
consulting services with respect to business development under a consulting
agreement. This agreement commenced in January 1995.

The Company paid Mr. Fthenakis $7,202 in 1995 and $28,520 in 1996 to date
for consulting services with respect to business development under a consulting
agreement. This agreement commenced in January 1995.

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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is currently composed of Messrs. Kushner,
Fthenakis and Townsend. The Company is not aware of any compensation committee
interlocks.

EXECUTIVE COMPENSATION

The following table sets forth information regarding the compensation for
1995, 1994 and 1993 of the Company's Chief Executive Officer and the four other
most highly compensated executive officers in 1995 (the "Executive Officer
Group") for services rendered in all capacities to the Company:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------------------

NAME AND PRINCIPAL OTHER ANNUAL OPTION ALL OTHER
POSITION(S) YEAR SALARY($) BONUS($) COMPENSATION($)(2) AWARDS COMPENSATION($)(3)
- ---------------------------- --------- --------- --------- ----------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>

C.E. Velez (1).............. 1995 253,454 0 1,691 -- 6,300
President, Chief Executive 1994 243,600 93,200 926 -- 4,500
Officer and Chairman of 1993 236,015 153,000 1,343 -- 60,610
the Board

Raymond V. McMillan......... 1995 166,385 0 2,616 -- 16,915
President-Information 1994 157,500 41,504 599 20,000 14,207
Technology Services 1993 161,165 73,000 2,353 -- 15,482

George S. Sebestyen......... 1995 191,219 0 3,008 -- 169,300(4)
President-CTASS 1994 181,002 31,500 0 -- 24,583
1993 173,389 0 713 -- 16,472

Martin N. Titland(5)........ 1995 184,689 0 1,828 -- 21,538
Executive Vice President 1994 177,617 49,832 674 12,000 22,009
1993 171,942 73,000 1,597 30,000 16,100

Gregory H. Wagner........... 1995 150,007 0 768 -- 27,085
Executive Vice President, 1994 147,000 62,595 558 -- 8,864
Chief Financial Officer 1993 140,730 64,000 799 -- 12,651
and Treasurer
</TABLE>

- ------------------------------

(1) Dr. Velez currently has outstanding certain loans from the Company. See
"Certain Transactions."

(2) Represents long term disability premiums and group life insurance premiums
for amounts in excess of $50,000.

(3) Includes amounts of the Company's contributions allocated to participants'
accounts pursuant to the Company's 401(k) plan and ESOP, other relocation
reimbursements, compensation from the exercise of stock options and
miscellaneous cash payments pursuant to the Company's cafeteria plan.

(4) Includes payment of $160,000 pursuant to the award of a commercial contract.

(5) Martin N. Titland retired as Executive Vice President of the Space and
Telecommunications Systems business on September 6, 1996. The Company and
Mr. Titland have entered into a three year consulting agreement which
provides for compensation of $96,000 per annum for approximately 960 hours
of service in each of the first two years of the agreement.

54
<PAGE>
Ricardo de Bastos, who joined the Company in April 1996 as the President of
the Space and Telecommunications Systems business, receives an annual salary of
$200,000. In addition, Mr. de Bastos received other compensation of $125,000 in
cash (after tax) and other compensation of $4,500 in connection with his hiring,
and will receive 13,171 shares of Common Stock (which will vest over three
years), and options to purchase 26,342 shares of Common Stock (which will vest
over three years).

OPTION GRANTS DURING 1995

During fiscal 1995, the Company granted options under the 1991 Plan to
purchase an aggregate of 15,250 shares of Common Stock at exercise prices
ranging from $8.97 to $9.39 per share. No stock options were granted to any
member of the Executive Officer Group during fiscal 1995.

Since January 1, 1996, the Company has granted certain key executives
options under the 1991 Plan to purchase an aggregate of 228,632 shares of Common
Stock at an exercise price of $9.49 per share, including 26,342 options to
purchase shares of Common Stock granted to Ricardo de Bastos.

FISCAL YEAR-END OPTION VALUES

The following table sets forth information concerning the exercise of stock
options during fiscal 1995 and the number and value of unexercised stock options
held at year end by each member of the Executive Officer Group. No stock options
were exercised by members of the Executive Officer Group during fiscal 1995.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FY-END (#) FY-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ----------------------------------------- ----------------------- --------------------------
<S> <C> <C>

C.E. Velez............................... 0 0

Raymond V. McMillan...................... 5,000/17,000 54,120/95,192

George S. Sebestyen...................... 0 0

Martin N. Titland........................ 60,000/12,000 612,860/94,020

Gregory H. Wagner........................ 73,000/0 889,960/0
</TABLE>

- ------------------------

(1) There was no public trading market for the Common Stock on December 31,
1995. Accordingly, solely for purposes of this table, the values in this
column have been calculated on the basis of an assumed initial public
offering price of $15.00, less the aggregate exercise price of the options.

STOCK OPTIONS

NON-QUALIFIED STOCK OPTIONS

Non-qualified stock options have been granted to directors and certain key
employees pursuant to individual agreements. As of August 31, 1996,
non-qualified stock options to purchase 494,870 shares of Common Stock having a
weighted average exercise price of $7.38 per share were outstanding.

1991 PLAN

In 1991, the Company established the 1991 Plan in which directors, officers
and other employees of, and consultants to, the Company may participate. Options
granted under the 1991 Plan can be qualified or non-qualified stock options. An
aggregate of 1,000,000 shares of the Common Stock is authorized for issuance
under the 1991 Plan, of which 377,274 shares remain available for grant. The
1991 Plan is

55
<PAGE>
administered by the Compensation Committee of the Board of Directors. The
Compensation Committee determines, among other things, to whom options or stock
bonuses will be granted and the times at which grants will be made, as well as
the terms of each option or bonus. During 1993, employees purchased 102,830 of
such shares and received 77,530 bonus shares pursuant to these programs. During
1994, employees purchased 141,793 of such shares and received 107,140 bonus
shares. During 1995, employees purchased 15,061 of such shares and received
15,061 bonus shares. During the first six months of 1996, employees purchased no
such shares and received no bonus shares. The Company intends to grant options
to purchase 175,000 shares of Common Stock at the public offering price upon the
consummation of the Offerings.

BONUS PLAN

The Company has individual incentive plans for its executive officers which
provide for cash bonuses to be awarded based upon financial performance in
relation to criteria set forth in the incentive plans. Payment of these bonuses
is usually made after year-end. The Company also provides two levels of awards
for specific achievements by all levels of Company employees. Spot bonus awards
and major contribution awards may be made based upon the written recommendation
and approval of the appropriate levels of management.

Bonus expense is recorded each year to match the incentive plans pertaining
to that year. Any unpaid bonus amounts are recorded as a liability and
subsequent payments reduce the liability balance when made. At December 31, 1995
and 1994, respectively, the Company had accrued bonus liabilities of $1.2
million and $1.1 million for 1995 and 1994. Payments made subsequent to December
31, 1995 and 1994 were $0.8 million and $1.3 million respectively.

THE 401(K) PLAN

The Company sponsors a qualified 401(k) plan (the "401(k) Plan") which
allows participants to make before-tax salary deferral contributions. Employees
may contribute to the 401(k) Plan up to 15% of their 401(k) Plan eligible
compensation with a maximum in 1996 of $9,500. The Company will match employee
contributions for an amount up to 3% of each employee's 401(k) Plan eligible
compensation. The Company may contribute additional amounts not based upon the
employee's elective contributions at the discretion of the Board of Directors,
which are allocated on the basis of each participant's compensation. The
Company's contributions to the 401(k) Plan generally vest over four years.

The Company added its Common Stock as an investment alternative in the
401(k) Plan in December 1993. Participants are restricted to not more than 20%
of their balances as an investment in Common Stock.

DESCRIPTION OF THE ESOP PLAN

The Company sponsors an employee stock ownership plan ("ESOP"), which was
adopted in 1988. The ESOP is a qualified stock bonus plan under Section 401(a)
of the Code and an employee stock ownership plan under Section 4975(e)(7) of the
Code. The ESOP is designed to enable participating employees to share in the
growth and prosperity of the Company while providing them with the opportunity
to accumulate capital for their future. All contributions to the ESOP are made
by the Company. Contributions are proportionately allocated on the basis of each
eligible participant's compensation. ESOP shares vest over four years. Upon
distribution of ESOP shares to participants and their beneficiaries, the Company
may be required to purchase such shares at fair market value if such shares are
not readily tradable on an established market. The ESOP presently holds 514,720
shares of Common Stock. See "Principal Stockholders."

56
<PAGE>
PRIOR LIMITED MARKET FOR COMMON STOCK

The Company established the Limited Market for the Common Stock in 1992 to
enable employees to make limited purchases and sales of shares of Common Stock
by registering 2,012,180 shares of Common Stock including Stock held by certain
officers and directors of the Company (the "Limited Market Registration") with
the Commission for sale to the Company's employees, directors and consultants in
connection with the 1991 Plan, to a trustee for the benefit of employees under
ESOP, upon exercise of options granted under certain stock option agreements and
to employees, consultants and directors pursuant to bonuses granted by the
Company. The Limited Market enabled certain stockholders to sell shares of
Common Stock to qualified persons and, in certain circumstances, the Company, at
prices based on a formula on five occasions since 1992. All of the shares of
Common Stock sold in connection with the Limited Market Registration are subject
to certain restrictions (including restrictions on transferability) and certain
other contingencies under the terms of stock restriction agreements, which will
automatically terminate upon the consummation of the Offerings.

The formula price was based on a variety of factors, such as the book value
of the Company, the after-tax profits of the Company, the number of shares of
Common Stock outstanding and the change in both the Company's revenues and
profit margins of the Company's contracts, discounted for the limited liquidity
of the Common Stock and adjusted based on a market index of comparable
companies. In connection with the Board's annual determination of the
appropriate formula price, Legg Mason Wood Walker, Incorporated was asked to
recommend to the Board of Directors (i) the discount factor to reflect the
limited liquidity of the Common Stock and (ii) the market index to reflect
existing securities market conditions, and provide to the Board of Directors an
assessment as to whether the price calculated as of the end of the relevant
fiscal year was within a range that Legg Mason Wood Walker, Incorporated
considered reasonable. At December 31, 1995, the formula price, based upon the
relevant discount factor and market index, and certain other factors, was $9.49
per share.

57
<PAGE>
CERTAIN TRANSACTIONS

During 1995, the Company discontinued the operations of its Simulation
Systems Division, which manufactured aircraft flight simulators for sale or
lease. The assets of the division consisted primarily of a cockpit flight
simulator and various fixed assets, which had an aggregate value of $3.1
million, net of accumulated depreciation. These assets were sold on September 1,
1995 to a company principally owned by Mr. Claussen, one of the Company's
principal stockholders, for two notes secured by the assets with an aggregate
principal amount of $2.2 million, bearing interest at the Company's borrowing
rate which has ranged between 6.00% and 7.75% per annum, and a 15% minority
interest in the entity purchasing the division, which has been assigned a value
of $0.2 million. In March 1991, the Company made a loan to Mr. Claussen of
$368,623 for the purchase of his new residence. The interest rate on this loan
varied from 4.69% to 7.75% per annum and equaled the interest rate on the
Company's revolving line of credit under the Credit Facility. Mr. Claussen paid
all outstanding principal and accrued interest on the loan in January 1996.

Between May 1993 and July 1995, the Company made loans aggregating $500,000
to Dr. Velez for the purchase and construction of a new residence, evidenced by
a revolving promissory note due August 2000 bearing interest at the same rates
applicable to the Company under its Credit Facility, which have ranged between
6.00% and 7.75% per annum. Interest on this loan is payable annually in July of
each year and has been paid in cash and, in 1996, with the consent of the
Company, in the form of a $43,000 promissory note due February 19, 1997, bearing
interest at the same rate as the revolving promissory note. Both notes are
secured by a pledge of shares of Common Stock owned by Dr. Velez.

58
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with regard to the
beneficial ownership of the Common Stock as of August 31, 1996 (assuming the
Underwriters' over-allotment option is not exercised), by (i) each person known
by the Company to own beneficially more than 5% of the outstanding shares of
Common Stock, (ii) each director, each executive officer and each member of the
Executive Officer Group and (iii) all current directors and executive officers
of the Company as a group:

<TABLE>
<CAPTION>
PERCENT BENEFICIALLY
OWNED
SHARES ----------------------------------
NAME AND ADDRESS BENEFICIALLY BEFORE AFTER OFFERINGS
OF BENEFICIAL OWNER OWNED (1) OFFERINGS (2)
- -------------------------------------- -------------- --------------- -----------------
<S> <C> <C> <C>
5% Stockholders:
C.E. Velez.......................... 2,550,000 55.9% 31.9%
ESOP................................ 514,720 11.3 6.4
B.A. Claussen....................... 499,796(3) 10.7 6.2
Terry J. Piddington................. 241,707 5.3 3.0
Directors and executive officers:
C.E. Velez.......................... 2,550,000 55.9 31.9
Terry J. Piddington................. 241,707 5.3 3.0
George S. Sebestyen................. 136,744 3.0 1.7
Gregory H. Wagner................... 74,400 1.6 *
Martin N. Titland................... 82,216(4) 1.8 *
Raymond V. McMillan................. 21,918 * *
John W. Townsend, Jr................ 13,222(5) * *
George W. Morgenthaler.............. 9,291(6) * *
John L. Slack....................... 3,698(7) * *
Harvey D. Kushner................... 2,176(8) * *
Ricardo de Bastos................... 0 * *
Emanuel J. Fthenakis................ 263 * *
James M. Papada, III................ 263 *
All current directors and executive
officers as a group (13 persons as
of August 31, 1996)................. 3,136,777 [68.8%] 39.2%
</TABLE>

- ------------------------

* Less than 1%.

(1) Except as otherwise indicated, the persons in this table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and subject to the information contained in the footnotes to this
table. Shares not outstanding but deemed beneficially owned by virtue of the
right of a person or group to acquire them within 60 days are treated as
outstanding only for purposes of determining the number of and percent owned
by such person or group. All share amounts are exclusive of shares
beneficially owned through the ESOP.

(2) The number of shares of Common Stock deemed outstanding prior to the
Offerings consists of 4,560,626 shares of Common Stock outstanding as of
August 31, 1996. The number of shares of Common Stock deemed outstanding
after the Offerings includes an additional 3,000,000 shares of Common Stock
being offered for sale by the Company in the Offerings and 433,259 shares
issued to the holders of the Notes.

(3) Includes non-qualified options to purchase 100,000 shares of Common Stock
granted under the 1991 Plan, which are currently exercisable within 60 days
of August 31, 1996.

59
<PAGE>
(4) Includes non-qualified options to purchase 40,000 shares of Common Stock
granted under the 1991 Plan which are currently exercisable within 60 days
of August 31, 1996.

(5) Includes non-qualified options to purchase 3,242 shares of Common Stock
granted under the 1991 Plan which are currently exercisable within 60 days
of August 31, 1996.

(6) Includes non-qualified options to purchase 3,935 shares of Common Stock
granted under the 1991 Plan which are currently exercisable within 60 days
of August 31, 1996.

(7) Includes non-qualified options to purchase 278 shares of Common Stock
granted under the 1991 Plan which are currently exercisable within 60 days
of August 31, 1996.

(8) Includes non-qualified options to purchase 556 shares of Common Stock
granted under the 1991 Plan which are currently exercisable within 60 days
of August 31, 1996.

60
<PAGE>
DESCRIPTION OF CAPITAL STOCK

AMENDMENTS TO THE RESTATED CHARTER

Prior to the consummation of the Offerings, the Company will amend the
Restated Charter to, among other things, (i) increase the number of authorized
shares of Common Stock, (ii) authorize the issuance of preferred stock without
stockholder approval and upon such terms as the Board of Directors may
determine, (iii) remove provisions relating to the control and ownership of the
Company by Dr. Velez, (iv) prohibit business combinations involving the Company
unless certain conditions are met and (v) classify the Board of Directors into
three classes consisting of an equal number of directors (three or four
directors each), each class serving staggered three-year terms.

GENERAL

The authorized capital stock of the Company currently consists of 20,000,000
shares of Common Stock. After giving effect to the amendment to the Restated
Charter prior to the consummation of the Offerings, the Company's authorized
capital stock will consist of (i) 20,000,000 shares of Common Stock, par value
$.01 per share and (ii) 1,000,000 shares of Preferred Stock, par value $1.00 per
share (the "Preferred Stock").

COMMON STOCK

As of August 31, 1996, there were outstanding 4,560,626 shares of Common
Stock held of record by 360 persons. Upon the consummation of the Offerings,
there will be 7,993,885 shares of Common Stock outstanding assuming (i) no
exercise of the Underwriters' over-allotment option, (ii) no exercise of
outstanding options to purchase an aggregate of 669,870 shares of Common Stock
and (iii) the issuance of 433,259 shares of Common Stock to the holders of the
Notes.

Holders of Common Stock are entitled to one vote per share in all matters to
be voted on by the stockholders of the Company and do not have cumulative voting
rights. Subject to preferences that may be applicable to any Preferred Stock
outstanding at the time, holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. See "Dividend Policy." In the
event of a liquidation, dissolution or winding up of the Company, holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of the Company's liabilities and the liquidation preference, if any, of any
outstanding Preferred Stock. Holders of shares of Common Stock have no
preemptive, subscription, redemption or conversion rights. There are no
redemption or sinking fund provisions applicable to the Common Stock. All of the
outstanding shares of Common Stock are, and the shares offered by the Company in
the Offerings will be, when issued and paid for, fully paid and non-assessable.
The rights, preferences and privileges of holders of Common Stock are, subject
to, and may be adversely affected by, the rights of the holders of shares of any
series of Preferred Stock which the Company may designate and issue in the
future.

PREFERRED STOCK

After giving effect to the amendment to the Restated Charter prior to the
consummation of the Offerings, the Board of Directors will have the authority,
without any further vote or action by the stockholders, to provide for the
issuance of up to 1,000,000 shares of Preferred Stock from time to time in one
or more series with such designations, rights, preferences and limitations as
the Board of Directors may determine, including the consideration received
therefor. The Board also will have the authority to determine the number of
shares comprising each series, dividend rates, redemption provisions,
liquidation preferences, sinking fund provisions, conversion rights and voting
rights without approval by the holders of Common Stock. Although it is not
possible to state the effect that any issuance of Preferred Stock might have on
the rights of holders of Common Stock, the issuance of Preferred Stock may have
one or more of the following effects: (i) to restrict Common Stock dividends if
Preferred Stock dividends have not been

61
<PAGE>
paid, (ii) to dilute the voting power and equity interest of holders of Common
Stock to the extent that any Preferred Stock series has voting rights or is
convertible into Common Stock or (iii) to prevent current holders of Common
Stock from participating in the Company's assets upon liquidation until any
liquidation preferences granted to holders of Preferred Stock are satisfied. In
addition, the issuance of Preferred Stock may, under certain circumstances, have
the effect of discouraging a change in control of the Company by, for example,
granting voting rights to holders of Preferred Stock that require approval by
the separate vote of the holders of Preferred Stock for any amendment to the
Restated Charter or any reorganization, consolidation, merger or other similar
transaction involving the Company. As a result, the issuance of such Preferred
Stock may discourage bids for the Common Stock at a premium over the market
price therefor, and could have a materially adverse effect on the market value
of the Common Stock. See "Risk Factors--Effect of Certain Charter Provisions."

CERTAIN CHARTER PROVISIONS

Prior to the consummation of the Offerings, the Company will amend the
Restated Charter to, among other things, (i) prohibit business combinations
involving the Company unless certain conditions are met and (ii) classify the
Board of Directors into three classes consisting of an equal number of directors
(or as close to equal as possible) three or four directors each, each class
serving staggered three-year terms. The "business combination" provision will
provide that certain "business combinations" between the Company and an
"interested stockholder" are prohibited for a three-year period following the
date that such stockholder became an "interested stockholder", unless (i) the
"business combination" was approved by the Board of Directors of the Company
before the other party to the "business combination" became an "interested
stockholder", (ii) upon consummation of the transaction that made it an
"interested stockholder", the "interested stockholder" owned at least 85% of the
voting stock of the Company outstanding at the commencement of the transaction
(excluding voting stock owned by directors who are also officers or held in
employee benefit plans in which the employees do not have a confidential right
to tender or vote stock held by the plan) or (iv) the "business combination" was
approved by the Board of Directors of the Company and ratified by two-thirds of
the voting stock which the "interested stockholder" did not own. The three-year
prohibition does not apply to certain "business combinations" proposed by an
"interested stockholder" following the announcement or notification of certain
extraordinary transactions involving the Company and a person who had not been
an "interested stockholder" during the previous three years or who became an
"interested stockholder" with the approval of the majority of the Company's
directors. The term "business combination" is defined generally to include
mergers or consolidations between the Company and an "interested stockholder,"
transactions with an "interested stockholder" involving the assets or stock of
the corporation or its majority-owned subsidiaries and transactions which
increase an "interested stockholder's" percentage ownership of stock. The term
"interested stockholder" is defined generally as a stockholder who, together
with affiliates and associates, owns (or, within three years prior, did own) 15%
or more of the Company 's voting stock. This provision could prohibit or delay a
merger, takeover or other change in control of the Company and therefore could
discourage attempts to acquire the Company.

In addition, the classification of the Board of Directors into three classes
consisting of three or four directors each, each class serving staggered three
year terms, may render more difficult the removal of incumbent management.

LIMITATIONS ON DIRECTORS' LIABILITY

The Restated Charter provides that no director of the Company shall be
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) in respect of certain acts set forth in the Colorado
Corporation Code or (iv) for any transaction from which the director derived

62
<PAGE>
an improper personal benefit. The effect of these provisions will be to
eliminate the rights of the Company and its stockholders (through stockholders'
derivative suits on behalf of the Company) to recover monetary damages against a
director for breach of fiduciary duty as a director (including breaches
resulting from gross negligence), except in the situations described above.

In addition, the Restated Charter provides that the Company must indemnify
its directors and executive officers to the fullest extent provided by law and
may indemnify its other officers, employees and agents to the fullest extent
provided by law.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
in the opinion of the Commission such indemnification is against public policy
as expressed in the Act and is therefore unenforceable.

BY-LAWS

The Company intends to amend its by-laws prior to the consummation of the
Offerings. The Company intends to include in the amended by-laws provisions
which require, subject to certain exceptions, sixty (60) days' advance notice of
(i) stockholder nominations for election of directors at any annual meeting and
(ii) stockholder proposals to be considered at any annual meeting.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar of the Common Stock will be .

63
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offerings, there has been no public market for the shares of
the Common Stock of the Company. The Company can make no predictions as to the
effect, if any, that sales of shares or the availability of shares for sale will
have on the market price prevailing from time to time. Nevertheless, sales of
significant amounts of the Common Stock in the public market, or the perception
that such sales may occur, could adversely affect prevailing market prices. See
"Risk Factors--Shares Eligible for Future Sale."

Upon completion of the Offerings, the Company expects to have 7,993,885
shares of Common Stock outstanding, assuming no exercise of the Underwriters'
over-allotment option. Of these shares, the 3,000,000 shares of Common Stock
sold in the Offerings and the shares of Common Stock sold under the
Limited Market Registration will be freely tradable without restriction under
the Securities Act, except for any such shares which may be acquired by an
"affiliate" of the Company (an "Affiliate") as that term is defined in Rule 144
under the Securities Act, which shares will be subject to the resale limitations
of Rule 144.

An aggregate of approximately shares of Common Stock held by existing
stockholders upon completion of the Offerings will be "restricted securities"
(as that phrase is defined in Rule 144) and may not be resold in the absence of
registration under the Securities Act or pursuant to exemptions from such
registration, including among others, the exemption provided by Rule 144 under
the Securities Act. Except as described below, approximately shares of
Common Stock are eligible for sale in the public market pursuant to Rule 701
under the Securities Act. In addition, approximately [ ] shares are eligible for
sale in the public market under Rule 144, subject to the volume limitations and
other restrictions described below.

In general, under Rule 144 as currently in effect, if a period of at least
two years has elapsed since the later of the date the "restricted securities"
were acquired from the Company and the date they were acquired from an
Affiliate, then the holder of such restricted securities (including an
Affiliate) is entitled to sell a number of shares within any three-month period
that does not exceed the greater of 1% of the then outstanding shares of the
Common Stock (approximately 80,000 shares immediately after the Offerings) or
the average weekly reported volume of trading of the Common Stock on Nasdaq
during the four calendar weeks preceding such sale. The holder may only sell
such shares through unsolicited brokers' transactions. Sales under Rule 144 are
also subject to certain requirements pertaining to the manner of such sales,
notices of such sales and the availability of current public information
concerning the Company. Affiliates may sell shares not constituting restricted
shares in accordance with the foregoing volume limitations and other
requirements but without regard to the two-year holding period. Under Rule
144(k), if a period of at least three years has elapsed between the later of the
date restricted securities were acquired from the Company and the date they were
acquired from an Affiliate, as applicable, a holder of such restricted
securities who is not an Affiliate at the time of the sale and has not been an
Affiliate for at least three months prior to the sale would be entitled to sell
the shares immediately without regard to the volume limitations and other
conditions described above.

Any employee of the Company who purchased his or her shares of Common Stock
pursuant to a written compensation plan or contract may be entitled to rely on
the resale provisions of Rule 701 under the Securities Act, which permits
non-affiliates to sell their Rule 701 shares without having to comply with the
current public information, holding period, volume limitation or notice
provisions of Rule 144 and permits affiliates to sell their Rule 701 shares
without having to comply with Rule 144's holding period restrictions.

The Company intends to file as soon as practicable after the closing of the
Offerings a registration statement on Form S-8 under the Securities Act to
register approximately and shares of Common Stock reserved for
issuance under the 1991 Plan, thus permitting the resale of shares issued under
the 1991 Plan by non-affiliates in the public market without restriction under
the Securities Act. Such registration statement is expected to become effective
immediately upon filing, whereupon shares

64
<PAGE>
registered thereunder will become eligible for sale in the public market,
subject to vesting and, in certain cases, subject to the lock-up agreements
described below. As of August 31, 1996, options to purchase an aggregate of
669,870 shares of Common Stock were outstanding under the 1991 Plan. Upon
consumation of the Offerings, the Company intends to grant options to purchase
175,000 shares of Common Stock under 1991 Plan.

The holders of the Notes shares are entitled to certain registration rights
with respect to 433,259 shares of Common Stock.

Notwithstanding the foregoing, in connection with the Offerings, the
Company, the management and directors of the Company, the holders of the Notes
and certain other stockholders, who will own an aggregate of approximately
shares of Common Stock after the Offerings, have each agreed with the
Underwriters that, without the prior written consent of Lehman Brothers it will
not (a) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exchangeable for Common Stock (whether such shares or any such securities are
then owned by such person or are thereafter acquired), or (b) enter into any
swap or similar agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (a) or (b) of this paragraph is to be settled by
delivery of such Common Stock or such other securities, in cash or otherwise,
for a period of 365 days after the date of this Prospectus, other than, in the
case of the Company, (i) the sale to the Underwriters of the shares of Common
Stock pursuant to the Underwriting Agreements, (ii) the issuance of 433,259
shares of Common Stock to the holders of the Notes pursuant to the Note Purchase
Agreement, (iii) upon the exercise of outstanding stock options and (iv) the
grant of options to purchase 175,000 shares of Common Stock under the 1991 Plan.

65
<PAGE>
CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-U.S. HOLDERS OF COMMON STOCK

The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a
person that, for U.S. federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership or a foreign estate or
trust (a "non-U.S. holder"). This discussion does not consider specific facts
and circumstances that may be relevant to a particular holder's tax position
(including the tax position of certain U.S. expatriates) and does not deal with
U.S. state and local or non-U.S. tax consequences. Furthermore, the following
discussion is based on provisions of the U.S. Internal Revenue Code of 1986, as
amended (the "Code"), and administrative and judicial interpretations as of the
date hereof, all of which are subject to change. Each prospective holder is
urged to consult a tax advisor with respect to the U.S. federal tax consequences
of acquiring, holding and disposing of Common Stock as well as any tax
consequences that may arise under the laws of any U.S. state, municipality or
other tax jurisdiction.

DIVIDENDS

Dividends paid to a non-U.S. holder of Common Stock will be subject to
withholding of U.S. federal income tax at a 30% rate or such lower rate as may
be specified by an applicable income tax treaty, unless the dividends are
effectively connected with the conduct of a trade or business within the United
States or, if an income tax treaty applies, are attributable to a U.S. permanent
establishment of such holder. Dividends that are effectively connected with such
holder's conduct of a trade or business in the United States or, if an income
tax treaty applies, are attributable to a U.S. permanent establishment of such
holder, are subject to tax at rates applicable to U.S. citizens, resident aliens
and domestic U.S. corporations, and are not generally subject to withholding.
Any such affectively connected dividends received by a non-U.S. corporation may
also, under certain circumstances, be subject to an additional "branch profits
tax" at a 30% rate or such lower rate as may be specified by an applicable
income tax treaty.

Under current United States Treasury regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above and, under the current interpretation of the United
States Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. Under proposed United States Treasury regulations, not
currently in effect, however, a non-U.S. holder of Common Stock who wishes to
claim the benefit of an applicable treaty rate would be required to satisfy
applicable certification and other requirements.

A non-U.S. holder of Common Stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts currently withheld by filing an appropriate claim for refund with the
U.S. Internal Revenue Service.

GAIN ON DISPOSITION OF COMMON STOCK

A non-U.S. holder generally will not be subject to U.S. federal income tax
in respect of gain recognized on a disposition of Common Stock unless (i) the
gain is effectively connected with a trade or business of the non-U.S. holder in
the United States, (ii) in the case of a non-U.S. holder who is an individual
and holds the Common Stock as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year of the sale and either
(a) such individual's "tax home" for the U.S. federal income tax purposes is in
the United States, or (b) the gain is attributable to an office or other fixed
place of business maintained in the United States by such individual, or (iii)
the Company is or has been a "U.S. real property holding corporation" for
federal income tax purposes and the non-U.S. holder held, directly or
indirectly, at any time during the five-year period ending on the date of
disposition, more than 5% of the Common Stock. The Company has not been, is not,
and does not anticipate becoming a "U.S. real property holding corporation" for
federal income tax purposes.

66
<PAGE>
FEDERAL ESTATE TAXES

Common Stock held by a non-U.S. holder at the time of death will be included
in such holder's gross estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.

U.S. INFORMATION REPORTING REQUIREMENT AND BACKUP WITHHOLDING TAX

U.S. information reporting requirements, other than reporting of dividend
payments for purposes of the withholding tax noted above, and backup withholding
tax generally will not apply to dividends paid to non-U.S. holders that are
either subject to the 30% withholding discussed above or that are not so subject
because an applicable tax treaty reduces such withholding. Otherwise, backup
withholding of U.S. federal income tax at a rate of 31% may apply to dividends
paid with respect to the Common Stock to holders that are not "exempt
recipients" and that fail to provide certain information (including the holder's
U.S. taxpayer identification number) in the manner required by U.S. law and
applicable regulations. Generally, the payor of the dividends may rely on the
payees' address outside the United States in determining that the withholding
discussed above applies, and consequently, that the backup withholding
provisions do not apply.

As a general proposition, U.S. information reporting and backup withholding
also will not apply to a payment made outside the United States of the proceeds
of a sale of Common Stock through an office outside the United States of a
non-U.S. broker. However, U.S. information reporting requirements (but not
backup withholding) will apply to a payment made outside the United States of
the proceeds of a sale of Common Stock through an office outside the United
States of a broker that is a U.S. person, that derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States, or that is a "controlled foreign corporation" as to the United States,
unless the broker has documentary evidence in its records that the holder is a
non-U.S. holder and certain conditions are met or the holder otherwise
establishes an exemption. Payment by a U.S. office of a broker of the proceeds
of a sale of Common Stock is currently subject to both U.S. backup withholding
and information reporting unless the holder certifies non-U.S. status under
penalties of perjury or otherwise establishes an exemption.

A non-U.S. holder generally may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for
refund with the U.S. Internal Revenue Service.

67
<PAGE>
UNDERWRITING

The underwriters of the U.S. Offering (the "U.S. Underwriters"), for whom
Lehman Brothers Inc., Cowen & Company and Legg Mason Wood Walker, Incorporated
are serving as representatives, have severally agreed, subject to the terms and
conditions of the U.S. Underwriting Agreement the form of which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part, to
purchase from the Company, and the Company has agreed to sell to each U.S.
Underwriter, the aggregate number of shares of Common Stock set forth opposite
their respective names below:

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
Lehman Brothers Inc..............................................................
Cowen & Company..................................................................
Legg Mason Wood Walker, Incorporated.............................................
----------
Total.................................................................... 2,400,000
----------
----------
</TABLE>

The managers of the International Offering named below (the "International
Managers") for whom Lehman Brothers International (Europe), Cowen & Company and
Legg Mason Wood Walker, Incorporated are acting as lead managers, have severally
agreed, subject to the terms and conditions of the International Underwriting
Agreement, the form of which is filed as an exhibit to the Registration
Statement, to purchase from the Company, and the Company has agreed to sell to
each International Manager, the aggregate number of shares of Common Stock set
forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
- ---------------------------------------------------------------------------------- -----------
<S> <C>
Lehman Brothers International (Europe)............................................
Cowen & Company...................................................................
Legg Mason Wood Walker, Incorporated..............................................
-----------
Total..................................................................... 600,000
-----------
-----------
</TABLE>

The U.S. Underwriting Agreement and the International Underwriting Agreement
(collectively, the "Underwriting Agreements") provide that the obligations of
the U.S. Underwriters and the International Managers to purchase shares of
Common Stock are subject to certain conditions, and that if any of the shares of
Common Stock are purchased by the U.S. Underwriters or by the International
Managers pursuant to the Underwriting Agreements, all shares of Common Stock
agreed to be purchased by either the U.S. Underwriters or by the International
Managers pursuant to the Underwriting Agreements must be so purchased. The
offering price and the underwriting discounts and commissions for the U.S.
offering and the international offering are identical. The closing of the
international offering is a condition to the closing of the U.S. offering and
the closing of the U.S. offering is a condition to the closing of the
international offering.

The Company has been advised that the U.S. Underwriters and the
International Managers propose to offer the shares of Common Stock directly to
the public initially at the public offering price set forth on the cover page of
this Prospectus, and to certain selected dealers (who may include the U.S.
Underwriters and the International Managers) at such public offering price less
a concession not in excess of $ per share. The U.S. Underwriters and the
International Managers may allow and the selected dealers may reallow a
concession not in excess of $ per share to certain other brokers and
dealers. After the initial public offering, the public offering price, the
concession to selected dealers and the reallowance to the other dealers may be
changed by the U.S. Underwriters and the International Managers.

68
<PAGE>
The U.S. Underwriters and the International Managers have entered into an
Agreement Among U.S. Underwriters and International Managers (the "Agreement
Among") pursuant to which each U.S. Underwriter has agreed that, as part of the
distribution of the shares of Common Stock offered in the U.S. offering, (a) it
is not purchasing any of such shares for the account of anyone other than a U.S.
or Canadian Person (as defined below) and (b) it has not offered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any of such
shares or distribute any prospectus relating to the U.S. offering outside the
United States or Canada or to anyone other than a U.S. or Canadian Person. In
addition, pursuant to the Agreement Among each International Manager has agreed
that as part of the distribution of the shares of Common Stock offered in the
international offering, (a) it is not purchasing any of such shares for the
account of any U.S. or Canadian Person and (b) it has not offered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any of such
shares or distribute any prospectus relating to the international offering
within the United States or Canada or to any U.S. or Canadian Person. The
foregoing limitations do not apply to stabilization transactions or to certain
other transactions specified in the Underwriting Agreements and the Agreement
Among, including: (i) certain purchases and sales between the U.S. Underwriters
and the International Managers; (ii) certain offers, sales, resales, deliveries
or distributions to or through investment advisors or other persons exercising
investment discretion; (iii) purchases, offers or sales by a U.S. Underwriter
who is also acting as an International Manager or by an International Manager
who also is acting as a U.S. Underwriter and (iv) other transactions
specifically approved by the U.S. Underwriters and International Managers. As
used herein, "U.S. or Canadian Person" means any resident or citizen of the
United States or Canada, any corporation, pension, profit sharing or other trust
or other entity organized under or governed by the laws of the United States or
Canada or any political subdivision thereof (other than the foreign branch of
any United States or Canadian Person), any estate or trust the income of which
is subject to United States or Canadian federal income taxation regardless of
the source of its income, and any United States or Canadian branch of a person
other than a United States or Canadian person. The term "United States" means
the United States of America (including, the states thereof and the District of
Columbia) and its territories, its possessions and other areas subject to its
jurisdiction. The term "Canada" means the provinces of Canada, its territories,
its possessions and other areas subject to its jurisdiction.

Pursuant to the Agreement Among, sales may be made among the U.S.
Underwriters and the International Managers of such number of shares of Common
Stock as may be mutually agreed. The price of any shares so sold shall be the
public offering price as then in effect for Common Stock being sold by the U.S.
Underwriters and International Managers, less an amount not greater than the
selling concession unless otherwise determined by mutual agreement. To the
extent that there are sales pursuant to the Agreement Among, the number of
shares initially available for sale by the U.S. Underwriters and the
International Managers may be more or less than the amount specified on the
cover page of this Prospectus.

Each International Underwriter has represented and agreed that: (i) it has
not offered or sold and, prior to the date six months after the date of issue of
the shares of Common Stock, will not offer or sell any shares of Common Stock to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purpose of their business or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Common Stock in, form or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on, and
will only issue or pass on, to any person in the United Kingdom, any document
received by it in connection with the issue of the Common Stock if that person
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995.

69
<PAGE>
Purchasers of the shares offered pursuant to the Offerings may be required
to pay stamp taxes and other charges in accordance with the laws and practices
of the country of purchase in addition to the offering price set forth on the
cover page hereof.

The Company has granted to the U.S. Underwriters and the International
Managers options to purchase up to an additional 450,000 shares of Common Stock
at the public offering price, less the aggregate underwriting discounts and
commissions, shown on the cover page of this Prospectus, solely to cover
over-allotments, if any. The option may be exercised at any time up to 30 days
after the date of this Prospectus. To the extent that the U.S. Underwriters and
the International Managers exercise such options, each of the U.S. Underwriters
and the International Managers will be committed, subject to certain conditions,
to purchase a number of option shares proportionate to such U.S. Underwriter's
and the International Manager's commitment.

The Company has agreed to indemnify the U.S. Underwriters and the
International Managers against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments that the U.S. Underwriters and
the International Managers may be required to make in respect thereof.

The Company intends to apply to the Nasdaq National Market for the listing
of its Common Stock under the symbol "CTAI."

The U.S. Underwriters and the International Managers have informed the
Company that they do not intend to confirm sales to any account over which they
exercise discretionary authority.

The Company, the management and directors of the Company, the holders of the
Notes and certain other stockholders, who will own an aggregate of approximately
shares of Common Stock after the Offerings, have each agreed with the
Underwriters that, without the prior written consent of Lehman Brothers, it will
not (a) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exchangeable for Common Stock (whether such shares or any such securities are
then owned by such person or are thereafter acquired), or (b) enter into any
swap or similar agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (a) or (b) of this paragraph is to be settled by
delivery of such Common Stock or such other securities, in cash or otherwise,
for a period of 365 days after the date of this Prospectus, other than, in the
case of the Company, (i) the sale to the Underwriters of the shares of Common
Stock pursuant to the Underwriting Agreements, (ii) the issuance of 433,259
shares of Common Stock to the holders of the Notes pursuant to the Note Purchase
Agreement, (iii) upon the exercise of outstanding stock options and (iv) the
grant of options to purchase 175,000 shares of Common Stock pursuant to the 1991
plan.

Legg Mason Wood Walker, Incorporated has from time to time performed, and
expects to continue to perform, various investment banking services for the
Company on a fee-for-services basis. See "Management--Prior Limited Market for
Common Stock." From time to time, certain other U.S. Underwriters or their
affiliates may provide investment banking services to the Company. Lehman
Brothers and Legg Mason Wood Walker, Incorporated have been retained by CTA to
provide advisory services with regard to (i) the renegotiation of the Credit
Facility and (ii) the repayment terms of the Notes.

Prior to these Offerings there has been no public market for the Common
Stock. The price to the public for the Common Stock has been determined by
negotiation between the Company and the U.S. Underwriters and the International
Managers and is based on, among other things, the Company's financial and
operating history and condition, the prospects of the Company and its industry
in general, the management of the Company and the market prices of the
securities of the companies engaged in businesses similar to those of the
Company. There can, however, be no assurance that the price at which

70
<PAGE>
the Common Stock will sell in the public market after the Offerings will not be
lower than the price at which they are sold in the Offerings.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Willkie Farr & Gallagher, New York, New York and Sherman & Howard,
L.L.C. Certain legal matters relating to the Offerings will be passed upon for
the Underwriters by Simpson Thacher & Bartlett (a partnership which includes
professional corporations), New York, New York. Willkie Farr & Gallagher and
Simpson Thacher & Bartlett will rely on Sherman & Howard, L.L.C. with respect to
matters of Colorado law.

EXPERTS

The consolidated financial statements of the Company as of December 31, 1995
and December 31, 1994 and for each of the three years in the period ended
December 31, 1995, appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports appearing elsewhere herein and in the Registration Statement, and are
included in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.

71
<PAGE>
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Reports and
other information filed by the Company with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, and at the
following regional offices of the Commission: 7 World Trade Center, Suite 1300,
New York, New York 10048, and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site
that contains reports and information statements and other materials that are
filed through the Commission's Electronic Data Gathering, Analysis, and
Retrieval System. The Web site can be accessed at http://www.sec.gov.

This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-1 and exhibits relating thereto, including any
amendments (the "Registration Statement"), of which this Prospectus is a part,
and which the Company has filed with the Commission under the Securities Act.
Reference is made to such Registration Statement for further information with
respect to the Company and the Common Stock offered hereby. Statements contained
herein concerning the provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the Commission.

The Company holds registered trademarks covering the names CTA-TM- and CTA
INCORPORATED and has applied for registered trademarks covering the names
INDOSTAR-TM-, GEMtrak-TM-, GEMnet-TM-, GEMnode-TM-, GEMcons-TM-, GEMtags-TM-,
GEMmail-TM- and GEMstar-TM-.

72
<PAGE>
CTA INCORPORATED
CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND
AS OF DECEMBER 31, 1995 AND 1994 AND FOR EACH
OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995

CONTENTS

<TABLE>
<S> <C>
Report of Independent Auditors....................................... F-2

Audited Consolidated Financial Statements

Consolidated Balance Sheets.......................................... F-3
Consolidated Statements of Income.................................... F-4
Consolidated Statements of Stockholders' Equity...................... F-5
Consolidated Statements of Cash Flows................................ F-6
Notes to Consolidated Financial Statements........................... F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
CTA INCORPORATED

We have audited the accompanying consolidated balance sheets of CTA
INCORPORATED and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of CTA
INCORPORATED and subsidiaries at December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.

/s/ ERNST & YOUNG LLP

Washington, D.C.
February 15, 1996

F-2
<PAGE>
CTA INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
<S> <C> <C> <C>
June 30
1994 1995 1996
---------- ---------- -----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................. $ 3,902 $ 235 $ 6,504
Accounts receivable (Notes 1 and 3)........................................ 57,363 58,586 48,748
Other current assets (Note 4).............................................. 3,421 3,697 5,783
Recoverable income taxes (Note 10)......................................... 53 2,521 5,020
---------- ---------- -----------
Total current assets......................................................... 64,739 65,039 66,055
Furniture and equipment (Notes 1 and 4)...................................... 24,126 21,301 23,033
Accumulated depreciation and amortization.................................. (15,387) (14,517) (15,008)
---------- ---------- -----------
8,739 6,784 8,025
Costs in excess of net assets acquired (Note 1).............................. 6,243 5,633 5,340
Other assets (Notes 1, 4, 6 and 10).......................................... 3,844 6,812 8,371
GEMnet investment (Note 5)................................................... 6,251 7,262 7,262
---------- ---------- -----------
Total assets................................................................. $ 89,816 $ 91,530 $ 95,053
---------- ---------- -----------
---------- ---------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable--line of credit (Note 7)..................................... $ 15,000 $ 16,324 $ 20,000
Accounts payable........................................................... 7,985 13,910 16,565
Accrued expenses (Note 4).................................................. 5,198 4,804 5,129
Deferred lease incentives.................................................. 319 293 279
Excess of billings over costs and contract prepayments..................... 9,419 4,603 4,850
Acquisition notes payable--current (Note 2)................................ 750 750 --
Deferred income taxes (Note 10)............................................ 5,430 4,642 4,642
---------- ---------- -----------
Total current liabilities.................................................... 44,101 45,326 51,465
Subordinated notes payable (Note 7).......................................... 15,000 15,000 15,000
Other long-term liabilities.................................................. 2,015 2,431 3,127
Acquisition notes payable--noncurrent (Note 2)............................... 750 -- --
Commitments and contingencies (Notes 7 and 12)............................... -- -- --
Stockholders' equity (Note 9):
Common stock, $.01 par value, 20,000,000 shares authorized and 5,000,000
issued................................................................... 50 50 50
Capital in excess of par value............................................. 8,922 9,023 8,798
Retained earnings.......................................................... 23,641 25,587 22,545
---------- ---------- -----------
32,613 34,660 31,393
Notes receivable from employees............................................ -- -- (361)
Treasury stock, at cost (554,185 shares in 1994, 660,554 shares in 1995 and
616,788 shares in 1996).................................................. (4,663) (5,887) (5,571)
---------- ---------- -----------
Total stockholders' equity................................................... 27,950 28,773 25,461
---------- ---------- -----------
Total liabilities and stockholders' equity................................... $ 89,816 $ 91,530 $ 95,053
---------- ---------- -----------
---------- ---------- -----------
</TABLE>

F-3
<PAGE>
CTA INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Contract revenues.................. $ 125,072 $ 143,071 $ 217,007 $ 102,852 $ 100,691
Cost of contract revenues.......... 109,102 121,675 196,656 94,206 99,180
Selling, general and administrative
expenses......................... 7,169 8,950 9,798 4,105 3,905
Other expenses..................... 1,492 833 318 224 639
--------- --------- --------- --------- ---------
Operating profit (loss)............ 7,309 11,613 10,235 4,317 (3,033)
Interest expense................. 992 3,627 4,116 1,692 2,304
--------- --------- --------- --------- ---------
Income (loss) before income
taxes............................ 6,317 7,986 6,119 2,625 (5,337)
Income taxes (benefit) (Note 10)... 2,779 3,434 2,448 1,123 (2,295)
--------- --------- --------- --------- ---------
Income (loss) from continuing
operations....................... 3,538 4,552 3,671 1,502 (3,042)
Income (loss) from discontinued
operations, net of income taxes
(Note 13)........................ 1,012 (93) (1,725) (181) --
--------- --------- --------- --------- ---------
Net income (loss).................. $ 4,550 $ 4,459 $ 1,946 $ 1,321 $ (3,042)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Earnings (loss) per share:
Continuing operations............ $ .75 $ .95 $ .78 $ .31 $ .66
Discontinued operations.......... .22 (.02) (.37) (.04) --
--------- --------- --------- --------- ---------
Earnings (loss) per share.......... $ .97 $ .93 $ .41 $ .27 $ .66
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average shares
outstanding...................... 4,689,180 4,783,333 4,709,268 4,826,604 4,593,019
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

See accompanying notes.

F-4
<PAGE>
CTA INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS EXCEPT FOR SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK
---------------- CAPITAL IN TREASURY STOCK
PAR EXCESS OF RETAINED NOTES RECEIVABLE ----------------
SHARES VALUE PAR VALUE EARNINGS FROM EMPLOYEES SHARES COST
--------- ----- ---------- -------- ---------------- -------- ------
Balance at December 31, 1992............ 5,000,000 $50 $7,833 $ 14,632 -- 604,500 $2,811
<S> <C> <C> <C> <C> <C> <C> <C>
Purchase of treasury stock............ -- -- -- -- -- 199,940 1,433
Sale of treasury stock................ -- -- 222 -- -- (74,640) (301)
Exercise of stock options............. -- -- (396) -- -- (115,590) (466)
Sale of treasury stock to ESOP (Note
8).................................. -- -- 298 -- -- (95,000) (383)
Compensatory issuance of common stock
to employees........................ -- -- 141 -- -- (45,020) (181)
Net income............................ -- -- -- 4,550 -- -- --
--------- ----- ---------- -------- ------- -------- ------
Balance at December 31, 1993............ 5,000,000 50 8,098 19,182 -- 474,190 2,913
Purchase of treasury stock............ -- -- -- -- -- 397,573 3,486
Sale of treasury stock................ -- -- 121 -- -- (74,304) (528)
Issuance of stock for acquisition
(Note 2)............................ -- -- 156 -- -- (57,293) (344)
Exercise of stock options............. -- -- 18 -- -- (31,800) (142)
Sale of treasury stock to ESOP (Note
8).................................. -- -- 109 -- -- (40,000) (240)
Sale of treasury stock to 401(k) plan
(Note 8)............................ -- -- 218 -- -- (70,000) (306)
Purchase of treasury stock from ESOP
(Note 8)............................ -- -- -- -- -- 30,000 269
Compensatory issuance of common stock
to employees........................ -- -- 202 -- -- (74,181) (445)
Net income............................ -- -- -- 4,459 -- -- --
--------- ----- ---------- -------- ------- -------- ------
Balance at December 31, 1994............ 5,000,000 50 8,922 23,641 -- 554,185 4,663
Purchase of treasury stock............ -- -- -- -- -- 73,842 684
Exercise of stock options............. -- -- (46) -- -- (39,500) (283)
Issuance of stock for acquisition
notes payable (Note 2).............. -- -- 89 -- -- (39,936) (286)
Purchase of treasury stock from ESOP
(Note 8)............................ -- -- -- -- -- 138,100 1,296
Compensatory issuance of common stock
to employees........................ -- -- 58 -- -- (26,137) (187)
Net income............................ -- -- -- 1,946 -- -- --
--------- ----- ---------- -------- ------- -------- ------
Balance at December 31, 1995............ 5,000,000 50 9,023 25,587 -- 660,554 5,887
Purchase of treasury stock............ -- -- -- -- -- 49,614 466
Sale of treasury stock................ -- -- 8 -- -- (3,813) (28)
Exercise of stock options............. -- -- (264) -- -- (49,000) (401)
Issuance of stock for acquisition
notes payable (Note 2).............. -- -- 30 -- -- (39,515) (345
Issuance of notes receivable to
employees for stock................. -- -- -- -- (361) -- --
Compensatory issuance of common stock
to employees........................ -- -- 1 -- -- (1,052) (8)
Net (loss)............................ -- -- -- (3,042) -- -- --
--------- ----- ---------- -------- ------- -------- ------
Balance at June 30, 1996................ 5,000,000 $50 $8,798 $ 22,545 $ 361 616,788 $5,571
--------- ----- ---------- -------- ------- -------- ------
--------- ----- ---------- -------- ------- -------- ------
</TABLE>

See accompanying notes.

F-5
<PAGE>
CTA INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
JUNE 30,
------------------------- ----------------
<S> <C> <C> <C> <C> <C>
1993 1994 1995 1995 1996
------- ------- ------- ------- -------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)..................................................... $ 4,550 $ 4,459 $ 1,946 $ 1,321 $(3,042)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Loss on disposal of SIM............................................. -- -- 718 -- --
Depreciation and amortization:
Furniture and equipment........................................... 2,322 2,119 2,658 934 1,337
Capitalized software development costs............................ 285 299 350 137 256
Other non current assets.......................................... 880 605 610 292 512
Deferred lease incentives......................................... (504) (832) (382) (159) (148)
Provision for receivable allowances................................. 1,114 (236) (990) (634) 62
Accrued interest on subordinated debt............................... -- 1,005 1,063 346 517
Other non cash expenses............................................. 777 738 432 36 61
Minority interest in subsidiary..................................... (61) -- -- -- --
Changes in assets and liabilities: --
Accounts receivable............................................... (3,458) (8,181) (233) 3,349 9,776
GEMnet investment................................................. -- (6,251) (1,011) (4,951) --
Recoverable income taxes.......................................... (650) 808 (2,707) (2,712) (2,499)
Other assets...................................................... (1,029) (449) 933 909 (4,244)
Accounts payable and accrued expenses............................. (4,062) 973 5,089 (3,798) 2,980
Excess of billings over costs and contract prepayments............ (903) 7,990 (4,816) 4,198 247
Deferred income taxes, net........................................ (360) (1,660) (1,299) -- --
------- ------- ------- ------- -------
Net cash (used in) provided by operating activities................... (1,099) 1,387 2,361 (532) 5,815
------- ------- ------- ------- -------
INVESTING ACTIVITIES
Investments in furniture and equipment................................ (3,661) (5,072) (4,327) (816) (2,778)
Capitalized computer software......................................... -- (846) (832) (528) (72)
Acquisition of subsidiaries........................................... (250) (500) -- -- --
Other................................................................. (301) -- -- -- 7
------- ------- ------- ------- -------
Net cash used in investing activities................................. (4,212) (6,418) (5,159) (1,344) (2,843)
------- ------- ------- ------- -------
FINANCING ACTIVITIES
Net (repayments) borrowings under bank line of credit agreement....... (4,616) 12,109 1,324 874 3,676
Repayment of acquisition notes........................................ (2,900) (2,643) (375) (464) (375)
Proceeds from subordinated notes...................................... 15,000 -- -- -- --
Debt financing costs.................................................. (690) -- -- -- --
Proceeds from deferred lease incentives............................... 150 150 150 150 315
Purchase of treasury stock............................................ (1,433) (3,755) (1,980) (120) (355)
Proceeds from exercise of stock options............................... 70 160 12 -- --
Sale of treasury stock to ESOP and 401(k) plan........................ 681 873 -- -- --
Other treasury stock sales............................................ 523 649 -- -- 36
Other................................................................. (353) -- -- -- --
------- ------- ------- ------- -------
Net cash provided by (used in) financing activities................... 6,432 7,543 (869) 440 3,297
------- ------- ------- ------- -------
Net (decrease) increase in cash and cash equivalents.................. 1,121 2,512 (3,667) (1,436) 6,269
Cash and cash equivalents at beginning of period...................... 269 1,390 3,902 3,902 235
------- ------- ------- ------- -------
Cash and cash equivalents at end of period............................ $ 1,390 $ 3,902 $ 235 $ 2,466 $ 6,504
------- ------- ------- ------- -------
------- ------- ------- ------- -------
SUPPLEMENTAL INFORMATION
Cash paid during the year for:
Income taxes........................................................ $ 4,699 $ 3,698 $ 5,115 $ 3,635 $ 197
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Interest............................................................ $ 643 $ 2,638 $ 2,863 $ 1,388 $ 1,168
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Noncash investing and financing activities:
Conversion of note to common stock.................................. $ -- $ -- $ 375 $ 375 $ 375
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Notes issued for common stock....................................... $ -- $ -- $ 225 $ -- $ 137
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Purchase of minority interest of CTA Space Systems (Note 2):
Common stock acquired............................................. $ -- $ 2,500 $ -- $ -- $ --
Payment in CTA common stock....................................... -- (500) -- -- --
Cash payments..................................................... -- (500) -- -- --
------- ------- ------- ------- -------
Acquisition financing provided by sellers......................... $ -- $ 1,500 $ -- $ -- $ --
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>

See accompanying notes.

F-6
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1996

1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

CTA INCORPORATED (the "Company") provides diversified professional and
technical services to the aerospace and defense communities and other
governmental customers in the areas of systems engineering, software
development, and high-performance embedded systems development. The Company also
develops and manufactures satellites, satellite ground systems and sensor
systems. During 1995, the Company disposed of its aircraft simulation systems
business.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its subsidiaries. Significant intercompany accounts and transactions have
been eliminated in consolidation.

UNAUDITED INFORMATION

Financial information for the six months ended June 30, 1995 and 1996 are
unaudited but have been prepared on the same basis as the audited consolidated
financial statements and, in the opinion of management, contain all adjustments
necessary for the fair presentation of the financial position, results of
operations and cash flows for those periods. The consolidated results of
operations for the six months ended June 30, 1996 are not necessarily indicative
of the results to be expected for any future period.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes, in particular, estimates of contract cost and revenues used
in the earnings recognition process. Actual results could differ from those
estimates.

CASH AND CASH EQUIVALENTS

The Company considers highly liquid investments with original maturities of
three months or less to be cash equivalents.

FURNITURE AND EQUIPMENT

Furniture and equipment are carried at cost. Depreciation is computed based
upon accelerated methods using estimated useful lives of three to ten years.
Leasehold improvements are amortized on a straight-line basis over the terms of
the leases, which range from one to ten years. Purchased computer software used
by the Company is amortized on a straight-line basis over a three-year period.

COSTS IN EXCESS OF NET ASSETS ACQUIRED

Costs in excess of net assets are amortized on a straight-line basis over
periods of 5 to 15 years. Accumulated amortization at December 31, 1994 and
1995, and June 30, 1996 was $1,595,000, $2,205,000 and $2,498,000, respectively.

F-7
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CAPITALIZED COMPUTER SOFTWARE COSTS

Included in other assets at December 31, 1994 and 1995, and June 30, 1996
are costs to develop software to be marketed to third parties of $846,000,
$1,547,000 and $1,506,000, respectively, net of accumulated amortization. The
amount of software development costs capitalized in 1994 and 1995, and for the
six months ended June 30, 1996 was $846,000, $832,000 and $72,000, respectively.
Amortization expense was $131,000 for the year ended December 31, 1995, and $0
and $113,000 for the six months ended June 30, 1995 and 1996, respectively.

CONTRACT REVENUES AND RELATED CONTRACT COSTS

Revenues result from services performed for the U.S. government and
commercial customers under a variety of long-term contracts and subcontracts,
some of which provide for reimbursement of costs plus fixed fees and/or award
fees, and others which are fixed-price type.

Revenues on cost-type contracts are recognized as costs are incurred on the
basis of direct costs plus allowable indirect expenses and an allocable portion
of a fixed fee. Award fees on cost-type contracts are recognized as earned. A
cumulative effect adjustment for refinements in profit estimates on contracts in
process at the beginning of the year favorably impacted fourth quarter 1994
profitability on contracts by approximately $1,000,000.

Revenues on fixed-price type contracts are recognized using the
percentage-of-completion method of accounting, primarily based on contract costs
incurred to date compared with total estimated costs at completion.

[Revenue from time and materials contracts is recognized based on hours
worked at amounts represented by the agreed-upon billing amounts. Costs are
recognized on the percentage-of-completion method of accounting based on the
total estimated cost at completion.]

When adjustments in contract value or estimated costs are determined, any
changes from prior estimates are reflected in earnings in the current period.
The Company provides for anticipated losses, if any, on contracts and allowances
for receivables during the period in which they are first identified.

Contract costs, including indirect costs for cost-type contracts, are
subject to audit by government representatives. Such audits have been completed
through 1991. Management believes that any adjustments resulting from
determinations for subsequent periods and contract close-outs will not have a
significant impact on the Company's consolidated financial position or results
of operations.

RESEARCH AND DEVELOPMENT COSTS

The Company has included in selling, general and administrative expenses
total independent research and development costs of approximately $1,065,000,
$890,000 and $2,587,000 for the years ended December 31, 1993, 1994, and 1995,
respectively, and $186,000 and $813,000 for the six months ended June 30, 1995
and 1996, respectively.

F-8
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK COMPENSATION

Compensation expense is recognized for stock options and other stock grants
to the extent the exercise price is less than the fair market value of the
Company's common stock at the date of grant.

EARNINGS PER SHARE

Earnings per share is computed based on the weighted average number of
common and common equivalent shares outstanding, including shares owned by the
Company's employee stock ownership plan. Weighted average shares outstanding
were 4,689,180, 4,783,333 and 4,709,268 for the years ended December 31, 1993,
1994, and 1995, respectively, and 4,826,604 and 4,593,019 for the six months
ended June 30, 1995 and 1996, respectively. Stock options are considered to be
common equivalent shares when dilutive.

NEW ACCOUNTING PRONOUNCEMENTS

The Company adopted Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of", effective January 1, 1996. SFAS No. 121 requires that
certain long-lived assets to be held and used be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Additionally, SFAS No. 121 requires that
certain long-lived assets to be disposed of be reported at the lower of carrying
amount or fair value less cost to sell. The adoption of this standard did not
have a material affect on the Company's consolidated results of operations and
financial condition.

The Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation."
While SFAS No. 123 established financial accounting and reporting standards for
stock-based employee compensation plans using fair value method of accounting,
it allows companies to continue to measure compensation cost for those plans
using the intrinsic value method of accounting as prescribed in Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees." Should a company choose not to change its accounting method, it must
disclose the pro forma effect on net earnings and earnings per share as if the
fair value method had been adopted. The Company will continue its present APB
Opinion No. 25 accounting treatment for stock-based compensation, and adopt the
disclosure provisions of SFAS No. 123 beginning as required.

RECLASSIFICATIONS

Certain prior year balances have been reclassified to conform with the
current period presentation.

2. ACQUISITIONS

CTA SPACE SYSTEMS

In July 1992, the Company acquired a 79% interest in CTASS for $10.3
million, $4.9 million of which was paid in cash with the remainder financed by
the selling shareholders at an imputed interest rate of 8.5% per annum.
Principal payments on the acquisition notes of $3.0 million and $2.4 million
were paid in July 1993 and July 1994, respectively. In July 1994, the Company
acquired the remaining CTASS common

F-9
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

2. ACQUISITIONS (CONTINUED)
stock for $2.5 million, payable 50% in cash and 50% in the Company's common
stock. The Company paid the cash portion with payments of $500,000, $375,000 and
$375,000 in 1994, 1995 and 1996, respectively, and the common stock portion with
issuances of 57,293 shares in 1994, 39,936 shares in 1995 and 39,515 shares in
1996. The number of shares of common stock issued as payment were based on the
then current fair market value of the common stock. The consolidated financial
statements of the Company reflect the results of operations of CTASS since July
1992.

TECHNOLOGY SYSTEMS ASSOCIATES, INC.

In December 1993, the Company purchased certain assets of Technology Systems
Associates, Inc. for $100,000 and entered into a non-compete agreement with its
sole stockholder. Total consideration under the non-compete agreement was
$1,065,000, of which $178,000 remains payable in 1996.

The cost of the non-compete is included in other assets, net of accumulated
amortization, and is being amortized over the term of the agreement.

3. ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
--------- --------- -----------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C>
Accounts receivable:
U.S. Government:
Billed..................................................... $ 40,114 $ 41,624 $ 33,803
Unbilled:
Contracts in progress.................................... 9,913 10,882 8,729
Amounts awaiting contractual coverage.................... 10,805 5,823 5,273
Revenue awaiting government approval of final indirect
rates or contract close-out............................ 221 629 1,553
Commercial customers
Contracts in progress...................................... -- 2,328 2,152
--------- --------- -----------
61,053 61,286 51,510
Less allowances................................................ (3,690) (2,700) (2,762)
--------- --------- -----------
$ 57,363 $ 58,586 $ 48,748
--------- --------- -----------
--------- --------- -----------
</TABLE>

Contracts in progress consist primarily of revenues on long-term contracts
that have been recognized under the percentage of completion method for
accounting purposes but not billed to customers. These amounts generally will be
billable upon product delivery or satisfaction of other contract requirements.

Amounts awaiting contractual coverage include amounts for which the Company
expects to obtain the necessary contract modifications in the normal course of
business. At December 31, 1994 and 1995, and June 30, 1996 approximately $7.1
million, $1.6 million and $1.6 million respectively, is related to situations
where disputes regarding the extent of contractual coverage have resulted in
legal actions or formal claims. The Company has provided allowances that it
believes adequately provide for the resolution of these and

F-10
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

3. ACCOUNTS RECEIVABLE (CONTINUED)
other matters. The Company expects to realize substantially all billed and
unbilled receivables within one year.

4. COMPOSITION OF CERTAIN FINANCIAL STATEMENT BALANCES

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
--------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
(UNAUDITED)
Other current assets:
Receivables from employees and stockholders (Note 11)...... $ 1,692 $ 849 $ 846
Other...................................................... 1,729 2,848 4,937
--------- --------- -----------
$ 3,421 $ 3,697 $ 5,783
--------- --------- -----------
--------- --------- -----------
Furniture and equipment:
Data processing equipment.................................. $ 11,256 $ 9,764 $ 10,038
Office furniture and equipment............................. 8,068 8,586 8,506
Other equipment............................................ 3,845 1,861 3,404
Leasehold improvements..................................... 957 1,090 1,085
--------- --------- -----------
24,126 21,301 23,033
Accumulated depreciation and amortization.................... (15,387) (14,517) (15,008)
--------- --------- -----------
$ 8,739 $ 6,784 $ 8,025
--------- --------- -----------
--------- --------- -----------
Other Assets:
Assets transferred under contractual arrangement (Note
13)...................................................... $ -- $ 2,370 $ 2,370
Investment in EarthWatch (Note 6).......................... -- -- 2,038
Capitalized software costs, net............................ 846 1,547 1,506
Deferred tax asset (Note 10)............................... -- 750 750
Other...................................................... 2,998 2,145 1,707
--------- --------- -----------
$ 3,844 $ 6,812 $ 8,371
--------- --------- -----------
--------- --------- -----------
Accrued expenses:
Salaries and incentives.................................... $ 4,165 $ 3,664 $ 3,717
Employee benefit plans..................................... 310 492 489
Other...................................................... 723 648 923
--------- --------- -----------
$ 5,198 $ 4,804 $ 5,129
--------- --------- -----------
--------- --------- -----------
</TABLE>

5. GEMnet INVESTMENT

In 1994, the Company began an initiative to enter the wireless global data
communications market through development and construction of its low earth
orbit GEMnet satellite. Construction of this satellite was completed in 1995,
but the satellite was destroyed because of a failure of the launch vehicle. The
Company recovered $6.1 million of insurance proceeds related to the launch
failure which were applied against program costs incurred. The remaining GEMnet
assets, valued at $7.3 million, consist primarily of satellite software and
ground station and other equipment. If the Company is unable to

F-11
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

5. GEMnet INVESTMENT (CONTINUED)
develop GEMnet, the Company may have to expense substantially all or a portion
of its $7.3 million in GEMnet assets.

The Company has received an experimental license from the Federal
Communications Commission ("FCC") for the initial two satellites in the system.
The Company also has applied for an operational satellite system license. The
timing of resolution of this license with the FCC is uncertain but is not
expected before 1997.

The Company currently intends to continue its pursuit of the global data
communications market by utilizing its GEMnet assets. The development of the
initial GEMnet satellites and the full satellite system will require capital in
excess of that committed or currently available to the Company. Accordingly, the
Company will need to obtain additional capital from other partners and/or raise
additional debt and/or equity financing.

There are a number of other companies that are developing low earth orbit
systems, some of which would likely be direct competitors in the data
communications market. If the GEMnet system becomes operational, the Company
expects to incur operating losses for several years. The ultimate recoverability
of existing and planned investments in GEMnet will depend on various factors,
including the success of the Company's efforts to obtain licenses needed to
operate the satellite system in the U.S. and other target markets, the ability
to finance development of the satellite system, and the ability to develop
sufficient business to support profitable operations.

6. INVESTMENT IN EarthWatch

In May 1994, the Company entered into an agreement with EarthWatch, Inc.
("EarthWatch") pursuant to which it is manufacturing two remote sensing
satellites. Total consideration under this contract consists of $4.0 million in
cash and 1,018,748 shares of EarthWatch preferred stock valued at $4.00 per
share which is convertible into approximately 3.5 percent of EarthWatch's fully
diluted equity. Other assets at June 30, 1996 include 509,374 shares of such
stock, carried on a cost basis at $2.0 million, received as a milestone payment
under the contract with EarthWatch in March 1996.

7. NOTES PAYABLE AND SUBORDINATED DEBT

In December 1993, the Company and its subsidiaries entered into an agreement
with a bank for a revolving credit facility providing the availability to borrow
up to $32,000,000 (as amended) which includes a facility for letters of credit
up to $10,000,000.

At December 31, 1994 and 1995 and June 30, 1996, there was $15,000,000,
$16,324,000 and $20,000,000, respectively, outstanding under the revolving line
of credit. Borrowings under the revolving credit facility are secured by the
Company's accounts receivables and bear interest at either the lender's prime
rate or LIBOR plus 1.25%, at the Company's discretion. The weighted average rate
in effect for short-term borrowings at December 31, 1994 and 1995 and June 30,
1996, was approximately 6.1%, 7.6%, and 6.8%, respectively. Under the agreement,
the Company pays an annual commitment fee on the unused credit line and an
annual administration fee on the total revolving credit line. The revolving line
of credit expires on December 9, 1996. The Company has entered into negotiations
for a $50.0 million secured credit facility to replace the revolving line of
credit.

In December 1993, the Company entered into a note purchase agreement (the
"Notes Agreement") providing for $15,000,000 aggregate principal amount of
unsecured, senior subordinated notes (the "Notes"). The Notes bear interest at
12.0% per annum, payable quarterly. The Notes may be prepaid at

F-12
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

7. NOTES PAYABLE AND SUBORDINATED DEBT (CONTINUED)
any time beginning the fourth year, subject to a premium starting at 6.86% and
declining annually to zero at maturity of the Notes in 2001. The Notes may be
prepaid during the first three years only concurrently with a public offering of
the Company's common stock and subject to a higher prepayment premium.

The Company is required at the election of the holder to repurchase the
Notes at the unpaid principal amount, plus accrued interest, at the occurrence
of a transaction which results in a change in control of ownership of the
Company or a "Qualifying Sale" of the Company's common stock as defined by the
Notes Agreement.

The Notes also provide for payment of contingent interest over and above the
12.0% fixed rate upon the occurrence of a change of control in ownership of the
Company, sales of the Company's common stock by the Company or its shareholders
as defined in the Notes Agreement as a "Qualifying Sale" or a "Secondary Sale to
the public," or at December 31, 1998, at the election of the holders of the
Notes.

If no Qualifying Sale or change of control has occurred, the ultimate amount
of the contingent interest is based on the greater of amounts resulting from
several calculations as specified in the Notes Agreement, some of which are
based on the market value of the Company's common stock as determined in annual
valuations by an appraisal. The contingent interest is intended to approximate
9.5% of the Company's fair market value and could be reduced to 8.0% of the
Company's fair market value if operating results specified in the Notes
Agreement are achieved. The Company recognizes interest expense annually for the
PRO RATA amount of contingent interest payable at December 31, 1998.

Minimum scheduled principal repayments of the Notes commence in 1998 and are
as follows: $3,000,000 in 1998 through 1999, $4,000,000 in 2000, and $5,000,000
in 2001.

The loan agreements include financial covenants which require the Company
and subsidiaries to maintain certain financial ratios and provide restrictions
on capital expenditures. The agreements also require advance approval by the
lenders of payment of dividends.

Due to the adjustments to profit recorded in the first quarter of 1996, the
Company sought and received 90-day waivers to three of its restrictive debt
covenants from its debt through June 30, 1996. Since that time, the Company has
concluded amendments to the covenant provisions of the lending agreement with
its senior lender, and has received additional 90-day waivers through September
30, 1996 to the applicable restrictive debt covenants of the Notes Agreement.

Interest expense on all borrowings was $992,000, $3,627,000 and $4,116,000
for the years ended December 31, 1993, 1994, and 1995, respectively, and was
$1,692,000 and $2,304,000 for the six months ended June 30, 1995 and 1996,
respectively. The expense in 1994, 1995 and 1996 includes contingent interest
accrued under the terms of the Notes Agreement.

8. EMPLOYEE BENEFIT PLANS

Substantially all of the Company's employees are eligible to participate in
the Company's employee stock ownership plan ("ESOP"). The ESOP is designed to
enable participating employees to share in the growth and prosperity of the
Company while providing them with the opportunity to accumulate capital for
their future. The ESOP allows only Company contributions, in cash or in common
stock, as determined by the Board of Directors. Contributions are
proportionately allocated on the basis of each eligible participant's
compensation. Employee vesting in benefits ranges from 40% at the end of two
years to 100% at the end of four years. Shares of the Company's common stock
which may ultimately be distributed by the ESOP to participants carry certain
limited provisions for repurchase by the Company. Through June 30, 1996, no
shares of the Company's common stock have been distributed by the ESOP. At
December 31, 1994 and 1995 and June 30, 1996, the ESOP owned 652,820, 514,720
and 514,720 shares, respectively, of the Company's common stock, all of which
have been allocated to plan participants.

F-13
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

8. EMPLOYEE BENEFIT PLANS (CONTINUED)

The Company and its subsidiaries maintain 401(k) savings plans which allow
for Company and employee contributions based upon a percentage of the
participating employee's salary. Employee vesting in Company contributions
ranges from one to four years.

Beginning in 1994, participants could choose to invest their contributions
in Company common stock. During 1994, the Company's 401(k) plan acquired 70,000
shares of the Company's treasury stock on behalf of the plan participants. The
Company's 401(k) plan owned 70,000 shares of the Company's common stock at
December 31, 1994 and 1995, and June 30, 1996.

Amounts charged to expense under the above plans were $4,215,000, $2,077,000
and $2,089,000 for the years ended December 31, 1993, 1994 and 1995,
respectively, and $964,000 and $897,000 for the six months ended June 30, 1995
and 1996, respectively. The reduction in expense subsequent to 1993 results
primarily from a reduction of discretionary contributions by the Company in
defined contribution plans. The Company currently provides no significant other
post retirement benefits.

9. COMMON STOCK AND STOCK OPTIONS

All of the Company's outstanding shares contain restrictions on
transferability. Shares of common stock held by two of the Company's principal
stockholders are subject to a buy-sell arrangement with the Company which
contains repurchase features under specified circumstances. At June 30, 1996,
none of the specified circumstances exist. Certain former participants in a
terminated benefit plan hold approximately 28,510 shares of the Company's common
stock which contain provisions for repurchase by the Company, at the option of
those stockholders.

In December 1991, the Company adopted the 1991 Stock Option and Purchase
Plan which reserves 1,000,000 common shares for the granting of incentive or non
qualified stock options or stock purchase rights through 2001. The Compensation
Committee of the Board of Directors is authorized to grant options and purchase
rights and to establish the respective terms, subject to certain restrictions.
As of June 30, 1996, 667,453 options are outstanding under this plan and
predecessor plans.

<TABLE>
<CAPTION>
NUMBER OF SHARES
------------------------------------------------
YEAR ENDED DECEMBER 31, SIX MONTHS
-------------------------------- ENDED JUNE 30,
1993 1994 1995 1996
---------- --------- --------- --------------
<S> <C> <C> <C> <C>
Options outstanding at beginning of period...................... 797,680 568,190 587,975 467,225
Granted (prices of $4.18-$7.17 in 1993, $7.17-$8.97 in 1994,
$8.97-$9.39 in 1995 and $9.39-$9.49 in 1996).................. 33,380 56,135 15,250 250,228
Canceled (average price of $4.18 in 1993, $7.17 in 1994, $5.20
in 1995 and $4.18 in 1996).................................... (147,280) (4,550) (96,500) (1,000)
Exercised (average price of $.60 in 1993, $5.03 in 1994, $6.01
in 1995 and $2.80 in 1996).................................... (115,590) (31,800) (39,500) (49,000)
---------- --------- --------- -------
Options outstanding at end of year (prices of $1.54-$7.17 in
1993, $1.54-$8.97 in 1994, $1.54-$9.39 in 1995 and $1.59-$9.49
in 1996)...................................................... 568,190 587,975 467,225 667,453
---------- --------- --------- -------
---------- --------- --------- -------
</TABLE>

Approximately 357,000 stock options were exercisable as of June 30, 1996.

F-14
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

10. INCOME TAXES

The provisions for income taxes for the six months ended June 30, 1995 and
1996 were computed using the estimated annual tax rate expected to be applicable
for the full year.

The provision (benefit) for income taxes consisted of the following
components:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1994 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal...................................................... $ 3,223 $ 4,194 $ 2,053
State........................................................ 764 826 784
--------- --------- ---------
3,987 5,020 2,837
Deferred:
Federal...................................................... (352) (1,531) (1,345)
State........................................................ (62) (127) (193)
--------- --------- ---------
(414) (1,658) (1,538)
--------- --------- ---------
$ 3,573 $ 3,362 $ 1,299
--------- --------- ---------
--------- --------- ---------
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's net deferred tax liability are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Current deferred tax liabilities:
Unbilled receivables................................................... $ 7,250 $ 4,832
Change in accounting for tax reporting................................. 1,927 985
Other.................................................................. 857 2,755
--------- ---------
10,034 8,572
--------- ---------
Current deferred tax assets:
Contract provisions and allowances..................................... 3,080 2,746
Deferred lease incentives.............................................. 354 261
Accrued vacation....................................................... 676 693
Other accruals......................................................... 494 230
--------- ---------
4,604 3,930
--------- ---------
Net current deferred tax liabilities..................................... $ 5,430 $ 4,642
--------- ---------
--------- ---------
Long-term deferred tax assets (liabilities):
Accrued interest on subordinated debt.................................. $ 402 $ 818
Other deferred liabilities............................................. (402) (68)
--------- ---------
Net long-term deferred tax assets........................................ $ -- $ 750
--------- ---------
--------- ---------
</TABLE>

F-15
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

10. INCOME TAXES (CONTINUED)
A reconciliation of income tax expense at the statutory Federal rate to
income tax expense related to continuing operations at the Company's effective
income tax rate is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1994 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Federal income taxes at statutory rate.............. $ 2,843 $ 2,737 $ 1,135
State income taxes, net of Federal tax benefit...... 456 430 148
Goodwill amortization............................... 232 212 252
Foreign sales corporation (FSC) benefit............. -- -- (243)
Other............................................... 42 (17) 7
--------- --------- ---------
$ 3,573 $ 3,362 $ 1,299
--------- --------- ---------
--------- --------- ---------
</TABLE>

11. TRANSACTIONS WITH RELATED PARTIES

The Company has made loans to two of its principal stockholders for
relocation costs that include the purchase of new residences. The loans were
made in exchange for promissory notes and are secured by deeds of trust on
residential property. The loans bear interest at the same rates applicable to
the Company's revolving line of credit. The remaining indebtedness of
approximately $111,000 on one of these loans was paid in January 1996. At
December 31, 1994 and 1995, and at June 30, 1996, $620,000, $631,000 and
$538,000, respectively, remained outstanding under these loans. The outstanding
loans are due on demand.

12. COMMITMENTS AND CONTINGENCIES

The Company has operating leases for all of its office space and various
computer and office equipment. Most of the office space leases require the
Company to pay maintenance and operating expenses such as taxes, insurance and
utilities and also include provisions for renewal. Certain of the leases contain
provisions for periodic rate escalations to reflect changes in the consumer
price index. Total rent expense for the years ended December 31, 1993, 1994 and
1995 was $5,282,000, $5,045,384 and $4,602,000, respectively, and for the six
months ended June 30, 1995 and 1996 was $2,037,000 and $1,870,000, respectively.

At December 31, 1995, total future minimum rental commitments under
non-cancelable leases are summarized as follows (in thousands):

F-16
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

12. COMMITMENTS AND CONTINGENCIES (CONTINUED)
At June 30, 1996, the Company had a 6.75% limited partnership interest in
its corporate headquarters building in Rockville, Maryland that vests up to 9.5%
over the life of the lease.

The Company is involved in litigation incidental to its business. Management
of the Company, after reviewing developments with legal counsel, is of the
opinion that the outcome of such matters will not have a material adverse effect
on the financial position or future operations of the Company.

13. SALE OF SIMULATION SYSTEMS DIVISION

ASSETS TRANSFERRED UNDER CONTRACTUAL ARRANGEMENT

In September 1995, the Company entered into an agreement to sell
substantially all of the assets of its Simulation Systems Division ("SIM") to a
former director and a principal stockholder of the Company and other investors
in exchange for two notes secured by the assets of the division with an
aggregate principal amount of $2.2 million, bearing interest at the Company's
borrowing rate and a 15% minority interest in the purchasing entity, valued at
$0.2 million. The assets of the division consisted primarily of a cockpit flight
similator and various fixed assets, which had an aggregate book value of $3.1
million, net of accumulated depreciation. Realization of the investment and
notes receivable totaling $570,000 are dependent primarily on the future success
of the business, while the realization of a note totaling $1,800,000 is
dependent on the proceeds from the use or sale of an aircraft simulator.

DISCONTINUED OPERATIONS

The consolidated income statement excludes sales and expenses of
discontinued operations from captions applicable to continuing operations. Net
sales of SIM prior to its disposition were $15,527,000 in 1993, $9,720,000 in
1994 and $470,000 in 1995. The income (loss) from operations of the SIM business
were $1,012,000 in 1993, $(93,000) in 1994 and $(1,260,000) in 1995, net of
income tax. The 1995 loss from disposal of the business was $465,000 net of
income tax.

14. OTHER INFORMATION

MAJOR CUSTOMERS

The percentage of contract revenues that comprise 10% or more of total
revenues to U.S. Government customers were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------------------
1993 1994 1995
----- ----- -----
<S> <C> <C> <C>
Department of Defense..................................................................... 60% 36% 31%
Department of Transportation.............................................................. 21% 16% --
General Services Administration........................................................... -- 11% --
National Aeronautics and Space Administration............................................. -- -- 19%

<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
-------------
1995 1996
----- -----
<S> <C> <C>
Department of Defense..................................................................... 34% 36%
Department of Transportation.............................................................. -- --
General Services Administration........................................................... -- --
National Aeronautics and Space Administration............................................. 21% 16%
</TABLE>

F-17
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

14. OTHER INFORMATION (CONTINUED)
In addition, 27% of the Company's revenues were from a single commercial
customer for the year ended December 31, 1995 and 25% and 31% for the six months
ended June 30, 1995 and 1996, respectively.

Revenues recognized from foreign sales were $58,233,000 during the year
ended December 31, 1995, and $30,800,000 and $25,500,000 for the six months
ended June 30, 1995 and 1996, respectively.

FORMULA FOR DETERMINING FAIR MARKET VALUE OF COMMON STOCK

In 1991, the Board of Directors of the Company approved the use of a formula
for assessing the fair market value of the Company's common stock. Net book
value, contract revenues, income from continuing operations, contract margin and
weighted average shares outstanding constitute some of the financial statement
factors considered in this formula.

15. BUSINESS SEGMENTS

The Company operates in its three principal business units: Space and
Telecommunications Systems, Information Technology (IT) Services and Mobile
Information and Communications Services. The Space and Telecommunications
Systems business principally designs and manufactures small low-earth and
geosynchronous orbit satellites and related support systems. The Information
Technology Services business comprises the Company's historical business base of
providing IT services for a variety of customers. The Mobile Information and
Communications Services business unit has been formed to pursue commercial
applications of the Company's proprietary technology in innovative IT and
space-based or wireless solutions to a variety of applications, including mobile
asset tracking and remote fixed asset monitoring.

F-18
<PAGE>
CTA INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

JUNE 30, 1996

15. BUSINESS SEGMENTS (CONTINUED)
The following table provides certain financial information for each business
segment:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- --------------------
1993 1994 1995 1995 1996
--------- --------- --------- --------- ---------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Contract revenues:
Information Technology Services................... $ 92.2 $ 107.5 $ 109.4 $ 54.4 $ 49.7
Space and Telecommunications Systems.............. 32.9 35.6 107.6 48.5 51.0
Launch Support
Mobile Information and Communications Services.... -- -- -- -- --
--------- --------- --------- --------- ---------
$ 125.1 $ 143.1 $ 217.0 $ 102.9 $ 100.7
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Operating profit:
Information Technology Services................... $ 8.4 $ 10.6 $ 5.9 $ 2.8 $ .6
Space and Telecommunications Systems.............. .4 1.8 5.6 1.7 (2.2)
Launch Support
Mobile Information and Communications Services.... -- -- (1.0) -- (.8)

Other expense....................................... (1.5) (.8) (.3) (.2) (.6)
--------- --------- --------- --------- ---------
$ 7.3 $ 11.6 $ 10.2 $ 4.3 $ (3.0)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

Interest expense.................................... (1.0) (3.6) (4.1) (1.7) (2.3)
Income from continuing operations before
income taxes...................................... 6.3 8.0 6.1 2.6 (5.3)

Depreciation and amortization expense:
Information Technology Services................... .9 1.9 1.6 1.0 .9
Space and Telecommunications Systems.............. 1.7 .5 1.4 .1 .7
Mobile Information and Communications Services.... -- -- -- -- --

Capital expenditures:
Information Technology Services................... .9 2.1 1.4 .4 .7
Space and Telecommunications Systems.............. 2.8 3.0 2.8 .4 2.1
Mobile Information and Communications Services.... -- -- .1 -- --

Identifiable assets:
Information Technology Services................... 24.6 29.6 42.4 36.1 32.0
Space and Telecommunications Systems.............. 44.5 46.2 32.1 32.4 37.9
Mobile Information and Communications Services.... -- 6.3 7.3 11.2 7.4
General corporate assets.......................... 5.2 7.7 9.7 12.8 17.8
--------- --------- --------- --------- ---------
$ 74.3 $ 89.8 $ 91.5 $ 92.5 $ 95.1
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

F-19
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus, and
if given or made, such information and representations must not be relied upon
as having been authorized by the Company or any U.S. Underwriter. This
Prospectus does not constitute an offer of any securities other than those to
which it relates or an offer to sell, or a solicitation of an offer to buy, in
any where such an offer or solicitation would be unlawful. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that the information contained herein is correct as of
any date subsequent to the date hereof.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Prospectus Summary............................... 3
Risk Factors..................................... 8
Use of Proceeds.................................. 19
Dividend Policy.................................. 19
Capitalization................................... 20
Dilution......................................... 21
Selected Consolidated Financial Data............. 22
Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 24
Business......................................... 32
Management....................................... 51
Certain Transactions............................. 58
Principal Stockholders........................... 59
Description of Capital Stock..................... 63
Shares Eligible for Future Sale.................. 64
Underwriting..................................... 69
Legal Matters.................................... 72
Experts.......................................... 72
Available Information............................ 73
Index to Consolidated Financial Statements....... F-1
Independent Auditors' Report..................... F-2
</TABLE>

---------------------

Until , 1996 (25 days after the date of this Prospectus), all
dealers effecting transactions in the Common Stock, whether or not participating
in this distribution, may be required to deliver a Prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver a Prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.

3,000,000 SHARES

[CTA (LOGO) INCORPORATED]

COMMON STOCK

----------------
PROSPECTUS
, 1996

---------------------
LEHMAN BROTHERS

COWEN & COMPANY

LEGG MASON WOOD WALKER
INCORPORATED

- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
[INSIDE BACK COVER GRAPHICS]
CTA GENTRAK (TM)

IN LATE 1996, CTA WILL INTRODUCE...

CARGO MANAGEMENT

<TABLE>
<CAPTION>
<S> <C>
Dock Bar Code Reader Driver's Bar Code Reader and Message Device
- --Freight scanned during loading --Cargo data loaded before delivery via doc
- --Cargo data downloaded to CTA Service Center PC in cradel
via cradle and dock PC --Scanning each item unloaded ensures proper
- --Local data base retained at dock delivery
--Serive Center updated via Asset Monitor and
Terrestrial
</TABLE>

[Photographs of Dock Bar Code Reader, Driver's Bar Code Reader, message device,
terminals, and computer screen showing dock report.]

Customer PC generates trailer status and cargo information Level of support
selectable

[Photograph of computer screens showing vehicle performance summaries.]

Global Positioning System
[Photograph of satellite.]

ASSET TRACKING

CTA Service Center: Asset location and cargo management database Service Center
collects and maintains location and cargo on-load/delivery status
Generates customer speficified sum

Asset Monitor communicates with Service Center via wireless networks

[Photograph of computer screen database.]

Open system architecture allows use of multiple netowrks.
- --RAM Mobile

- --AT&T Wireless cellular
- --Future Low-Earth Orbit Satellite Systems

[Close-up photograph of asset monitor.]
The Asset Monitor is a key compoent in trailer location and cargo management
- --Communicates with Service Center and driver hand-held device
- --Computes location by using Global Positioning System
- --Accepts updates to on-board computer programs and sensor reporting parameters
from Service Center
- --Operates on self-contained rechargeable batteries

[Photograph of truck trailer with asset monitor attached.]
- --Untethered trailers, containers, etc. report location, temperature, volume and
door security status at a programmable rate
- --Asset monitor operates for up to 8 weeks in untethered mode
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[Alternate Page]

Subject to Completion, dated September 9, 1996

PROSPECTUS

3,000,000 Shares
[CTA (LOGO) INCORPORATED]

Common Stock
------------------

Of the 3,000,000 shares of Common Stock, par value $.01 per share (the
"Common Stock"), of CTA INCORPORATED, a Colorado corporation (the "Company" or
"CTA"), offered hereby, 600,000 shares are being offered initially in Europe by
the International Managers and 2,400,000 shares are being offered initially in
the United States and Canada by the U.S. Underwriters (together with the
International Managers, the "Underwriters"). Such offerings are referred to
collectively as the "Offerings." See "Underwriting."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING AT PAGE .
------------------------

<TABLE>
<CAPTION>
Underwriting
Discounts and Proceeds to
Price to Public Commissions(1) Company (2)
<S> <C> <C> <C>
Per Share................................. $ $ $
Total(3).................................. $ $ $
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses estimated at $ payable by the Company.
(3) The Company has granted the International Managers a 30-day option to
purchase up to 90,000 additional shares on the same terms and conditions as
set forth above solely to cover over-allotments, if any. The U.S.
Underwriters have been granted a similar option to purchase up to 360,000
additional shares solely to cover over-allotments, if any. If such options
are exercised in full, the total Price to Public, Underwriting Discounts
and Commissions and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------------

The shares of Common Stock offered by this Prospectus are offered by the
International Managers subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
International Managers and to certain further conditions. It is expected that
delivery of the certificates for the shares will be made at the offices of
Lehman Brothers, in New York, New York, on or about , 1996.
------------------------
LEHMAN BROTHERS
COWEN & COMPANY
LEGG MASON WOOD WALKER
INCORPORATED

, 1996
<PAGE>
[ALTERNATE INTERNATIONAL]

- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus, and
if given or made, such information and representations must not be relied upon
as having been authorized by the Company or any International Manager. This
Prospectus does not constitute an offer of any securities other than those to
which it relates or an offer to sell, or a solicitation of an offer to buy, in
any where such an offer or solicitation would be unlawful. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that the information contained herein is correct as of
any date subsequent to the date hereof.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Prospectus Summary............................... 3
Risk Factors..................................... 8
Use of Proceeds.................................. 19
Dividend Policy.................................. 19
Capitalization................................... 20
Dilution......................................... 21
Selected Consolidated Financial Data............. 22
Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 24
Business......................................... 32
Management....................................... 51
Certain Transactions............................. 58
Principal Stockholders........................... 59
Description of Capital Stock..................... 61
Shares Eligible for Future Sale.................. 64
Underwriting..................................... 69
Legal Matters.................................... 72
Experts.......................................... 72
Available Information............................ 73
Index to Consolidated Financial Statements....... F-1
Independent Auditors' Report..................... F-2
</TABLE>

---------------------

3,000,000 SHARES

[CTA (LOGO) INCORPORATED]

COMMON STOCK

----------------
PROSPECTUS
, 1996

---------------------
LEHMAN BROTHERS

COWEN & COMPANY

LEGG MASON WOOD WALKER
INCORPORATED

- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, which will be paid
solely by the Company. All the amounts shown are estimates, except the SEC
registration fee, the NASD filing fee and the Nasdaq National Market listing
fee:

<TABLE>
<CAPTION>
AMOUNT
---------
<S> <C>
SEC registration fee............................................................... $ 19,035
NASD filing fee.................................................................... 6,020
Nasdaq listing fee................................................................. *
Transfer agent and registrar fees and expenses..................................... *
Printing and engraving expenses.................................................... *
Legal fees and expenses............................................................ *
Accounting fees and expenses....................................................... *
Blue Sky fees and expenses......................................................... *
Miscellaneous expenses............................................................. *
---------
Total.......................................................................... $ *
---------
---------
</TABLE>

- ------------------------

* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

As authorized by Section 7-9-101 et. seq. of the Colorado Business
Corporation Act, each director and officer of the Company may be indemnified by
the Company against expenses (including attorneys' fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred in connection with
the defense or settlement of any threatened, pending or completed legal
proceedings in which he is involved by reason of the fact that he is or was a
director or officer of the Company if he acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, if he had no
reasonable cause to believe that his conduct was unlawful. If the legal
proceeding, however, is by or in the right of the Company, the director or
officer may not be indemnified in respect of any claim, issue or matter as to
which he shall have been adjudged to be liable for negligence or misconduct in
the performance of his duty to the Company unless a court determines otherwise.

Article XI of the Restated Charter of the Company provides that no director
of the Company shall be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) in respect of certain acts set
forth in the Colorado Corporation Code or (iv) for any transaction from which
the director derived an improper personal benefit. In addition, Article XII of
the Restated Charter provides that the Company must indemnify directors and
executive officers to the fullest extent permitted by law and may indemnify
other officers to the fullest extent permitted by law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following information is furnished with regard to all securities sold by
the Company within the past three years which were not registered under the
Securities Act.

II-1
<PAGE>
In December 1993, the Company issued $15.0 million aggregate principal
amount of the Notes to Equitable Capital Private Income and Equity Partnership
II, L.P. and BCI Growth III, L.P. for $10.0 million and $5.0 million in cash
respectively.

The sales described in this Item 15 were made in reliance upon the exemption
from registration set forth in Section 4(2) of the Securities Act relating to
sales by an issuer not involving any public offering. The foregoing transactions
did not involve a distribution or public offering. No underwriters were engaged
in connection with the foregoing issuances of securities and no commissions or
discounts were paid.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
------------ -----------------------------------------------------------------------------------------------
<S> <C> <C>
* 1.1 Form of U.S. Underwriting Agreement.
* 1.2 Form of International Underwriting Agreement.
* 3.1 Restated Articles of Incorporation of the Company.
* 3.2 By-laws of the Company, as amended.
* 5.1 Opinion of Willkie Farr & Gallagher.
Opinion of Sherman & Howard
(7)10.1 Buy Sell Agreement, dated February 28, 1983, among Carmelo E. Velez, B.A. Claussen and the
Company.
(4)10.1.1 Amendment to the Buy Sell Agreement, dated March 23, 1992, among Carmelo E. Velez, B.A.
Claussen and the Company.
(7)10.2 Lease Agreement, dated February 6, 1989, between 6116 Associates Limited Partnership and the
Company, concerning the Company's Rockville, Maryland corporate headquarters.
(7)10.3 Addendum No. 1. to the Lease Agreement, dated February 6, 1989, between 6116 Associates Limited
Partnership and the Company.
(7)10.4 Addendum No. 2 to the Lease Agreement, dated March 8, 1990, between 6116 Associates Limited
Partnership and the Company.
(7)10.5 Amended and Restated Limited Partnership Agreement of 6116 Associates Limited Partnership,
dated February 6, 1989, among Marvin R. Lang, as General Partner and those persons listed on
Schedule A attached thereto as Limited Partners.
(6)10.5.1 Amendment of Amended and Restated Certificate of Limited Partnership and Amended and Restated
Limited Partnership Agreement of 6116 Associates Limited Partnership.
(7)10.6 Option Agreement, dated August 16, 1991, between the Company and John W. Townsend, Jr. (The
"Townsend Option").
(4)10.6.1 Amendment to Townsend Option, dated March 18, 1992.
(7)10.7 Consulting Agreement, dated August 2, 1991, between the Company and Richard E. Brackeen.
(7)10.8 1984 Stock Option Plan.
(7)10.9 1991 Stock Option, Purchase Right and Bonus Plan.
(7)10.10 401(k) Plan.
(7)10.11 Employee Stock Ownership Plan.
(7)10.12 Loan and Security Agreement, dated October 12, 1989, between the Company and The Riggs National
Bank of Washington, D.C.
(7)10.13 Letter Agreement, dated February 13, 1991, between the Company and The Riggs National Bank of
Washington, D.C.
(3)10.13.1 Proposed Credit Facility Term Sheet, dated April 17, 1992 between the Company and The Riggs
National Bank of Washington, D.C.
</TABLE>

II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
------------ -----------------------------------------------------------------------------------------------
<S> <C> <C>
(5)10.14 Agreement, dated June 7, 1989, among the Company and Jose Maria Escondrillas, Javier Camunas
and CSL Company.
(5)10.15 Concept of Operations Joint Venture CTA/Spanish Partners, dated May 10, 1989, between the
Company and the Partners.
(5)10.16 License Agreement, dated June 7, 1989, between the Company and CSL Company.
(8)10.17 Stock Purchase Agreement between the Company and Engineering Technologies, Inc.
(3)10.18 Agreement dated April 17, 1992 between the Company and The Riggs National Bank of Washington,
D.C. regarding Employee Stock Loan Program.
(3)10.19 Memorandum of Understanding, dated June 12 1992, between the Company and Capitol Securities
Management, Inc.
(3)10.20 Consulting Agreement dated July 22, 1992 between the Company and Emanuel Fthenakis.
(3)10.21 Employment Agreement between George Sebestyen and Engineering Technologies, Incorporated.
(9)10.22 Stock Purchase Agreement between the Company and International Microspace, Inc.
(2)10.23 Financing and Security Agreement between the Company and First Union Commercial Corporation.
(2)10.24 Note Purchase Agreement.
* 23.1 Consent of Willkie Farr & Gallagher (included in Exhibit 5.1).
* 23.2 Consent of Sherman & Howard, L.L.C. (included in Exhibit 5.2).
+ 23.3 Consent of Ernst & Young LLP.
+ 24.0 Power of Attorney (included on signature page).
(7)28.1 Share Purchase Policy of the Company adopted by the Board of Directors on November 15, 1991.
(7)28.2 Letter, dated November 15, 1991, to the Company from Legg Mason Wood Walker, Inc.
(3)28.2.1 Letter and report dated March 23, 1994 to the Company from Legg Mason Wood Walker, Inc.
(1)28.2.2 Letter and report dated February 27, 1995 to the Company from Legg Mason Wood Walker, Inc.
(7)28.3 Letter, dated March 22, 1991, to the Company from Legg Mason Wood Walker, Inc., concerning the
appraisal of the Common Stock.
(7)28.4 Letter, dated October 20, 1991 to the Company from First National Bank of Maryland, concerning
the Loan Purchase Policy.
(5)28.5 Letter, dated February 21, 1992, to the Company from Legg Mason Wood Walker, Inc., concerning
the appraisal of Common Stock.
</TABLE>

- ------------------------

* To be filed by amendment

+ Filed herewith

(1) Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form S-1 (File No. 33-44510) filed with the
Commission on May 12, 1995.

(2) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-1 (File No. 33-44510) filed with the
Commission on March 30, 1994.

(3) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement on Form S-1 (File No. 33-44510) filed with the
Commission on August 20, 1992.

(4) Incorporated by reference to Amendment No. 3 to the Registration Statement
on Form S-1 (File No. 33-44510) filed with the Commission on March 23, 1992.

II-3
<PAGE>
(5) Incorporated by reference to Amendment No. 2 to the Registration Statement
on Form S-1 (File No. 33-44510) filed with the Commission on February 28,
1992.

(6) Incorporated by reference to Amendment No. 1 to the Registration Statement
on Form S-1 (File No. 33-44510) filed with the Commission on February 13,
1992.

(7) Incorporated by reference to the Registration Statement on Form S-1 (File
No. 33-44510) filed with the Commission on December 12, 1991.

(8) Incorporated by reference to the Current Report on Form 8-K filed with the
Commission on July 20, 1992.

(9) Incorporated by reference to the Current Report on Form 8-K filed with the
Commission on September 14, 1993.

(b) FINANCIAL STATEMENT SCHEDULES

The financial statement schedule listed below is filed as part of the
Registration Statement.

Schedule II Valuation and Qualifying Accounts and Reserves

ITEM 17. UNDERTAKINGS

(1) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreements
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.

(2) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to its Restated Certificate, Bylaws, the Underwriting
Agreement or otherwise, the Registrant has been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

(3) The Registrant hereby undertakes that:

(a) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
Registration Statement as of the time it was declared effective.

(b) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in Rockville, Maryland on
September 9, 1996.

CTA INCORPORATED

By: _________/s/_C.E. VELEZ___________
Name: C.E. Velez
Title: President, Chief Executive
Officer and
Chairman of the Board of
Directors

POWER OF ATTORNEY

Each of the undersigned officers and directors of CTA INCORPORATED hereby
severally constitutes and appoints C.E. Velez and Gregory H. Wagner, and each of
them, as the attorneys-in-fact for the undersigned, in any and all capacities,
with full power of substitution, to sign any and all pre- or post-effective
amendments to this Registration Statement, any subsequent registration statement
for the same offering which may be filed under Rule 462(b) under the Securities
Act of 1933, as amended, and any and all pre- or post-effective amendments
thereto, and to file the same with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that each said attorney-in-fact,
or either of them, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------- ------------------------------------------------- ----------------------
<C> <S> <C>

/s/ C.E. VELEZ President, Chief Executive Officer, Chairman of
-------------------------------- the Board and Director September 9, 1996
C.E. Velez
/s/ GREGORY H. WAGNER Executive Vice President, Chief Financial Officer
-------------------------------- and Treasurer September 9 1996
Gregory H. Wagner
/s/ RICARDO DE BASTOS President-Space and Telecommunications Systems
-------------------------------- and Director September 9, 1996
Ricardo de Bastos
/s/ RAYMOND V. MCMILLAN President-Information Technology Services and
-------------------------------- Director September 9, 1996
Raymond V. McMillan
/s/ EMANUEL J. FTHENAKIS
-------------------------------- Director September 9, 1996
Emanuel J. Fthenakis
/s/ HARVEY D. KUSHNER
-------------------------------- Director September 9, 1996
Harvey D. Kushner
/s/ GEORGE W. MORGENTHALER
-------------------------------- Director September 9, 1996
George W. Morgenthaler
/s/ JAMES M. PAPADA, III
-------------------------------- Director September 9, 1996
James M. Papada, III
/s/ ARTURO SILVESTRINI
-------------------------------- Director September 9, 1996
Arturo Silvestrini
</TABLE>

II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------- ------------------------------------------------- ----------------------
<C> <S> <C>
/s/ JOHN L. SLACK
-------------------------------- Director September 9, 1996
John L. Slack
/s/ JOHN W. TOWNSEND
-------------------------------- Director September 9, 1996
John W. Townsend
</TABLE>

II-6
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS, ON SCHEDULE

THE BOARD OF DIRECTORS AND SHAREHOLDERS
CTA INCORPORATED

We have audited the accompanying consolidated balance sheets of CTA
INCORPORATED and subsidiaries as of December 31, 1995 and 1994, and for each of
the three years in the period ended December 31, 1995, and have issued our
report thereon dated February 15, 1996 (included elsewhere in this Registration
Statement). Our audits also included the financial statement schedule listed in
item 16(b) of this Registration Statement. This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

/s/ ERNST & YOUNG LLP

Washington, D.C.
February 15, 1996
<PAGE>
SCHEDULE II

CTA INTERNATIONAL INCORPORATED
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
($000)

<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT ------------------------
BEGINNING CHARGED TO CHARGED BALANCE
OF COSTS AND TO OTHER AT END
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
- ------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1993
Allowance for Doubtful Accounts.......... $ 2,812 $ 985 $ 372 $ 243 $ 3,926

For the year ended December 31, 1994
Allowance for Doubtful Accounts.......... $ 3,926 $ 520 $ 0 $ 756 $ 3,690

For the year end December 31, 1995
Allowance for Doubtful Accounts.......... $ 3,690 $ 200 $ 292 $ 1,482 $ 2,700
</TABLE>
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIAL PAGE
EXHIBIT NO. DESCRIPTION NUMBER
------------ ------------------------------------------------------------------------------ -------------------
<S> <C> <C> <C>
* 3.1 Restated Articles of Incorporation of the Company.
* 3.2 By-laws of the Company, as amended.
* 4.1 Form of U.S. Underwriting Agreement.
* 4.2 Form of International Underwriting Agreement.
* 5.1 Opinion of Willkie Farr & Gallagher.
Opinion of Sherman & Howard, L.L.C.
(7)10.1 Buy Sell Agreement, dated February 28, 1983, among Carmelo E. Velez, B.A.
Claussen and the Company.
(4)10.1.1 Amendment to the Buy Sell Agreement, dated March 23, 1992, among Carmelo E.
Velez, B.A. Claussen and the Company.
(7)10.2 Lease Agreement, dated February 6, 1989, between 6116 Associates Limited
Partnership and the Company, concerning the Company's Rockville, Maryland
corporate headquarters.
(7)10.3 Addendum No. 1. to the Lease Agreement, dated February 6, 1989, between 6116
Associates Limited Partnership and the Company.
(7)10.4 Addendum No. 2 to the Lease Agreement, dated March 8, 1990, between 6116
Associates Limited Partnership and the Company.
(7)10.5 Amended and Restated Limited Partnership Agreement of 6116 Associates Limited
Partnership, dated February 6, 1989, among Marvin R. Lang, as General Partner
and those persons listed on Schedule A attached thereto as Limited Partners.
(6)10.5.1 Amendment of Amended and Restated Certificate of Limited Partnership and
Amended and Restated Limited Partnership Agreement of 6116 Associates Limited
Partnership.
(7)10.6 Option Agreement, dated August 16, 1991, between the Company and John W.
Townsend, Jr. (The "Townsend Option").
(4)10.6.1 Amendment to Townsend Option, dated March 18, 1992.
(7)10.7 Consulting Agreement, dated August 2, 1991, between the Company and Richard E.
Brackeen.
(7)10.8 1984 Stock Option Plan.
(7)10.9 1991 Stock Option, Purchase Right and Bonus Plan.
(7)10.10 401(k) Plan.
(7)10.11 Employee Stock Ownership Plan.
(7)10.12 Loan and Security Agreement, dated October 12, 1989, between the Company and
The Riggs National Bank of Washington, D.C.
(7)10.13 Letter Agreement, dated February 13, 1991, between the Company and The Riggs
National Bank of Washington, D.C.
(3)10.13.1 Proposed Credit Facility Term Sheet, dated April 17, 1992 between the Company
and The Riggs National Bank of Washington, D.C.
(5)10.14 Agreement, dated June 7, 1989, among the Company and Jose Maria Escondrillas,
Javier Camunas and CSL Company.
(5)10.15 Concept of Operations Joint Venture CTA/Spanish Partners, dated May 10, 1989,
between the Company and the Partners.
(5)10.16 License Agreement, dated June 7, 1989, between the Company and CSL Company.
(8)10.17 Stock Purchase Agreement between the Company and Engineering Technologies,
Inc.
(3)10.18 Agreement dated April 17, 1992 between the Company and The Riggs National Bank
of Washington, D.C. regarding Employee Stock Loan Program.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIAL PAGE
EXHIBIT NO. DESCRIPTION NUMBER
------------ ------------------------------------------------------------------------------ -------------------
<S> <C> <C> <C>
(3)10.19 Memorandum of Understanding, dated June 12 1992, between the Company and
Capitol Securities Management, Inc.
(3)10.20 Consulting Agreement dated July 22, 1992 between the Company and Emanuel
Fthenakis.
(3)10.21 Employment Agreement between George Sebestyen and Engineering Technologies,
Incorporated.
(9)10.22 Stock Purchase Agreement between the Company and International Microspace,
Inc.
(2)10.23 Financing and Security Agreement between the Company and First Union
Commercial Corporation.
(2)10.24 Note Purchase Agreement.
* 23.1 Consent of Willkie Farr & Gallagher (included in Exhibit 5.1).
* 23.2 Consent of Sherman & Howard (included in Exhibit 5.2).
+ 23.3 Consent of Ernst & Young LLP.
+ 24.0 Power of Attorney (included on signature page).
(7)28.1 Share Purchase Policy of the Company adopted by the Board of Directors on
November 15, 1991.
(7)28.2 Letter, dated November 15, 1991, to the Company from Legg Mason Wood Walker,
Inc.
(3)28.2.1 Letter and report dated March 23, 1994 to the Company from Legg Mason Wood
Walker, Inc.
(1)28.2.2 Letter and report dated February 27, 1995 to the Company from Legg Mason Wood
Walker, Inc.
(7)28.3 Letter, dated March 22, 1991, to the Company from Legg Mason Wood Walker,
Inc., concerning the appraisal of the Common Stock.
(7)28.4 Letter, dated October 20, 1991 to the Company from First National Bank of
Maryland, concerning the Loan Purchase Policy.
(5)28.5 Letter, dated February 21, 1992, to the Company from Legg Mason Wood Walker,
Inc., concerning the approval of Common Stock.
</TABLE>

- ------------------------

* To be filed by amendment

+ Filed herewith

(1) Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form S-1 (File No. 33-44510) filed with the
Commission on May 12, 1995.

(2) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-1 (File No. 33-44510) filed with the
Commission on March 30, 1994.

(3) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement on Form S-1 (File No. 33-44510) filed with the
Commission on August 20, 1992.

(4) Incorporated by reference to Amendment No. 3 to the Registration Statement
on Form S-1 (File No. 33-44510) filed with the Commission on March 23 ,1992.

(5) Incorporated by reference to Amendment No. 2 to the Registration Statement
on Form S-1 (File No. 33-44510) filed with the Commission on February 28,
1992.

(6) Incorporated by reference to Amendment No. 1 to the Registration Statement
on Form S-1 (File No. 33-44510) filed with the Commission on February 13,
1992.

(7) Incorporated by reference to the Registration Statement on Form S-1 (File
No. 33-44510) filed with the Commission on December 12, 1991.
<PAGE>
(8) Incorporated by reference to the Current Report on Form 8-K filed with the
Commission on July 20, 1992.

(9) Incorporated by reference to the Current Report on Form 8-K filed with the
Commission on September 14, 1993.

<PAGE>
EXHIBIT 23.3

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our reports dated
February 15, 1996, in the Registration Statement (Form S-1), to be filed on or
about September 9, 1996, and related Prospectus of CTA INCORPORATED for the
registration of 3,000,000 shares of its common stock.

/s/ ERNST & YOUNG LLP

Washington, D.C.
September 6, 1996