===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
____X_____ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended __December 31, 1996___
OR
__________ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number ___1-6035___
THE TITAN CORPORATION 401(k) RETIREMENT PLAN
THE TITAN CORPORATION
3033 Science Park Road
San Diego, CA 92121
(Name and address of principal executive
office of issuer of securities)
===========================================================================
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: June 30, 1997
THE TITAN CORPORATION
401(k) RETIREMENT PLAN
By ___________________________
Eric M. DeMarco,
Senior Vice President,
Chief Financial Officer
By ___________________________
Philip J. Englund
Senior Vice President,
General Counsel and
Secretary
<PAGE>
THE TITAN CORPORATION
401(k) RETIREMENT PLAN
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Public Accountants.......................... 4
Statement of Net Assets Available for Plan Benefits
with Fund Information as of December 31, 1996................. 5
Statement of Net Assets Available for Plan Benefits
with Fund Information as of December 31, 1995................. 6
Statement of Changes in Net Assets Available
for Plan Benefits with Fund Information
for the year ended December 31, 1996.......................... 7
Notes to Financial Statements..................................... 8
Supplemental Schedules:
Schedule I - Item 27A - Schedule of Assets Held For Investment
Purposes at December 31, 1996........ 15
Schedule II - Item 27D - Schedule of Reportable Transactions
for the year ended December 31, 1996. 16
All other financial statements and schedules are
omitted because they are not applicable or because the
required information is shown in the financial
statements or the notes thereto.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of the Titan Corporation 401(k) Retirement Plan:
We have audited the accompanying statements of net assets available for
plan benefits with fund information of The Titan Corporation 401(k)
Retirement Plan (the "Plan") as of December 31, 1996 and 1995, and the
related statement of changes in net assets available for plan benefits with
fund information for the year ended December 31, 1996. These financial
statements and the schedules referred to below are the responsibility of
the Plan's management. Our responsibility is to express an opinion on
these financial statements and schedules 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 net assets available for plan benefits with
fund information of the Plan as of December 31, 1996 and 1995, and the
changes in its net assets available for plan benefits with fund information
for the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole.The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for
purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The fund
information in the statements of net assets available for plan benefits and
the statement of changes in net assets available for plan benefits is
presented for purposes of additional analysis rather than to present the
net assets available for plan benefits and changes in net assets available
for plan benefits of each fund. The supplemental schedules and fund
information have been subjected to the auditing procedures applied in our
audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
San Diego, California
June 27, 1997
<PAGE>
<TABLE>
THE TITAN CORPORATION 401(k) RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1996
<CAPTION>
Non-
Participant
Participant Directed Directed
---------------------------------------------------------------------------------- ----------------------
Vanguard Vanguard
Investment VMMR Titan Titan
Vanguard Contract Vanguard Vanguard and Common Participant Common
Wellesley Trust Windsor II World - U.S. Other Stock Loans stock Total
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
The Titan Corporation
Common Stock $ --- $ --- $ --- $ --- $ --- $ 1,576,907 $ --- $ 3,472,468 $ 5,049,375
Vanguard Funds 11,331,474 15,788,254 12,922,871 11,254,018 1,770,134 --- --- --- 53,066,751
Short-term Investments --- --- --- --- --- 18,463 --- --- 18,463
Participant Loans 5,644 4,040 5,734 6,729 1,246 3,927 2,080,951 --- 2,108,271
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Investments 11,337,118 15,792,294 12,928,605 11,260,747 1,771,380 1,599,297 2,080,951 3,472,468 60,242,860
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Receivables for:
Employee contributions 44,808 25,987 68,749 59,517 12,227 4,454 --- --- 215,742
Employer contributions 10,079 5,911 15,460 13,421 2,778 13,318 --- 60,966 121,933
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total receivables 54,887 31,898 84,209 72,938 15,005 17,772 --- 60,966 337,675
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Assets 11,392,005 15,824,192 13,012,814 11,333,685 1,786,385 1,617,069 2,080,951 3,533,434 60,580,535
LIABILITIES:
Accrued investment and
administrative expenses 722 18,726 42 111 190 --- --- --- 19,791
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $11,391,283 $15,805,466 $13,012,772 $11,333,574 $ 1,786,195 $ 1,617,069 $ 2,080,951 $ 3,533,434 $60,560,744
========== ========== ========== ========== ========== ========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
THE TITAN CORPORATION 401(k) RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
AS OF DECEMBER 31, 1995
<CAPTION>
Non-
Participant
Participant Directed Directed
---------------------------------------------------------------------------------- ----------------------
Vanguard Vanguard
Investment VMMR Titan Titan
Vanguard Contract Vanguard Vanguard and Common Participant Common
Wellesley Trust Windsor II World - U.S. Other Stock Loans stock Total
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
The Titan Corporation
Common Stock $ --- $ --- $ --- $ --- $ --- $ 1,730,666 $ --- $ 6,926,330 $ 8,656,996
Vanguard Funds 10,845,522 15,132,495 9,202,174 8,152,923 1,274,080 --- --- --- 44,607,194
Short-term Investments --- --- --- --- --- 162,056 --- --- 162,056
Participant Loans 8,640 9,970 6,302 6,531 997 6,501 2,009,967 --- 2,048,908
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Investments 10,854,162 15,142,465 9,208,476 8,159,454 1,275,077 1,899,223 2,009,967 6,926,330 55,475,154
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Receivables for:
Employee contributions 53,973 41,052 63,639 54,733 15,713 9,906 --- --- 239,016
Employer contributions 19,654 13,491 23,843 19,314 5,072 4,009 --- 85,526 170,909
Transfer of funds 31,598 (111,854) 26,877 23,807 3,755 25,817 --- --- ---
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total receivables/ 105,225 (57,311) 114,359 97,854 24,540 39,732 --- 85,526 409,925
(payables) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Assets 10,959,387 15,085,154 9,322,835 8,257,308 1,299,617 1,938,955 2,009,967 7,011,856 55,885,079
LIABILITIES:
Accrued investment and
administrative expenses 969 24,991 44 140 229 --- --- --- 26,373
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $10,958,418 $15,060,163 $ 9,322,791 $ 8,257,168 $ 1,299,388 $ 1,938,955 $ 2,009,967 $ 7,011,856 $55,858,706
========== ========== ========== ========== ========== ========== ========== ========== ==========
<FOOTNOTE>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
THE TITAN CORPORATION 401(k) RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
Non-
Participant
Participant Directed Directed
---------------------------------------------------------------------------------- ----------------------
Vanguard Vanguard
Investment VMMR Titan Titan
Vanguard Contract Vanguard Vanguard and Common Participant Common
Wellesley Trust Windsor II World - U.S. Other Stock Loans stock Total
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employee $ 701,451 $ 452,321 $ 981,160 $ 827,104 $ 178,881 $ 117,114 $ --- $ --- $ 3,258,031
Employer 179,710 123,554 243,882 208,403 51,909 46,652 --- 847,568 1,701,678
Rollovers 157,828 53,869 268,783 154,366 39,202 18,434 --- --- 692,482
Asset transfers in
from PSI Plan 285,752 1,135,624 378,165 589,279 804,550 24,108 18,275 --- 3,235,753
Miscellaneous receipts --- 1,613 --- --- --- --- --- --- 1,613
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total contributions 1,324,741 1,766,981 1,871,990 1,779,152 1,074,542 206,308 18,275 847,568 8,889,557
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Investment income:
Vanguard Funds 954,080 942,458 906,061 830,973 101,853 --- --- --- 3,735,425
Interest --- --- --- --- --- 1,208 182,104 --- 183,312
Investment and
administrative
expenses (2,193) (57,031) (138) (351) (601) --- --- --- (60,314)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net investment income 951,887 885,427 905,923 830,622 101,252 1,208 182,104 --- 3,858,423
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net realized gain/(loss)
on sale of investments (17,296) --- 159,367 216,530 --- 18,070 --- (433,701) (57,030)
Change in cost due to prior
period adjustments 269,053 --- 404,556 121,713 130,166 --- 211,732 --- 1,137,220
Net change in unrealized
gain/loss, appreciation/
depreciation of
investments 85,041 --- 1,400,513 1,223,144 --- (907,849) --- (3,341,898)(1,541,049)
Transfers (to) from
other funds (830,589) 140,929 318,081 305,087 (456,946) 467,861 (121,480) 177,057 0
Withdrawals and
distributions to
withdrawing and
terminated
participants (1,349,972) (2,048,034) (1,370,449) (1,399,842) (362,207) (107,484) (219,647) (727,448)(7,585,083)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) 432,865 745,303 3,689,981 3,076,406 486,807 (321,886) 70,984 (3,478,422) 4,702,038
NET ASSETS AVAILABLE
FOR PLAN BENEFITS:
BEGINNING OF YEAR 10,958,418 15,060,163 9,322,791 8,257,168 1,299,388 1,938,955 2,009,967 7,011,856 55,858,706
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
END OF YEAR $11,391,283 $15,805,466 $13,012,772 $11,333,574 $ 1,786,195 $ 1,617,069 $ 2,080,951 $ 3,533,434 $60,560,744
========== ========== ========== ========== ========== ========== ========== ========== ==========
<FOOTNOTE>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
THE TITAN CORPORATION
401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. PLAN DESCRIPTION AND RELATED INFORMATION
General
- -------
The Titan Corporation (the "Company") maintains the Titan Corporation
401(k) Retirement Plan (the "Plan"), a defined contribution plan, for its
employees and employees of the subsidiaries and divisions that adopt the
Plan upon the approval of the respective Boards of Directors. The Plan is
designed to encourage and assist employees in a long range savings program
by providing a mechanism by which employee and employer contributions to
the Plan are invested for the benefit of the employees. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of
1974 ("ERISA"). The following description of the Plan provides only general
information. Participants should refer to the Plan Agreement for a more
complete description of the Plan's provisions.
The Plan became effective on May 1, 1984. The Trustee of the Plan, which
is responsible for the administration of the trust fund under the terms of
a trust agreement, is Vanguard Fiduciary Trust Company ("Vanguard"). The
Company is the Plan Administrator and has full power to administer the Plan
and apply all of its provisions on behalf of participating employees. The
Plan Administrator has appointed a committee of five members (the
"Committee") consisting of Company employees to perform these duties with
respect to the operation of the Plan.
Effective January 1, 1996, the Plan was amended to allow the participants
of the Pulse Sciences, Inc./Beta Development Amended and Restated Employees
Profit Sharing Plan (the "PSI Plan") to participate in the Plan.
Accordingly, the net assets of the PSI Plan (approximately $3,235,753) were
merged into the Plan.
Participation
- -------------
Participation by eligible employees in the Plan is voluntary and is
available to each employee of the companies which have adopted the Plan.
Eligibility begins on any entry date (January 1, April 1, July 1 and
October 1) on or after attainment of age 21.
Contributions
- -------------
Participants may make tax deferred contributions of between 1% and 10% of
their annual compensation to a maximum dollar amount established by the
IRS. Tax deferred contributions are subject to certain limitations provided
by the IRS. Deferred contributions are matched by the employer at 100% of
the first 5% of salary deferred by the participant. Eligibility for
employer matching contributions begins on any entry date on or after the
earlier of six (6) months of participation in the Plan or attainment of age
21 and completion of a period of service of twelve (12) months.
With the approval of the Committee, a participant may contribute (rollover)
to the Plan all or a portion due to the participant from another plan
qualified under Section 401(a) of the Internal Revenue Code ("Code").
Rollover contributions are not matched in whole or in part by the employer.
In addition to matching contributions, the employer may elect to contribute
discretionary amounts to the Plan as determined by the Board of Directors
of the employer. These discretionary contributions are allocated to
participants employed on the last day of the plan year generally based upon
the ratio that each participant's compensation of the contributing employer
bears to the aggregate of all such participants' compensation with
adjustments for social security wage base.
Separate accounts are maintained in the name of each participant for prior
profit sharing plan contributions, deferred contributions, voluntary
contributions, rollover contributions, employer matching contributions and
employer discretionary contributions. Each account is credited with
contributions, adjusted for investment results and charged with
withdrawals.
The Company may contribute treasury shares of The Titan Corporation common
stock to the Titan Common Stock Fund in lieu of cash. During 1996, the
Company contributed 172,581 treasury shares valued at the market price on
the date of contribution.
Vesting
- -------
The value of a participant's M/A-COM Government Systems, Inc. merger
account, California Research and Technology, Inc. merger account, Advanced
Digital Systems, Inc. merger account and all employer matching and
discretionary contributions will vest in increments over the participant's
first five years of employment, as defined, after which full vesting
occurs. Each participant's deferred, voluntary, prior profit sharing
account and Spectron Merger Account and rollover contributions (and the
related net investment income or losses) are fully vested as contributions
are made and net investment income or losses are allocated to the
participant's account.
Termination of Employment Benefits and Forfeitures
- --------------------------------------------------
If a participant's employment is terminated for reasons other than
retirement, disability or death, benefits payable will be equal to the
vested value of the participant's accounts. Forfeited amounts are first
used to pay administrative expenses, second to restore forfeitures of
reemployed participants and third as an offset to employer matching
contributions. Forfeitures of employer contributions totaled $246,707 for
the year ended December 31, 1996.
Fund balances for employees that have been terminated and requested payouts
that are in various stages of processing and approval but not yet paid out
have been included in the Statement of Net Assets Available For Plan
Benefits With Fund Information. They will be reflected in the Statement of
Changes in Net Assets Available for Plan Benefits With Fund Information
when actually paid. At December 31, 1996 and 1995, these amounts were
$252,699 and $90,776, respectively.
Distributions and Withdrawals
- -----------------------------
Distributions are generally made upon termination of employment, including
retirement, disability or death. Benefits payable upon retirement or other
termination are made as a single lump sum cash payment or in substantially
equal monthly installments, except for distributions from the Titan Common
Stock Fund which are made in either shares of The Titan Corporation common
stock (see Note 3) or cash as elected by the participant. Benefits payable
upon death are made in a lump sum cash payment, except for distributions
from The Titan Common Stock Fund which are distributed in cash or stock as
elected by the participant or beneficiary. Participants with balances from
the M/A-COM Government Systems, Inc. merger account are subject to
different rules regarding the distribution of those funds. When a
participant terminates employment for any reason except for the attainment
of age 65, and the value of the vested portion of a participant's account
exceeds $3,500, the participant must consent to the receipt of the
distribution. If the participant does not consent to the receipt of the
distribution, the distribution shall commence upon reaching age 65. The
Plan makes automatic distributions of all remaining funds to participants
that have attained the age of seventy and one half.
Participants may also elect to withdraw in cash all or a portion of the
value of the voluntary contribution account upon providing 30 days written
notice to the Committee. Participants may withdraw the value of the
deferred contributions account, upon providing 30 days written notice to
the Committee, to the extent necessary to meet a financial hardship, as
defined in accordance with the regulations or rulings of the Code. After
withdrawal, certain periods of time, as required under the Plan, must lapse
before a participant can make additional deferred contributions.
Loans
- -----
Participants may obtain loans from the Plan subject to written application
to and approval by the Committee. The amount of a participant loan may not
exceed the lesser of: 1) $50,000 (reduced by the excess, if any, of the
highest outstanding balance of loans from the Plan during the one-year
period ending on the day before the date on which the loan is made), or 2)
one-half the present value of the participant's vested interest in his or
her accounts. Repayment is made over a period not to exceed five years
(except for loans for the purchase of a participant's principal residence).
The loan must be repayable in substantially level payments, with payments
not less frequently than quarterly. Interest is charged at a rate
commensurate with the prevailing interest rate charged by persons in the
business of lending money for loans which would be made under similar
circumstances. Loan disbursements are made from the borrowing participant's
individual deferred and voluntary contributions accounts as directed by the
participant. Upon disbursement, the loan balance is transferred from the
applicable investment fund (s) to a separate loan fund (participant loan
receivable) until repayment.
Termination of Plan
- -------------------
The Company may elect to amend or terminate the Plan at any time. In the
event of a Plan termination, the balance in each participant account
becomes 100% vested.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments
- ------------------------
Vanguard Funds are valued by Vanguard each business day.
Mutual Funds
Deposits to the Vanguard Mutual Funds are used to buy shares from a
diversified portfolio of securities. Securities listed on any securities
exchange are valued at the last sale price as of each valuation date.
Securities not listed or trades as of the close of trading on the valuation
date are valued at the latest quoted bid price of a dealer who regularly
trades in the security being valued.
Investment transactions are accounted for on the date the shares in the
funds are purchased or sold. Realized gains and losses on shares sold are
computed based on the weighted average cost of the shares held.
Vanguard Investment Contract Trust
Deposits to the Vanguard Investment Contract Trust are used by the Plan to
purchase an interest in various contracts negotiated by Vanguard and
several insurance companies and financial institutions which are valued at
cost plus net investment income.
Income Tax Status
- -----------------
The plan obtained its latest determination letter on June 30, 1995, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since receiving the determination letter.
However, the Plan Administrator believes that the Plan is currently
designed and being operated in compliance with the applicable requirements
of the Internal Revenue Code. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
Investment and Administrative Expenses
- --------------------------------------
Substantially all costs and expenses incurred in connection with the
administration of the Plan are paid by the Plan. Expenses include, but are
not limited to, trustee, actuarial, accounting, legal, and investment
advisory fees. Brokerage fees relating to the purchase or sale of
investments are added to the cost thereof or deducted from the proceeds
thereof, respectively.
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. INVESTMENT PROGRAMS
Participants elect from the following investment funds in which their
contributions, employer discretionary contributions and one-half of the
matching contributions are to be invested by the Trustee of the Plan:
Wellesley Income Fund
A Vanguard mutual fund consisting of bonds and stocks. Bonds will normally
constitute 60%-65% of fund assets and common stock will constitute \
35%-40% of fund assets.
Vanguard Investment Contract Trust
A fund invested primarily in investment contracts issued by insurance
companies and commercial banks, and other similar types of fixed principal
investments. The principal and interest of these contracts are obligations
of the issuing companies. For liquidity purposes, the Trust also invests in
short-term U.S. Government obligations and repurchase agreements
collateralized by U.S. Government obligations or federally insured
deposits.
Windsor II
A Vanguard mutual fund consisting of common stocks that, in the opinion of
the fund's investment advisor, are under-valued in the marketplace.
World - U.S. Growth
A Vanguard mutual fund consisting of common stocks of U.S. companies whose
prospects for growth and appreciation are believed by its investment
advisor to be favorable.
Titan Common Stock Fund
A fund consisting of The Titan Corporation common stock, par value $.01 per
share.
Prime Money Market Reserves Fund (VMMR Fund)
A Vanguard money market fund consisting of negotiable certificates of
deposit, banker's acceptances, commercial paper, and other short-term
corporate obligations.
Each participant may specify that his deferral contributions be invested
entirely in one fund or divided among the funds in multiples of 10% of his
contributions. Participants may elect in which fund to invest 50% of the
employer matching contribution. The remaining 50% of the employer matching
contribution is mandatorily invested in the Titan Common Stock Fund.
Employer discretionary contributions are allocated to any of the six
investment funds in 10% increments as directed by each participant. Once
per calendar quarter, each participant may elect to transfer balances
accumulated in one fund to another fund in 10% increments, and make changes
in investment allocations of prospective contributions. Employees may
change their contribution percentages quarterly as of January 1, April 1,
July 1 and October 1.
4. PARTY-IN-INTEREST AND 5 PERCENT REPORTABLE TRANSACTIONS
No prohibited transactions with "parties-in-interest", as defined under the
Employee Retirement Income Security Act of 1974 ("ERISA"), occurred during
the year ended December 31, 1996.
Five percent reportable transactions, as defined under ERISA, which
occurred during the year ended December 31, 1996, are summarized in
Schedule II.
5. NET REALIZED GAIN (LOSS) ON SALE OF INVESTMENTS
A summary of the aggregate costs, proceeds and net gain (Loss) on sale of
investments for the year ended December 31, 1996, is as follows:
<TABLE>
<CAPTION>
Revalued Net Net Gain
Cost (a) Proceeds (Loss)
---------- ---------- ----------
<S> <C> <C> <C>
Equity investments $10,713,949 $11,072,550 $ 358,601
The Titan Corporation
Common Stock 1,481,137 1,065,506 (415,631)
---------- ---------- ----------
$12,195,086 $12,138,056 $ (57,030)
========== ========== ==========
<FN>
(a) Market value at beginning of year or cost of current year purchases.
During 1996, the Trustee (Vanguard) regularly purchased and sold
interests in short-term investment funds of the Trustee, investments in
guaranteed investment contracts with insurance companies and financial
institutions and units of Vanguard GIC and mutual funds. These
transactions are not reflected in the foregoing amounts since the
related investment return consisted solely of interest and investment
income, with no resulting gain or loss.
</TABLE>
6. INVESTMENTS EXCEEDING 5% OF NET ASSETS
The following investments exceeded 5 percent of total net assets as of
December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Vanguard Wellesley $ 11,391,283 $ 10,958,418
Vanguard Investment
Contract Trust 15,805,466 15,060,163
Vanguard Windsor II 13,012,772 9,322,791
Vanguard World - U.S.Growth 11,333,574 8,257,168
Titan Common Stock 5,150,503 8,950,811
</TABLE>
<PAGE>
SCHEDULE I
<TABLE>
THE TITAN CORPORATION
(EIN 95-2588754)
401(k) RETIREMENT PLAN
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1996
<CAPTION>
Market
Identity of Issuer Description of Investment Cost Value
- ------------------ ----------------------------- ---------- ----------
<S> <C> <C> <C>
Vanguard 552,485.302 shares of $10,152,288 $11,331,474
Wellesley Income Fund
Vanguard 15,788,253.590 shares of 15,788,254 15,788,254
Vanguard Investment Contract
Trust
Vanguard 542,294.208 shares of 9,812,436 12,922,871
Vanguard Windsor II
Vanguard 474,052.967 shares of 8,032,733 11,254,018
Vanguard World US Growth Fund
Vanguard 1,770,134.390 shares of 1,770,134 1,770,134
VMMR Prime Portfolio
Titan Corporation 1,496,111 shares of Titan 6,030,744 5,067,838
Common Stock Fund
and Short-term Investments
Participant Loans 5.88% - 11.53% 2,108,271 2,108,271
---------- ----------
$53,694,860 $60,242,860
========== ==========
</TABLE>
<PAGE>
SCHEDULE II
<TABLE>
THE TITAN CORPORATION
(EIN 95-2588754)
401(k) RETIREMENT PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
Purchases Sales
---------------------- ----------------------
Number of Number of
Description Amount Transactions Amount Transactions Cost Net Gain
- -------------- --------- ------------ --------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Wellesley
Income Fund $2,716,277 83 $2,567,123 121 $2,315,938 $251,185
VMMR Prime $1,616,458 109 $1,250,569 70 $1,250,569 $ 0.00
Investment
Contract Trust $3,935,496 144 $3,279,737 119 $3,279,737 $ 0.00
Titan Common
Stock $1,979,670 68 $1,065,506 115 $ 897,988 $167,518
U.S. Growth
Fund $3,600,715 104 $2,061,008 98 $1,425,412 $635,596
Windsor II $3,670,373 97 $1,914,112 100 $1,459,401 $454,711
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Page
----
Exhibit A. Summary Annual Report to Participants....................... 18
Exhibit B. Consent of Independent Public Accountants................... 19
<PAGE>
EXHIBIT A
SUMMARY ANNUAL REPORT FOR THE
TITAN CORPORATION 401(k) RETIREMENT PLAN
This is a summary of the annual report for the TITAN CORPORATION 401(k)
RETIREMENT PLAN, Employer Identification Number 95-2588754, for the period
ended December 31, 1995. The annual report has been filed with the Internal
Revenue Service, as required under the Employee Retirement Income Security
Act of 1974 (ERISA).
BASIC FINANCIAL STATEMENT
- -------------------------
Benefits under the plan are provided by a trust. Plan expenses were
$10,212,656, which represent $10,141,209 of benefits paid to participants
and beneficiaries and $71,447 of administrative expenses. A total of 1,273
persons were participants or beneficiaries of the plan at the end of the
plan year, although not all of these persons had yet earned the right to
receive benefits.
The value of plan assets, after subtracting liabilities of the plan, were
$55,858,706 as of December 31, 1995, compared to $50,487,013 as of December
31, 1994. During the plan year the plan experienced an increase in its net
assets of $5,371,693. This increase includes unrealized appreciation or
depreciation in the value of plan assets; that is, the difference between
the value of the assets at the beginning of the year or the cost of assets
acquired during the year. The plan had total income of $15,584,349,
including employee contributions and rollovers of $3,787,869, earnings from
investment of $173,136 and employer contributions of $1,866,566.
YOUR RIGHTS TO ADDITIONAL INFORMATION
- -------------------------------------
You have the right to receive a copy of the full annual report, or any part
thereof, on request. The items listed below are included in that report.
1. An Accountant's report;
2. Assets held for investment; and
3. Transactions in excess of 5 percent of plan assets.
To obtain a copy of the full annual report, or any part thereof, write or
call the office of Poppy-Anne Koch, Manager, Employee Benefits, at the
Titan Corporation, 3033 Science Park Road, San Diego, CA 92121 - telephone
(619) 552-9507. The charge to cover the copying costs will be $2.50 for the
full annual report, or $.25 per page for any part thereof.
You also have the right to receive from the plan administrator, on request
and at no charge, a statement of the assets and liabilities of the plan and
accompanying notes, or a statement of income and expenses of the plan and
accompanying notes, or both. If you request a copy of the full annual
report from the plan administrator, these two statements and accompanying
notes will be included as part of that report. The charge to cover copying
costs given above does not include a charge for the copying of these
portions of the report because these portions are furnished without charge.
You also have the legally protected right to examine the annual report at
the main office of the plan, 3033 Science Park Road, San Diego, CA 92121,
and at the U.S. Department of Labor in Washington, D.C. or to obtain a copy
from the U.S. Department of Labor upon payment of copying costs. Request to
the Department should be addressed to Public Disclosure Room, N4677,
Pension and Welfare Benefit Programs, Department of Labor, 200 Constitution
Avenue, N.W., Washington, D.C. 20216.
<PAGE>
EXHIBIT B
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation
of our report included in this Annual Report on Form 11-K for the Titan
Corporation 401(k) Retirement Plan into the Titan Corporation's previously
filed Registration Statement File No. 33-4041 for the Plan.
Arthur Andersen LLP
San Diego, California
June 30, 1997
