SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_____
FORM 8K/A
CURRENT REPORT
Amendment No. 1
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 30, 1998
THE TITAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-06035 95-2588754
(Commission File No.) (IRS Employer Identification No.)
3033 Science Park Road
San Diego, California 92121-1199
(Address of principal executive officers and zip code)
Registrant's telephone number, including area code: (619) 552-9500
<PAGE>
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Current Report on
Form 8-K (Dated June 30, 1998) as set forth in the pages hereto:
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Horizons Technology, Inc., and subsidiaries consolidated interim
financial statements as of and for the three months ended March
31, 1998 and for the three months ended April 30, 1997.
(b) Pro Forma Financial Information.
Pro Forma combined statements of operations for the three months
ended March 31, 1998.
Pro Forma combined balance sheet as of March 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date August 12, 1998
The Titan Corporation
(Registrant)
By /s/ ERIC M.DEMARCO
Eric M. DeMarco
Sr. Vice President and
Chief Financial Officer
By /s/ DEANNA H. PETERSEN
Deanna H. Petersen
Vice President and
Corporate Controller
(Principal Accounting Officer)
<PAGE>
<TABLE>
HORIZONS TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands except share and per share information)
<CAPTION>
As of March 31,
1998
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 44
Accounts receivable, net............................. 6,114
Prepaid expenses and other current assets............ 95
Total current assets........................... 6,253
PROPERTY AND EQUIPMENT, net............................ 164
OTHER ASSETS........................................... 14
Total assets................................... $6,431
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Line of credit....................................... $5,405
Accounts payable..................................... 796
Accrued compensation................................. 1,268
Other accrued liabilities............................ 1,119
Net liabilities of discontinued operation............ 3,588
Total current liabilities...................... 12,176
OTHER NON-CURRENT LIABILITIES.......................... 900
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Preferred stock, par value $.01 per share:
Authorized shares-2,500,000
Issued and outstanding shares-500,000
(aggregate liquidation value $3,500,000)........... 5
Common stock, par value $.01 per share:
Authorized shares-12,000,000
Issued and outstanding shares-7,496,953........... 75
Paid-in capital...................................... 3,762
Retained deficit..................................... (10,487)
Total stockholders' deficit................... (6,645)
Total liabilities and stockholders' deficit........... $ 6,431
<FN>
The accompanying notes are an integral part of
this consolidated balance sheet.
</TABLE>
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<TABLE>
HORIZONS TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands)
<CAPTION>
Three months ended
March 31, April 30,
1998 1997
<S> <C> <C>
REVENUES.................................................... $5,989 $6,547
COSTS AND EXPENSES:
Cost of revenues.......................................... 4,401 4,360
Selling, general and administrative expense............... 1,391 1,073
Research and development expense.......................... -- 18
Total costs and expenses........................... 5,792 5,451
OPERATING PROFIT............................................ 197 1,096
Interest expense, net....................................... (107) (130)
Income from continuing operations before income taxes....... 90 966
Income tax provision........................................ 41 367
Income from continuing operations........................... 49 599
Loss from discontinued operations, net of taxes............. -- (491)
Net income (loss)........................................... $ 49 $ 108
Basic earnings per share:
Income from continuing operations......................... $ .01 $ .08
Loss from discontinued operation.......................... .00 (.07)
Net income................................................ $ .01 $ .01
Weighted average shares................................... 7,497 7,497
Diluted earnings per share:
Income from continuing operations......................... $ .01 $ .08
Loss from discontinued operation.......................... .00 (.07)
Net income................................................ $ .01 $ .01
Weighted average shares................................... 7,497 7,497
<FN>
The accompanying notes are an integral part of
these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
HORIZONS TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<CAPTION>
Three months ended
March 31, April 30,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used for) operating activities....... $ (458) $1,144
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash provided by (used for) investing activities....... 85 (16)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used for financing activities..................... (106) (996)
Increase (decrease) in cash and cash equivalents........... (479) 132
Cash and cash equivalents, beginning of year............... 523 416
Cash and cash equivalents, end of year..................... $ 44 $ 548
<FN>
The accompanying notes are an integral part of
these consolidated condensed financial statements.
</TABLE>
<PAGE>
HORIZONS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
(Unaudited)
1. Basis of Presentation
The information at March 31, 1998 and for the three months ended
March 31, 1998 and April 30, 1997 is unaudited, but includes all
adjustments, consisting only of normal recurring adjustments, which the
management of Horizons Technology, Inc. and Subsidiaries (the "Company" or
"Horizons") considers necessary for a fair presentation of the Company's
financial position, results of operations and cash flows for the periods
presented. The results of the interim periods are not necessarily
indicative of results for the full year. Effective January 1, 1998,
Horizons' January 31 fiscal year-end has been changed to coincide with the
Titan Corporation's fiscal year end of December 31. Accordingly,
Horizons' first quarter-end for 1998 has been changed to March 31, 1998.
The comparative prior year interim data is reported as of April 30, 1997.
Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts recorded in the
financial statements and accompanying notes. Actual results may differ
from those recorded using such estimates.
Net Income Per Share
In fiscal year 1998, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). Under
the provisions of SFAS 128, basic earnings per share is calculated based
on the weighted average number of common stock outstanding during the
period. Diluted earnings per share also gives effect to the dilutive
effect of stock options (calculated based on the treasury stock method).
All prior periods have been restated. A reconciliation of shares used in
the per share calculation is as follows:
<TABLE>
<CAPTION>
March 31, April 30,
1998 1997
<S> <C> <C>
Basic:
Weighted average common stocks outstanding....... 7,497 7,497
Diluted:
Weighted average common stocks.................... 7,497 7,497
Dilutive effect of stock options.................. 0 0
Weighted average stocks outstanding............... 7,497 7,497
</TABLE>
<PAGE>
HORIZONS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
March 31, 1998
(Unaudited)
2. Taxation
The estimated annual effective tax rates for 1998 and 1997 were 45%
and 38%, respectively. The difference between the federal statutory rate
and the estimated annual effective rate is primarily attributable to state
taxes and other nondeductible items.
3. Subsequent Event
On June 30, 1998, the Company consummated a merger with the Titan
Corporation ("Titan"), a public company. Titan issued approximately
3,200,000 shares of common stock in exchange for all outstanding shares of
Horizons stock based on exchange ratios of approximately .37 and .82
shares of Titan's common stock for each share of Horizons' common stock
and Horizons' preferred stock, respectively.
4. Discontinued Operation
In December 1997, the Company's Board of Directors adopted a plan to
wind down and exit its commercial software business (Information Systems
segment), in order to focus the Company's resources entirely on its
profitable government information technologies business or Systems
Engineering segment. Accordingly, the Information Systems segment has
been accounted for as a discontinued operation for all periods presented
in accordance with Accounting Principles Board Opinion No. 30 (APB 30),
which among other provisions, anticipates that the plan of disposal will
be carried out within one year.
Revenues for the ISG business were $548 and $684 for the three months
ended March 31, 1998, and April 30, 1997, respectively. In December 1997,
the Company recorded a charge of approximately $3,600 for costs to be
incurred in future periods in connection with the winding down of this
operation. Net current liabilities of discontinued operations consist
primarily of accrued facility costs, warranties, and anticipated operating
losses from the date of discontinuance until the estimated disposal date
net of certain accounts receivable balances. Prior year consolidated
financial statements have been restated to present the ISG business as a
discontinued operation. Losses applied to the deferred charge were $655
in the three month period ended March 31, 1998.
Included in the loss from discontinued operations is a tax benefit of
$141 for the three months ended April 30, 1997.
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial statements give
effect to the Merger of Titan and Horizons under the pooling of interests
method of accounting. These pro forma financial statements are presented
for illustrative purposes only and therefore are not necessarily
indicative of the operating results or financial position that might have
been achieved had the Merger occurred as of an earlier date, nor are they
necessarily indicative of operating results or financial position which
may occur in the future.
A pro forma combined balance sheet is provided as of March 31, 1998,
giving effect to the Merger as though it had been consummated on that
date. Pro forma combined statements of operations are provided for the
three months ended March 31, 1998 giving effect to the Merger as though it
had occurred at the beginning of the earliest period presented. For
purposes of the pro forma operating data, Titan's consolidated financial
statements for the three months ended March 31, 1998 have been combined
with Horizons' consolidated financial statements for the three months
ended March 31, 1998.
The pro-forma combined financial statements as of and for the three
month period ended March 31, 1998 for Titan and Horizons have been
prepared in accordance with generally accepted accounting principles
applicable to interim financial information and, in the respective
opinions of Titan's management and Horizons' management, include all
adjustments necessary for a fair presentation of financial information for
such interim periods.
<PAGE>
<TABLE>
The Titan Corporation and Horizons Technology, Inc.
Unaudited Pro Forma Combined Statements of Operations for
the Three Months Ended March 31, 1998
(In thousands, except per share data)
<CAPTION>
Pro Forma
Adjustments Pro Forma
Titan Horizons (Note 2) Combined
<S> <C> <C> <C> <C>
Revenues..........................$43,979 $5,989 $ --- $49,968
Costs and expenses:
Cost of revenues............. 33,836 4,401 --- 38,237
Selling, general and
administrative expense....... 5,044 1,391 --- 6,435
Research and development
expense................... 1,518 --- --- 1,518
Special charges................... 1,460 --- --- 1,460
Total costs and expenses.. 41,858 5,792 --- 47,650
Operating profit.................. 2,121 197 --- 2,318
Interest expense.................. (1,353) (122) --- (1,475)
Interest income................... 135 15 --- 150
Income from continuing operations
before income taxes.......... 903 90 --- 993
Income tax provision.............. 316 41 --- 357
Income from continuing operations.$ 587 $ 49 $ --- $ 636
Basic earnings per share:
Income from continuing
operations...................$ 0.02 $ 0.00 $ --- $ 0.02
Weighted average shares...... 22,864 7497 (4,324) 26,037
Diluted earnings per share:
Income from continuing
operations...................$ 0.02 $ 0.00 $ --- $ 0.02
Weighted average shares...... 22,533 7,497 (4,324) 26,706
</TABLE>
<PAGE>
<TABLE>
The Titan Corporation and Horizons Technology, Inc.
Unaudited Pro Forma Combined Balance Sheet
as of March 31, 1998
(In thousands, except shares and per share data)
<CAPTION>
Titan/
Pro Forma Horizons
Adjustments Pro Forma
Titan Horizons (Note 2) Combined
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash.......................................$ 1,153 $ 44 $ -- $ 1,197
Accounts receivable-net.................... 71,532 6,114 -- 77,646
Inventories................................ 18,586 -- -- 18,586
Net assets of discontinued operations...... 12,394 (3,588) -- 8,806
Prepaid expenses and other................. 2,408 95 -- 2,503
Deferred income taxes...................... 8,834 (413) 400 8,821
Total Current Assets................... 114,907 2,252 400 117,559
Property and equipment-net...................... 23,788 164 -- 23,952
Goodwill-net.................................... 39,059 -- -- 39,059
Other assets.................................... 8,317 14 -- 8,331
Net assets of discontinued operation............ 393 -- -- 393
Total assets..........................$ 186,464 $ 2,430 $ 400 $189,294
Liabilities and Stockholders' Equity
Current liabilities:
Lines of credit...........................$ 19,900 $ 5,405 $ -- $ 25,305
Accounts payable.......................... 14,025 796 -- 14,821
Acquisition debt.......................... 3,000 -- -- 3,000
Current portion of long-term debt......... 1,130 -- -- 1,130
Accrued compensation and benefits......... 7,616 1,268 -- 8,884
Other accrued liabilities................. 10,925 706 1,000 12,631
Total current liabilities............. 56,596 8,175 1,000 65,771
Long-term debt................................. 36,996 -- -- 36,996
Other non-current liabilities.................. 14,497 900 -- 15,397
Series B cumulative convertible redeemable
preferred stock, $3,000 liquidation
preference, 6% cumulative annual dividend,
500,000 shares issued and outstanding..... 3,000 -- -- 3,000
Stockholders' equity:
Preferred stock; $1 par value; authorized
2,500,000 shares:....................... -- 5 (5) --
Cumulative convertible, $13,897
liquidation preference: 694,872 shares
issued and outstanding................ 695 -- -- 695
Common stock; (Titan:$.01 par value, authorized
45,000,000 shares; issued and outstanding:
23,839,256 shares; Horizons: $.01
par value, authorized 12,000,000 shares,
issued and outstanding 7,497,000 shares) 238 32 -- 270
Capital in excess of par value................. 50,998 3,805 5 54,808
Retained earnings (deficit).................... 25,990 (10,487) (600) 14,903
Treasury stock: 971,894 shares, at cost........ (2,546) -- -- (2,546)
Total stockholders' equity........... 75,375 (6,645) (600) 68,130
Total liabilities and stockholders' equity.....$ 186,464 $ 2,430 $ 400 $189,294
</TABLE>
<PAGE>
THE TITAN CORPORATION AND HORIZONS TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The unaudited pro forma combined statements of operations combine
the historical statements of operations for the Titan Corporation
("Titan") with the historical statements of operations of Horizons
Technology, Inc. ("Horizons") for the three months ended March 31, 1998.
Note 2. Merger Costs
Titan estimates that Titan and Horizons will incur direct
transaction costs of approximately $1 million associated with the Merger,
consisting primarily of investment banking, filings with regulatory
agencies, accounting, legal, financial printing and other related costs.
These estimates are preliminary and are therefore subject to
change. These costs will be charged to operations as incurred. The
unaudited pro forma combined balance sheet gives effect to such charges as
if they had been incurred as of March 31, 1998, but the effect has not
been reflected in the unaudited pro forma combined statements of
operations as they are nonrecurring in nature.
The income tax effect of these charges has also been reflected as
a pro forma adjustment.
Note 3. Pro Forma Net Income Per Share
The unaudited pro forma combined net income per common share is
based upon the weighted average number of common and equivalent shares of
Titan and Horizons outstanding for each period at the exchange ratio of
approximately $2.25 of Titan Common Stock for each share of Horizons
Common Stock. The effect of the assumed conversion of Titan's convertible
subordinated debentures was antidilutive for the period presented.
