SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/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 9, 1999
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 offices and zip code)
Registrant's telephone number, including area code: (858) 552-9500
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 9, 1999, we acquired System Resources Corporation ("SRC"), an
information technology government contractor. We acquired SRC through a stock
purchase by our wholly owned subsidiary Titan Systems Corporation (formerly
named Titan Technolgies and Information Systems Corporation). We will be
accounting for this transaction as a purchase. We and the former stockholders of
SRC will file an election under the Internal Revenue Code to have the
transaction taxed as if it were a sale of assets for federal tax purposes. The
terms of the purchase are set forth in a Stock Purchase Agreement dated June 9,
1999, by and among Titan Systems Corporation ("Titan Systems"), SRC and the SRC
stockholders, a copy of which is filed as Exhibit 2.1. We refer you to the stock
purchase agreement for additional information about the terms and conditions of
the transaction. On June 10, 1999, we issued a press release announcing the
signing of the stock purchase agreement and the closing of the acquisition. We
are incorporating the press release into this Form 8-K, and a copy has been
attached as Exhibit 99.1.
We purchased all of the SRC stock for an aggregate of $33,000,000 in cash paid
at closing, less a $500,000 holdback, and an aggregate of $2,000,000 in
promissory notes which bear interest at 7% per annum and become fully payable on
June 9, 2000. The purchase price is subject to a working capital adjustment
based upon an audit of the closing balance sheet to be completed by our
auditors. SRC had stockholders' equity of approximately $11,400,000 on its
interim unaudited closing balance sheet. In addition, we agreed to pay the SRC
stockholders one-half of approximately $1,500,000 in SRC receivables aged more
than 720 days to the extent that any of those receivables are collected within
two years following the closing date.
We used borrowings from our $75 million term loan, which is a component of our
$190 million credit facility to fund the SRC acquisition. In connection with the
SRC transaction, our bank syndicate, with The Bank of Nova Scotia as the
administrative agent, amended and increased our existing credit facility. The
credit facility includes a $55 million line of credit for working capital and
general corporate purposes, $60 million in lines of credit dedicated to
acquisitions and the $75 million term loan referred to above. We used
approximately $5 million on the term loan to retire SRC's outstanding bank debt.
SRC, which is headquartered in Boston, Massachusetts and has 10 offices located
in the United States, principally acts as a provider of information systems,
solutions and services, primarily for U.S. government agencies. SRC's business
base includes aviation and airport systems, security, logistics automation and
command and control. SRC will continue to devote its assets to its existing
business base, including future expansion. In order to realize the anticipated
benefits of this acquisition, we must efficiently integrate and combine the
operations of Titan Systems and SRC. The process of integrating government
contracting, management services, administrative organizations, facilities,
management information systems and other aspects of operations will present a
significant challenge to the management of the two companies. We cannot assure
you that this integration process will be successful or that we will fully
realize the anticipated benefits of the SRC acquisition. Dedication of our
resources to the integration of SRC may detract attention from day-to-day
business of both Titan Systems and SRC. We have completed six acquisitions of
information technology defense contractors during the past 18 months and
continue to pursue other acquisitions. The dedication of resources to the
integration of SRC may also detract attention from our integration efforts for
our other acquisitions and our other ongoing operations.
The difficulties of integration may be increased by the necessity of
coordinating geographically separated organizations, integrating personnel with
disparate business backgrounds and combining different corporate cultures. We
cannot assure you that there will not be substantial costs associated with the
integration process, that such activities will not result in a decrease in
revenues or that there will not be other material adverse effects of these
integration efforts.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 23, 1999 THE TITAN CORPORATION
a Delaware corporation
By: /s/Gene W. Ray
Gene W. Ray
Chief Executive Officer and President
