<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 3, 2000
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
San Diego, California 92121-1199
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (858) 552-9500
ITEM 5. OTHER EVENTS.
We are filing the following information with the Securities and Exchange
Commission for purposes of updating our publicly available disclosure.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press Release Reporting Certain Financial Results of Titan
dated as of January 31, 2000.
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: February 3, 2000 THE TITAN CORPORATION
a Delaware Corporation
By: /s/ Cheryl L. Barr
Assistant General Counsel
and Assistant Secretary
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Exhibit 99.1
Titan Reports Record Results for Fiscal 1999 Page 1 of 6
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TITAN REPORTS RECORD RESULTS FOR FISCAL 1999;
FOURTH QUARTER REVENUES INCREASE 56% TO $132 MILLION;
FOURTH QUARTER EPS INCREASE 38% TO $.18 PER SHARE
================================================================================
SAN DIEGO, JANUARY 31, 2000 -- THE TITAN CORPORATION (NYSE:TTN) today reported
record revenues of $132 million and pro forma net income from continuing
operations of $8.3 million or $.18 per share (diluted) for the fourth quarter of
fiscal year 1999. This represents an increase in net income from continuing
operations of 73% over fourth quarter 1998 results adjusted for acquisition
related charges and other credits, net of taxes. Revenues in the fourth quarter
of fiscal 1999 increased 56% over revenues of $85 million for the year ago
quarter. These results do not include a net credit of $28.9 million reflecting
the $41.8 million gain the Company realized during the fourth quarter on the
sale of its minority ownership interest in IPivot, net of acquisition,
integration and other reorganization costs. (See attached schedule of Other
Financial Information).
For fiscal year 1999, Titan reported record revenues of $407 million and pro
forma net income from continuing operations of $21.2 million, or $.46 per share
(diluted). These record results were driven by very strong revenue growth across
each of Titan's businesses, most notably Titan Wireless and Cayenta. For fiscal
year 1999, revenues in Titan Wireless increased more than 300%, revenues in
Titan's Software Systems segment, which includes Cayenta, increased more than
100%, revenues in Titan Scan, Titan's medical sterilization and food
pasteurization business increased 28%, and revenues in Titan Systems, Titan's
defense information technology business, increased 20% over fiscal year 1998.
"1999 was a milestone year for Titan," said GENE W. RAY, Chairman, President,
and CEO of Titan. "We achieved significant progress in building our reputation
as a technology incubator by growing each of our three commercial businesses to
profitability, and realizing a significant gain on the sale of IPivot to Intel.
IPivot is an example of our technology spin off strategy whereby we bring value
to Titan shareholders by utilizing outside capital resources. We continue to
believe that our strategy of identifying promising technologies within Titan,
and developing commercial businesses is the best way to use Titan's core
competencies to build shareholder value. We look forward to the first quarter of
2000 with the goal of setting new revenue growth records for our commercial
businesses," Ray continued.
"Other important events for Titan in the fourth quarter include:
- the opening of our electron beam food pasteurization facility in Sioux
City, Iowa;
- the execution of a definitive agreement to acquire Advanced
Communication Systems which will bring the annual revenues of our
defense business to almost two-thirds of a billion dollars;
- the launching of our satellite based long distance telephone service
in five additional countries, bringing the total number of countries
we are providing satellite telephony service to eight," Ray concluded.
HIGHLIGHTS OF FINANCIAL PERFORMANCE BY BUSINESS UNIT
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Page 2 of 6
SOFTWARE SYSTEMS
Revenues from Titan's Software Systems segment, which includes Cayenta,
increased 102% to $16.6 million in the fourth quarter of fiscal 1999 from $8.2
million in the fourth quarter of fiscal 1998. Increased revenues were primarily
driven by the growth of Cayenta's enterprise application integration business,
with contracts from Sempra Energy, the FAA, the District of Columbia and Waste
Management contributing significantly in the fourth quarter. To a lesser extent,
the acquisition of an enterprise asset management software company in November
1999, and an e-commerce software company in December 1999 also contributed to
fiscal fourth quarter revenue growth. Software Systems' operating profit for the
fourth quarter of fiscal 1999 increased 52% to $2.9 million compared to $1.9
million in the same quarter a year ago.
TITAN SCAN
Revenues in the Titan Scan segment increased 37% to $4.3 million in the fourth
quarter of fiscal 1999 from $3.1 million in the fourth quarter of fiscal 1998.
Scan's operating profit for the fourth quarter of fiscal 1999 increased 91% to
$1.2 million compared to $600,000 in the same quarter a year ago. Increased
revenues and a significant margin improvement were due primarily to increased
capacity of Scan's contract medical product sterilization facilities, and to a
lesser extent from the recognition of revenues in Scan's food pasteurization
business. In the fourth quarter of 1999, revenue was recognized from the sale of
an X-ray sterilization system to Hawaii Pride, which marked Scan's first sale of
a food-related system. Titan expects that an increased percentage of Scan's
revenue will come from its electron beam food pasteurization business in fiscal
2000.
TITAN WIRELESS
Revenues in the Titan Wireless segment increased over 20 fold to $17.4 million
in the fourth quarter of fiscal 1999 from $700,000 in the fourth quarter of
fiscal 1998. Continued shipments of hardware to Benin, and to a lesser extent,
the launching of international long distance service by Titan's joint venture,
Sakon LLC in the countries of El Salvador, Cameroon, Jordan, Kuwait, and Saudi
Arabia resulted in substantial revenue increases in the fourth quarter of fiscal
1999 over the same period a year ago. Titan Wireless' operating profit for the
fourth quarter of fiscal 1999 increased to $3.4 million compared to a loss of
$1.7 million during the same period a year ago. Included in fourth quarter of
fiscal 1999 operating profit is $2.5 million related to a reduction of a
valuation allowance on amounts due from a certain customer. While a majority of
Titan Wireless' revenues in the fourth quarter and for all of fiscal 1999 were
derived from equipment sales, Titan expects a substantial increase in the
percentage of revenues attributable to telephony services in fiscal 2000,
beginning as early as the first fiscal quarter.
TITAN SYSTEMS
Revenues in the Titan Systems segment, which includes all of the business units
providing information technology and communications solutions to defense and
intelligence and other U.S. and allied government agencies, increased 29% to
$91.9 million in the fourth quarter of fiscal 1999 from $71.1 million in the
fourth quarter of fiscal 1998. Increased revenues resulted in part from strong
demand for Titan Systems' manpacks and signal processing antennas and for
increased demand for systems design and integration services as well as from the
acquisitions of System Resources Corporation in June 1999 and Atlantic Aerospace
Electronics Corporation in July 1999. Titan Systems' operating profit for the
fourth quarter of fiscal 1999 was $8.1 million compared to $10.3 million in the
same period a year ago. An increase in revenue volume requiring a greater
utilization of subcontractors, and substantially increased planned investments
in research and development for certain imaging and video processing products
resulted in reduced margins. Titan expects this trend to continue in fiscal year
2000.
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Page 3 of 6
Headquartered in San Diego, California, The Titan Corporation is a leading
diversified technology company that provides information technology,
communications and electron beam food pasteurization and medical sterilization
systems and services. Three of Titan's five segments develop and deploy
communications and information technology solutions and services. In addition,
Titan markets the leading technology for the electronic pasteurization of food
products and is continually identifying promising technologies suitable for
commercialization. The company has 3,200 employees, annualized sales of over
$500 million and total backlog in excess of $1 billion.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: The statements contained in this release which are not historical facts,
including our spin-off strategy, our expectations as to future sources of
revenues, our expected annual Titan Systems revenues, our outlook on the future
performance of our segments and our growth strategies, are forward-looking
statements that are subject to risks and uncertainties that could cause actual
results to differ materially from those set forth in or implied by
forward-looking statements. These risks and uncertainties include the risk that
the primary commercial markets targeted by Cayenta, Titan Scan and Titan
Wireless are emerging markets and that the Company's principal products and
services will not gain market acceptance, the Company's limited history of
commercializing businesses and the risk that it will not be successful, the
Company's dependence on continued funding of U.S. Department of Defense
programs, government contract procurement and termination risks and audit risks,
risks associated with acquiring other companies, including integration risks,
and other risks described in the Company's Securities and Exchange Commission
filings.
Investor Relations Contact:
Rochelle Bold
Vice President Investor Relations
(858) 552-9400 or [email protected]
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Page 4 of 6
THE TITAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Year ended
December 31, December 31,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $132,492 $ 84,750 $406,551 $303,428
-------- -------- -------- --------
Costs and expenses:
Cost of revenues 103,222 63,225 314,369 232,041
Selling, general and
administrative expense 13,626 10,617 46,583 37,553
Research and development
expense 1,373 1,565 6,690 5,590
Acquisition related charges
and other (28,880) 5,338 (28,880) 9,891
-------- -------- -------- --------
Total costs and expenses 89,341 80,745 338,762 285,075
-------- -------- -------- --------
Operating profit 43,151 4,005 67,789 18,353
Interest expense - net (2,479) (1,848) (8,606) (6,985)
-------- -------- -------- --------
Income from continuing operations
before income taxes and
cumulative effect of change in
accounting principle and income
taxes 40,672 2,157 59,183 11,368
Income tax provision 16,430 819 21,983 4,155
-------- -------- -------- --------
Income from continuing operations
before cumulative effect of
change in accounting principle 24,242 1,338 37,200 7,213
Cumulative effect of change in
accounting principle, net of
taxes - - - (19,474)
Loss from discontinued operations,
net of taxes (5,600) (1,827) (5,600) (7,444)
-------- -------- -------- --------
Net income (loss) 18,642 (489) 31,600 (19,705)
Dividend requirements on
preferred stock (174) (173) (695) (778)
Net income (loss) applicable to
common stock $ 18,468 $ (662) $ 30,905 $(20,483)
======== ======== ======== ========
Basic earnings (loss) per share:
Income from continuing
operations before cumulative
effect of change in
accounting principle $ 0.56 $ 0.03 $ 0.93 $ 0.18
Cumulative effect of change
in accounting principle - - - (0.56)
Loss from discontinued
operations (0.13) (0.05) (0.14) (0.21)
-------- -------- -------- --------
Net income (loss) $ 0.43 $ (0.02) $ 0.79 $ (0.59)
======== ======== ======== ========
Weighted average shares 42,748 35,604 39,318 34,895
======== ======== ======== ========
Diluted earnings (loss) per share:
Income from continuing
operations before cumulative
effect of change in
accounting principle $ 0.52 $ 0.03 $ 0.81 $ 0.18
Cumulative effect of change in
accounting principle - - - (0.54)
Loss from discontinued
operations (0.12) (0.05) (0.12) (0.21)
-------- -------- -------- --------
Net income (loss) $ 0.40 $ (0.02) $ 0.69 $ (0.57)
======== ======== ======== ========
Weighted average shares 46,605 36,643 46,032 36,177
======== ======== ======== ========
</TABLE>
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Page 5 of 6
THE TITAN CORPORATION
SEGMENT INFORMATION
(in thousands of dollars)
<TABLE>
<CAPTION>
Three months ended Year ended
December 31, December 31,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Titan Systems $ 91,867 $ 71,076 $311,412 $259,442
Software Systems 16,592 8,228 45,922 21,470
Titan Scan 4,310 3,135 14,295 11,184
Titan Wireless 17,440 713 27,325 6,717
Emerging Technologies
and Businesses 2,283 1,598 7,597 4,615
-------- -------- -------- --------
$132,492 $ 84,750 $406,551 $303,428
======== ======== ======== ========
Operating profit (loss):
Titan Systems $ 8,085 $ 10,297 $ 29,689 $ 32,488
Software Systems 2,900 1,905 9,073 5,137
Titan Scan 1,182 618 2,850 1,121
Titan Wireless 3,407 (1,720) 5,063 (4,334)
Emerging Technologies
and Businesses 623 269 1,355 34
Acquisition related charges
and other 28,880 (5,338) 28,880 (9,891)
-------- -------- -------- --------
Segment operating profit
before Corporate 45,077 6,031 76,910 24,555
Corporate (1,926) (2,026) (9,121) (6,202)
-------- -------- -------- --------
$ 43,151 $ 4,005 $ 67,789 $ 18,353
======== ======== ======== ========
</TABLE>
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Page 6 of 6
OTHER FINANCIAL INFORMATION
(in thousands, except per share data)
COMPUTATION OF PRO FORMA INCOME AND EARNINGS PER SHARE
FROM CONTINUING OPERATIONS
<TABLE>
<CAPTION>
Three months ended Year ended
December 31, December 31,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income from continuing operations
before income taxes and
cumulative effect of change in
accounting principle $ 40,672 $ 2,157 $ 59,183 $ 11,368
Less: Acquisition related charges
and other (28,880) 5,338 (28,880) 9,891
-------- -------- -------- --------
11,792 7,495 30,303 21,259
Proforma income tax provision 3,538 2,736 9,091 7,760
-------- -------- -------- --------
Proforma income from continuing
operations before cumulative
effect of change in accounting
principle 8,254 4,759 21,212 13,499
Dividend requirements on
preferred stock* - (173) (695) (778)
-------- -------- -------- --------
Proforma net income applicable
to common stock $ 8,254 $ 4,586 $ 20,517 $ 12,721
======== ======== ======== ========
Diluted weighted average shares 46,605 36,643 46,032 36,177
======== ======== ======== ========
Proforma diluted earnings
per share $ 0.18 $ 0.13 $ 0.46 $ 0.35
======== ======== ======== ========
</TABLE>
* Preferred dividends not included in calculation of earnings per share for the
fourth quarter of 1999 as the effect would be anti-dilutive.
