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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the
quarterly period ended September 30, 2003
or
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the
transition period
from
to
Commission file number 1-6035
THE
TITAN CORPORATION
(Exact name of registrant as specified in its charter)
|
DELAWARE
(State or other jurisdiction of
incorporation or organization)
|
|
95-2588754
(I.R.S. Employer
Identification No.)
|
3033
Science Park Road
San Diego, California 92121-1199
(Address of
principal executive offices, zip code)
(Registrant's telephone number, including area
code) (858) 552-9500
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by
check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes x No o.
Indicate by
check mark whether the registrant is an accelerated filer as
defined in rule 12b-2 of the Securities Exchange Act of
1934. Yes x No o.
The number of
shares of registrant's common stock outstanding at October 24,
2003, was 81,462,655.
Part I—FINANCIAL
INFORMATION
Item 1. Financial Statements
THE TITAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
|
|
|
Three
months ended
September 30,
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|
Nine
months ended
September 30,
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|
|
|
|
|
|
|
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2003
|
|
2002
|
|
2003
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|
2002
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|
|
|
|
|
|
|
|
|
|
|
|
Revenues
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|
$
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471,854
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$
|
352,819
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|
$
|
1,287,414
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|
$
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1,012,798
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|
|
|
|
|
|
|
|
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|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
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396,197
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|
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286,977
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|
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1,076,761
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817,161
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Selling, general and
administrative
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|
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38,495
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62,374
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119,289
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137,429
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Research and
development
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3,075
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2,279
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7,799
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|
7,051
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|
Exit and restructuring
charges and other (Note 3)
|
|
|
––
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|
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46,743
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|
|
––
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|
|
50,062
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Merger
related costs (Note 2)
|
|
|
750
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|
|
—
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|
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750
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|
|
—
|
|
|
|
|
|
|
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|
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Total costs and expenses
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|
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438,517
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398,373
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1,204,599
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1,011,703
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|
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|
|
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Operating profit
(loss)
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|
|
33,337
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|
|
(45,554
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)
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82,815
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|
|
1,095
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Interest
expense
|
|
|
(9,127
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)
|
|
(8,262
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)
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(25,909
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)
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(24,270
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)
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Interest income
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768
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|
565
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|
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2,199
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|
816
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Debt extinguishment costs
(Notes 1 and 6)
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—
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|
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—
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(12,423
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)
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(9,435
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)
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|
|
|
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|
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Income (loss) from
continuing operations before income taxes and cumulative effect of
change
in
accounting principle
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|
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24,978
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|
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(53,251
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)
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46,682
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(31,794
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)
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Income tax provision
(benefit)
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9,991
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|
(19,735
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)
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18,673
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(10,945
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)
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Income (loss) from
continuing operations before cumulative effect of change in
accounting
principle
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|
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14,987
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(33,516
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)
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28,009
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(20,849
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)
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Income (loss) from
discontinued operations, net of tax benefit (Note 5)
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190
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(191,782
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)
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34
|
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(209,729
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)
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|
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|
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Income (loss) before
cumulative effect of change in accounting principle
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15,177
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(225,298
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)
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28,043
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(230,578
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)
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Cumulative effect of
change in accounting principle, net of tax benefit
(discontinued
operations) (Note 4)
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––
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––
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––
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(40,111
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)
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|
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Net income
(loss)
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15,177
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(225,298
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)
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28,043
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(270,689
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)
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Dividend requirements on
preferred stock
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|
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(172
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)
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(172
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)
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(516
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)
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(517
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)
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Net income (loss)
applicable to common stock
|
|
$
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15,005
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$
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(225,470
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)
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$
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27,527
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$
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(271,206
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)
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Basic earnings (loss) per
share:
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Income
(loss) from continuing operations before cumulative effect of
change in accounting
principle
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|
$
|
0.18
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$
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(0.43
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)
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$
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0.35
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|
$
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(0.28
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)
|
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Income
(loss) from discontinued operations, net of tax benefit
|
|
|
—
|
|
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(2.46
|
)
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—
|
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(2.79
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)
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|
Cumulative effect of change in
accounting principle, net of tax benefit (discontinued
operations)
|
|
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—
|
|
|
—
|
|
|
—
|
|
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(0.53
|
)
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|
|
|
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Net
income (loss)
|
|
$
|
0.18
|
|
$
|
(2.89
|
)
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$
|
0.35
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$
|
(3.60
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)
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Weighted
average shares
|
|
|
80,210
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|
77,820
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79,374
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|
75,270
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Diluted earnings (loss)
per share:
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|
|
|
|
|
|
|
|
|
|
|
|
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|
Income
(loss) from continuing operations before cumulative effect of
change in accounting
principle
|
|
$
|
0.18
|
|
$
|
(0.43
|
)
|
$
|
0.33
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|
$
|
(0.28
|
)
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|
Income
(loss) from discontinued operations, net of tax benefit
|
|
|
—
|
|
|
(2.46
|
)
|
|
––
|
|
|
(2.79
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)
|
|
Cumulative effect of change in
accounting principle, net of tax benefit (discontinued
operations)
|
|
|
––
|
|
|
—
|
|
|
––
|
|
|
(0.53
|
)
|
|
|
|
|
|
|
|
|
|
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|
Net
income (loss)
|
|
$
|
0.18
|
|
$
|
(2.89
|
)
|
$
|
0.33
|
|
$
|
(3.60
|
)
|
|
|
|
|
|
|
|
|
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|
Weighted
average shares
|
|
|
84,210
|
|
|
77,820
|
|
|
82,296
|
|
|
75,270
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|
|
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|
|
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|
The
accompanying notes are an integral part of these consolidated
financial statements.
THE TITAN CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share
data)
|
|
September 30,
2003
|
|
December 31,
2002
|
|
|
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|
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|
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|
Assets
|
|
(Unaudited)
|
|
|
|
|
|
Current Assets:
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|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
31,735
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|
$
|
34,123
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|
|
Restricted
cash
|
|
|
––
|
|
|
394
|
|
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Accounts receivable — net
|
|
|
346,934
|
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|
314,363
|
|
|
Inventories
|
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|
31,500
|
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|
31,280
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|
Prepaid expenses and other
|
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|
32,380
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19,441
|
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|
Deferred income taxes
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|
101,360
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|
108,046
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Current assets of discontinued operations
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73,135
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|
103,871
|
|
|
|
|
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|
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|
Total current assets
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|
|
617,044
|
|
|
611,518
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|
|
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|
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|
Property and equipment
— net
|
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|
63,786
|
|
|
63,705
|
|
|
Goodwill
|
|
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465,723
|
|
|
462,719
|
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|
Other assets —
net
|
|
|
85,192
|
|
|
99,903
|
|
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Deferred income
taxes
|
|
|
53,015
|
|
|
53,015
|
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|
Non-current assets of
discontinued operations
|
|
|
2,009
|
|
|
6,582
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|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,286,769
|
|
$
|
1,297,442
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
Current portion of amounts outstanding under line of
credit
|
|
$
|
3,500
|
|
$
|
3,500
|
|
|
Accounts payable
|
|
|
71,878
|
|
|
81,376
|
|
|
Current portion of long-term debt
|
|
|
860
|
|
|
847
|
|
|
Accrued compensation and benefits
|
|
|
87,749
|
|
|
66,639
|
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|
Other accrued liabilities
|
|
|
94,180
|
|
|
87,602
|
|
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Current liabilities of discontinued operations
|
|
|
23,658
|
|
|
49,143
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
281,825
|
|
|
289,107
|
|
|
|
|
|
|
|
|
|
Long-term portion of
amounts outstanding under line of credit
|
|
|
343,000
|
|
|
344,750
|
|
|
Senior subordinated
notes
|
|
|
200,000
|
|
|
—
|
|
|
Company obligated
mandatory redeemable convertible preferred securities of a
subsidiary trust whose sole assets are
senior subordinated debentures
of Titan
|
|
|
—
|
|
|
250,000
|
|
|
Other long-term
debt
|
|
|
1,390
|
|
|
2,045
|
|
|
Other non-current
liabilities
|
|
|
57,775
|
|
|
54,401
|
|
|
Non-current liabilities of
discontinued operations
|
|
|
36,669
|
|
|
44,826
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
920,659
|
|
|
985,129
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
|
Preferred stock: $1 par value, authorized 5,000,000
shares:
|
|
|
|
|
|
|
|
|
Cumulative convertible, $13,800 liquidation
preference, designated 1,068,102 shares: 688,029 and
688,129
shares issued and outstanding
|
|
|
688
|
|
|
688
|
|
|
Series A junior participating: designated 1,000,000
authorized shares: None issued
|
|
|
—
|
|
|
—
|
|
|
Common stock: $.01 par value, authorized
200,000,000 shares, issued and outstanding: 81,461,595
and
78,344,550
shares
|
|
|
815
|
|
|
783
|
|
|
Capital in excess of par value
|
|
|
666,985
|
|
|
647,752
|
|
|
Deferred compensation
|
|
|
(2,105
|
)
|
|
(8,791
|
)
|
|
Retained earnings (deficit)
|
|
|
(299,275
|
)
|
|
(327,318
|
)
|
|
Accumulated other comprehensive income (loss)
|
|
|
(185
|
)
|
|
(132
|
)
|
|
Treasury stock (265,124 and 245,750 shares), at
cost
|
|
|
(813
|
)
|
|
(669
|
)
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
366,110
|
|
|
312,313
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders'
equity
|
|
$
|
1,286,769
|
|
$
|
1,297,442
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated
financial statements.