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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-6035

THE TITAN CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

        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 ý    No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

        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 ý    No o

        Aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2004, the last business day of the registrant's most recently completed second fiscal quarter: $1,072,748,978.

        Number of shares of Common Stock outstanding as of March 4, 2005 was: 84,894,131.

Documents Incorporated By Reference:

        The information required by Part III of this Form 10-K will be filed by amendment not later than April 30, 2005 or, if applicable, incorporated by reference to the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission in connection with the solicitation of proxies for the Annual Meeting of Stockholders to be held on June 7, 2005.

PART I

Item 1. Business.

Corporate Overview

        The Titan Corporation is a leading provider of comprehensive information and communications systems solutions and services to the Department of Defense, the Department of Homeland Security, and intelligence and other key government agencies. These systems, solutions, and services include research and development, design, assembly, installation, integration, test and evaluation, deployment, logistics and operations support, maintenance, and training. Systems and products we provide to military and government agencies include transformational weapons systems, sophisticated satellite communications systems, antennas/telemetry systems, tactical radios, signals intelligence systems, encryption devices, classified systems, and complex computer-based information systems for information processing, information fusion, dissemination, and data mining.

        Our services include system procurement selection and acquisition management services, program management, systems engineering and integration for mission-critical defense platforms and communications systems, enterprise information technology network design, integration, deployment, and operations support, translation and interpreter services, military and first responder training and situational exercises and evaluation, and test, modeling, and continuity of operations analysis for blast, nuclear, electro-magnetic, and chemical/biological threats.

        Our consolidated revenues were over $2 billion for the year ended December 31, 2004.

Our Core Markets.    We apply our core capabilities to provide technology, products, and services with a focus in four often overlapping and synergetic market areas: C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance), Transformational Military Programs, Government Enterprise Information Technology, and the War on Terrorism/Homeland Security. During 2004, our revenue was divided by customer approximately as follows:

2004 Revenue by Customer

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        These markets are described in greater detail in the following sections, including specific examples of the work we are doing in each.

Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR)

        C4ISR has been the cornerstone of our expertise since we were founded in 1981, and it is the principal business foundation on which we have grown over the years. C4ISR can be described as the process of gathering military information through intelligence, surveillance, and reconnaissance measures, and transmitting this information digitally through high-technology communications systems, processing the digitized information to facilitate command and control decision making, and disseminating such commands electronically to military and intelligence platforms for execution. Computers and communications systems are the common vehicle for this information gathering, processing and deployment process. We are a key contributor to the significant C4ISR systems that support the Department of Defense, national intelligence agencies, the Department of Homeland Security, and other key government agencies. Through systems engineering, technical assistance, program management, products, and systems integration, we have been in the forefront of assisting our customers in reaching their C4ISR mission goals. The following are examples of our efforts in C4ISR:

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Integrated Broadcast Service (IBS).    Titan's IBS is an information superiority-enabled service that generates increased combat power by networking sensors, decision makers, and the war fighter to achieve shared awareness, increased speed of command, more efficient operations, greater lethality, increased survivability, and a higher degree of precision intelligence. This networking is achieved via design and deployment of a system of sensors, communication platforms, and sophisticated software-based information fusion, sharing, and dissemination between intelligence gathering and military response missions. IBS bolsters the warfighters ability to execute their mission of threat avoidance, targeting, mission execution, and target negation or destruction. This service operates in a global environment and supports all elements of the U.S. intelligence community.



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Joint Deployable Intelligence Support Systems (JDISS).    JDISS was developed following Operation Desert Shield, when it was determined that communications between the armed services and national intelligence agencies were not optimized with respect to intelligence communications and dissemination. Since inaugurating support in 1992, the Titan-led team provides a common user platform for intelligence professionals that ranges from the Joint Task Force, Theater Joint Intelligence Centers, Theater Component Commands, Coalition Commands and Allied Partners to Service and Unit Level Commands, the Department of Defense and non-Department of Defense national agencies. Additionally, the program provides solutions for other communities of interest across defense, intelligence, law enforcement and homeland security. With over 10,000 current users and over 5,000 deployed systems, the JDISS program is used by the joint U.S. military services to connect a full spectrum of intelligence users, command centers and field commanders. JDISS has become a cornerstone of joint intelligence operations, providing interoperable solutions, intelligence mission applications, integration, security accreditation, deployment, and training support.



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The Joint Range Extension.    We have developed an information solution that allows real-time tactical data link information gleaned from a variety of sensors to be transmitted over any communications medium. This innovative capability allows commanders to see and share the actual tactical events of a campaign at different locations simultaneously. This capability is being used in the Middle East theatre to provide commanders with a view of the battle space at extended ranges, thus allowing forces to be coordinated, sequenced, and deployed rapidly to meet the needs of the operational commander.

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System-Level Solutions.    We develop, deliver and support system-level solutions for a wide range of weapon, sensor, surveillance, and reconnaissance systems. Additionally, we are conducting analysis of aircraft and ship structures, applying advanced corrosion control methodologies, and supporting the development of advanced materials. In support of information operations, we provide highly specialized information security and signal intelligence systems and services to the intelligence community. In the key national imperative areas of missile defense and combating terrorism, we conduct weapons effects analysis services and develop computer models for effects prediction.



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Communications Products.    Titan has provided the Department of Defense, our intelligence community and our closest allies with state-of-the-art, satellite communications systems since the origins of our company. However, that line of products has recently been expanded to include Electronic Warfare (EW) receivers and portable tactical radios. On the EW front, Titan is the designer and supplier of Prophet Block I systems. These systems are capable of receiving, intercepting, and direction-finding almost any radio or mobile phone transmitting in the 2 MHz to 2 GHz range. Two such systems can be used to triangulate and precisely geolocate a potentially threatening transmission source. More than 105 Block I systems have been delivered and almost 50 are being used in combat theaters of operation. The company's investment in tactical, line-of-sight radios has produced a family of lightweight, portable, low-power-consumption radios (TTR-2101 series) that can operate in multiple bands between High Frequency and Ultra-high Frequency, and which are lighter, smaller, lower cost, and easier to use than competing brands.



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The Naval Air Systems Command/Naval Air Warfare Center.    We are helping with the systems engineering and integration of Naval Aviation Reconnaissance and Surveillance systems under a multi-year contract. Under current tasking, our engineers provide design and analysis support for the installation and integration of state-of-the-art sensor systems in both manned and unmanned reconnaissance platforms. Systems level support typically includes concept exploration, specification preparation, interface design, laboratory integration, and test and evaluation. We also support tactical manned and unmanned platforms and avionics equipment. Our engineers provide design and analysis support for the integration of sophisticated subsystems into the avionics and weapons systems of many types of military aircraft. These subsystems include electro-optic/infrared devices, radar, electronic warfare systems, mission planning modules, and tactical data links.

Transformational Military Programs

        We are developing new transformational systems for the Department of Defense that focus on specific national security challenges faced by the United States and its allies. One aspect of the transformation is the development of new weapon systems and weapons delivery. We seek to win engineering development contracts and ultimately full-scale production contracts to provide low-cost, mission critical new weapons systems. The following are several key initiatives in our portfolio of active transformational military efforts:

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X-Craft/Sea Fighter.    We have designed and are in the final stages of completing the production of an experimental vessel for the United States Navy that is unlike any other currently in the fleet today. The X-Craft, christened "Sea Fighter" by the Navy on February 5, 2005, is a high-speed, 262-foot aluminum catamaran with a combined gas turbine and diesel propulsion plant, capable of speeds greater than 50 knots. The vessel is specifically designed to operate in shallow, or littoral, waters. The X-Craft's deck has two helicopter landing spots capable of handling a variety of aircraft up to the size of the H-60-series helicopter. With a design displacement of approximately 1,100 long tons, the X-Craft will be self-deployable over trans-Atlantic ranges. The X-Craft's unique mission module bay will be capable of simultaneously supporting the development of multiple mission packages. The X-Craft program incorporates not only innovative design, development and management methods, but also is using revolutionary acquisition processes intended to get this craft and the information derived from its use into the hands of naval forces as rapidly as possible. The X-Craft was first put into the water in February 2005. Extensive testing will follow to demonstrate

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tactics, techniques, procedures, and technology for the Navy's planned next generation of littoral warships. The Navy has not announced any strategy for future procurements of this class of vessel.

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Affordable Weapon.    Under a research and development contract with the Naval Sea Systems Command, Titan is developing and testing a loitering Unmanned Aerial Vehicle (UAV) that is designed to carry warheads or surveillance payloads at extended ranges and remain airborne for many hours. The UAV will be built using commercially-available, off-the-shelf components at a cost expected to be approximately one-tenth of the cost of legacy missiles currently in service. To date, we have built and successfully flight-tested 24 of these Affordable Weapons.



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Ka-Band Terminals and Components.    To date, there have been virtually no Department of Defense satellites operating in the Ka-band (20 GHz—30 GHz) and few commercial Ka-band satellites operating in overseas locations. However, a new series of U.S. Department of Defense Ka-band capable satellites called "Wideband Gapfiller Satellites" (WGS) are expected to be launched starting in 2006. Through the U.S. Army's Ka-SAT program initiated in 2002, Titan was contracted to design and test some of the key components (modems, waveforms, Comm-On-The-Move antennas) as well as complete terminals which perform in the Ka-band. These systems were developed in advance of the WGS launch to support the U.S. Army's Warfighter Information Network—Tactical (WIN-T) networks. The WIN-T mobile nodes will form the backbone of future Army wideband networks and Titan is positioned to supply key components of the ground-based systems for several years ahead.

Government Enterprise Information Technology

        We provide complete enterprise information technology solutions that enable seamless connectivity from the strategic to the tactical level of a customer's critical enterprise. By necessity, the defense and intelligence organizations require technology that enables information to flow into multi-disciplined, cross-organizational teams of commanders and technicians that respond quickly and effectively to continuing threats and immediate crises. Information is gathered through all source collection methods and is assessed, and in many cases, enriched to assure its relevance and use. We support many enterprise information technology and modernization efforts within our nation's defense and intelligence communities, as well as mission critical networks for civilian agencies. The following are several examples of Government Enterprise Information Technology contracts:

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USSOCOM.    Under our Enterprise Information Technology Contract (EITC), we are providing enterprise network management and engineering services across all of the U.S. Special Operations Command's (USSOCOM) communication and network infrastructures for data, voice, and video. EITC is an innovative solution to meet USSOCOM's worldwide enterprise needs. We are delivering strategic improvements, increased interoperability, and efficient support at all USSOCOM sites and locations, including planning, management, operations and maintenance, and training for all garrison and deployed wide area, metropolitan area, and local area networks. We also provide development, integration, testing, training, and customer support for all desktops, portable computing devices, applications, messaging systems, databases, and web services used by Special Operations Forces. The program also includes information assurance, transmission, and communication security requirements, requirements management, configuration management, hardware maintenance, and disaster recovery.



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Northern Command (NORTHCOM) Enterprise System Management.    Titan provides services for a wide range of information technology and infrastructure support to the NORTHCOM command, control, and communications dictorate (J6). This support comprises enterprise-wide command, control, and communications solutions that are helping the command accomplish its Homeland Defense mission and interact with the Homeland Security agencies at the federal and local level. Services provided by Titan include supporting the common operational picture, future concepts,

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information sharing/synchronization, network engineering and administration, systems integration and operations and maintenance support.

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GeoBase Support for USAF.    We provide a full range of geo-spatial services to the Headquarters Pacific Air Forces organizations (HQ PACAF) GeoBase Program for Directorate of the Civil Engineer, including program management, database development, systems engineering, and software engineering. Data gathering activities include aerial photography mission planning, ground control and photo control surveys, acquisition of aerial imagery, topographic data production of digital elevation models and topographic contours, and software/systems engineering. Using the data gathered, our software engineers develop custom Geospacial Information Services (GIS) solutions and a variety of GeoBase applications, which support operations in military theatre, anti-terrorism and force protection measures, air base defense, and law enforcement applications.



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e-Government Services and Information Assurance.    We provide systems and solutions related to e-government applications as well as the design, installation and maintenance of local and wide area networks used to operate the various U.S. government's Internet-based initiatives. We provide healthcare, electronic filing, and aviation safety systems for the government agencies involved in those initiatives, along with Internet portals used to electronically distribute confidential and non-confidential information to other government entities and the public at large. Titan also provides services and solutions related to information assurance and security consulting for government systems. Several government agencies have e-government applications designed by Titan, including the Federal Communications Commission, Health and Human Services, and the Federal Aviation Administration.

The War on Terrorism/Homeland Security

        We have been providing homeland security solutions to various government agencies, some of which now comprise the Department of Homeland Security, for over 15 years. As with our efforts in our traditional defense business, Titan brings innovation, integration, deployment, and life cycle service to the national imperative of homeland security and counter terrorism measures. We provide products and services in a wide variety of areas, including interpreter and translation services, border control and protection, first responder exercises and training, nuclear threat counter-proliferation, emergency communications capabilities and systems, chemical, biological, radiological or nuclear weapons (CBRN) consequence management, and continuity of operations and continuity of government studies. Examples of Titan contracts in this area include:

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Emergency Management.    We assist numerous U.S. government customers, including the Department of Homeland Security, in continuity of operations preparations, enabling continued operations following a terrorist act. We develop, integrate, and deploy Mobile Emergency Operations vehicles and other systems to provide backup communications capability to governmental agencies and first responders. Titan is a principal provider of training and situational exercises to prepare first responders for a variety of terrorist events as well as communications systems that greatly facilitate interoperability and crisis response.



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U.S. Army Intelligence and Security Command (INSCOM) Linguist Support.    Titan is the U.S. government's leading supplier of linguists under INSCOM's Worldwide Linguist Support Contract. Titan provides linguist support for contingency operations and current intelligence gathering requirements in over a dozen countries where the government has linguist shortfalls. Titan's linguist contract with the U.S. Army contributed $247.2 million, or 12.1%, of revenues in fiscal 2004.



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Defending Against Bio-terrorism.    We provide analytical support, systems development, and integration of key systems to help protect the nation from terrorist use of chemical, biological, radiological or nuclear weapons (CBRN). Examples include: programmatic support through the Department of Health and Human Services' HHS Metropolitan Medical Response System to over

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100 local jurisdictions; conduction of a national training program to the National Guard Civil Support Teams and to local first responders on atmospheric transport of airborne CBRN materials; developing a solution for the U.S. Postal Service to mitigate mail-borne chemical and biological threats; and developing and testing decontamination systems of general applicability to weapons of mass destruction event mitigation and recovery.

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Securing America's Borders.    Protecting America's cyber borders is a major Titan endeavor, as network and information technology security and protecting critical infrastructure have become increasingly important initiatives in national security. We are also working in the areas of intelligence information distribution, which integrates and fuses near real-time correlated intelligence data via satellite to intelligence agencies and combatant commanders worldwide. Additionally, Titan provides the information technology support for the U.S. Customs Service's Air & Marine Operation Center, our nation's focal point for protecting the security of the United States' borders from smugglers and terrorists. In 2004, Titan secured a major role as subcontractor on the Department of Homeland Security's US-VISIT contract as a member of the Smart Border Alliance. The goals of the US-VISIT program are to enhance security for our citizens and visitors while facilitating legitimate travel and trade across our borders. US-VISIT helps to secure our borders, facilitate the entry and exit process, and enhance the integrity of our immigration system while respecting the privacy of our visitors. The central thrust of Titan's role on US-VISIT is overall system quality management, in which Titan engineers will assure that the US-VISIT system and its software are properly designed, developed, and deployed over the next decade.



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21st Century Technology to Secure the Homeland.    We are in various stages of development on several homeland security technologies, including a new digital data link between aircraft and the ground, key components for improved portal screening systems, concealed weapons detectors, and through-the-wall surveillance capabilities.

Competition.    We are one of many companies involved in providing information systems solutions, support services and communications products for a variety of programs for agencies of the U.S. government and civil governments. Most activities in which we engage are very competitive and require that we have highly skilled and experienced technical personnel to compete. Many of our competitors have significantly greater financial, personnel and other resources than we have. These competitors include Northrop Grumman Corporation, the Boeing Company, General Dynamics Corporation, Lockheed Martin Corporation, the Raytheon Company, Computer Sciences Corporation, and Science Applications International Corporation. In addition, we compete with smaller and medium sized companies such as: Anteon Corporation, CACI International Inc., SRA International, ManTech International Corporation, Dynamics Research Corporation, and ViaSat, Inc. We believe that the primary competitive factors for our information systems solutions, support services and communications products include reputation, technical skills, past contract performance, experience in the industry, cost competitiveness, and customer relationships.

        We view our competitive strengths as follows:

        Long Standing Customer Relationships and Experienced Management.    We have an extensive history of providing comprehensive information and communications products, solutions and services to U.S. defense, intelligence, and civil government agencies. Collectively, Titan's executives and general managers have on average approximately 30 years of industry experience and have developed long-standing, key customer relationships across all of the U.S. military services and several allied countries. The industry experience of Titan's executives and general managers has also helped to develop a significant presence with many civilian government agencies, which has contributed to Titan's success in securing new contracts.

        Strong Contract Execution/Past Performance.    Given the mission-critical nature of many of the programs in which we serve, our customers usually require a strong track record of technical and

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operational execution on previous contracts. Past performance is graded by the Department of Defense in a Contract Performance and Assessment Report (CPAR) database, which is used by prospective customers in evaluating proposals for new contracts. We believe our strong past performance, as demonstrated by our CPAR scores, and history of execution on mission-critical defense and other government agency programs gives Titan a competitive advantage on many of the procurements that we bid on.

        Broad Solution Capabilities.    We have extensive industry expertise in the development of comprehensive information and communications products, solutions and services for government customers. We provide products and solutions in areas such as signal processing, antenna design, low-detection waveforms, computer-aided target and image recognition, satellite communications hardware and software, and real-time object tracking and targeting. In addition, we have significant knowledge of legacy information technology and C4ISR systems currently in operation and the ability to integrate new solutions into existing systems. This ability to provide full-service products, solutions and services, coupled with our employee base of over 8,900 "secret" and above-cleared personnel, has enabled us to bid on larger, more comprehensive government contracts than at any time in our history. During 2004, we won 13 of 18 competitive procurements that we bid with potential values each exceeding $100 million in revenues to Titan.

Commercial Businesses

        We have restructured our organization to focus our primary efforts on our core national security business and other federal civilian business. We have sold, shut down, or are in the process of shutting down all of the commercial businesses that Titan operated in prior years. Titan continues to generate a relatively small amount of revenue from certain commercial customers, which pertains to the same general products and services offered to our government customers. Commercial revenues for 2004 totaled $43.4 million, or 2.1% of total revenue. Approximately $16 million of commercial revenue was from commercial contracts to provide project management services related to facilities construction and cost estimation. Approximately $12 million of commercial revenue was earned from the sale of energy devices to the pulsed power community. These include devices to generate continuous microwave energy used in industrial microwave ovens to dry or cure bulk foods, lumber, and other products; components to produce pulses of microwave energy for use in medical and non destructive test applications; and high current, high voltage switches, trigger generators, and flash x-ray equipment used to take radiographic images of high-speed objects. The remaining balance of commercial revenues were generated from sales of digitized finger print scanners sold to law enforcement agencies, seek and detection equipment for commercial use, airborne antennas used on commercial aircraft and ground based antennas to receive images and communicate with satellite equipment, and a variety of circuit boards for industrial use. We do not expect commercial revenues to be a material part of our business in the foreseeable future.

Discontinued Operations

        In June of 2004, our board of directors made the decision to sell or otherwise dispose of Datron World Communications (Datron World) and our Titan Scan Technologies service business (Scan Services). During 2002, our board of directors made the decision to exit a substantial portion of our commercial businesses, consisting of Titan Wireless, Cayenta, AverCom and LinCom Wireless. AverCom, LinCom Wireless and Titan Scan Technologies were formerly parts of our Titan Technologies segment and Datron World Communications was previously part of our Titan Systems segment. Prior to the decisions to exit these businesses, we grouped our business into five segments—Titan Systems, Titan Wireless, Software Systems (including Cayenta), Titan Technologies and the SureBeam business. We are no longer reporting our results of operations by these segments; however, reference may be made to these segments in discussions of historical information.

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Datron World and Scan Services (Discontinued June 2004)

        Datron World and Scan Services are non-core operations that have not performed to management's expectation, and their divestiture will allow Titan to better focus on its National Security Solutions business. Datron World is a provider of broadband communications products for government and commercial contracts. Scan Services provides contract sterilization services, primarily for disposable medical device manufacturers, through its facilities located in Denver, CO, Lima, OH and San Diego, CA. During the fourth quarter of 2004, Datron World was sold for approximately $4.7 million, resulting in a loss of approximately $2.0 million. In February 2005, Scan Services was sold for approximately $4.9 million, which did not result in a material gain on the transaction.

Titan Wireless (Discontinued July 11, 2002)

        Titan Wireless provided telecommunications services and systems to developing countries primarily in Africa, Central Asia, the Middle East and Latin America. Despite our low cost technology and efficiency advantages, competition in the international telecommunications sector drove market rates to levels that made operations of our telecommunications systems at our size uneconomical. Notably, the bankruptcies of Global Crossing Ltd., WorldCom, Inc. and Phone1Globalwide Corporation (formerly Globaltron Corporation), and the dire financial condition of other providers such as ibasis, imposed a rapid and sudden deterioration in wholesale prices in 2002. In July 2002, we decided to exit our international telecommunications businesses through a combination of selling assets or businesses and shutting down operations. These actions were substantially completed in 2003. Refer to Note 7 to the consolidated financial statements for further discussion.

        While Titan continues to hold assets and liabilities of Titan Wireless in Discontinued Operations, there were no revenues in Titan Wireless for the year ended December 31, 2004.

Cayenta (Discontinued March 1, 2002)

        Cayenta provided software applications and implementation and integration services to customers to solve specific business and operating problems. These software applications were tailored for each customer's business and operating requirements and in certain cases made accessible via the Internet. Cayenta was discontinued in 2002, at which time Titan began to sell or otherwise dispose of Cayenta's assets. Refer to Note 7 to the consolidated financial statements for further discussion.

Titan Technologies (Substantially Discontinued August 2002)

        In 2002, Titan discontinued its AverCom business which was sold in 2002, its LinCom Wireless business which was shut down in 2002, and its electron-beam medical and mail sterilization business.

SureBeam (Discontinued October 2001)

        Titan discontinued its former subsidiary, SureBeam, in October 2001 and later completed a tax-free spin-off transaction in which all of the shares of SureBeam Corporation were distributed to Titan stockholders in August 2002. On January 19, 2004, SureBeam began liquidation proceedings under Chapter 7 of the United States Bankruptcy Code. During 2004, Titan received certain assets from the Bankruptcy proceedings which will be sold or disposed of through Titan's continuing operations, as these assets represented collateral securing Titan's interest in a credit facility previously provided to SureBeam. Additionally, and as a result of the bankruptcy proceedings, Titan assumed certain lease obligations and idle facilities which were previously guaranteed by Titan. In 2004, Titan incurred expenses and recorded charges related to these lease obligations and idle facilities that have been accounted for in discontinued operations, as such guarantees on the obligations of SureBeam existed at the time SureBeam was originally discontinued in October 2001. (See Note 7 to the notes to consolidated financial statements).

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Recent Developments

        As previously disclosed, during the first quarter of 2004, Titan learned of allegations that improper payments under the Foreign Corrupt Practices Act (FCPA) had been made, or items of value had been provided, involving international consultants for Titan or its subsidiaries to foreign officials. The allegations were identified as part of internal reviews conducted by Titan and Lockheed Martin, and jointly reported by them to the government. Titan's board of directors established a committee of the board to oversee Titan's internal review of these matters.

        The internal review began with a focus on Titan's Datron World Communications unit, which was discontinued in June 2004 and sold in November 2004, but the internal review later was expanded to a number of Titan's international businesses, including Titan Wireless (which was discontinued in 2002 and was substantially wound down in 2003) and Titan's National ID Card contract in Saudi Arabia. Titan agreed to, and did, provide the Securities and Exchange Commission (SEC) and the Department of Justice (DoJ) with the results of the investigation on an ongoing basis. In connection with the internal review, the SEC commenced an investigation into whether payments involving Titan's international consultants were made in violation of applicable law, particularly the FCPA. In addition, the DoJ initiated a criminal inquiry into this matter, and also initiated an investigation into whether these same alleged practices violated provisions of the United States Tax Code.

        As previously disclosed, Titan had recorded a provision of $3.0 million as of December 31, 2003 for resolution of the government FCPA investigations. Titan recorded an additional provision of $25.5 million in the second quarter of 2004 to reflect the change in its estimate of the cost of resolving these investigations.

        As a result of the investigation, Titan began to implement significant expanded FCPA and Internal Traffic in Arms Regulations (ITAR) policies. To lead and oversee those expanded policies, in September 2004, Titan brought in Dave Danjczek as its Vice-President for Compliance and Ethics.

        On March 1, 2005, Titan announced that it had entered into a consent to entry of a final judgment with the SEC without admitting or denying the SEC's allegations, and reached a plea agreement with the DoJ, under which Titan pled guilty to three felony FCPA counts related to its overseas operations, including in particular its operations in Benin. These counts consist of violations of the anti-bribery and the books and records provisions of the FCPA and aiding and assisting in the preparation of a false tax return. Matters resolved through the plea agreement with the DoJ involved commercial international business that Titan had discontinued and is in the process of winding down. As a part of the settlement, Titan was given credit for self reporting and cooperating with the government, and for accepting responsibility.

        On March 1, 2005, in connection with the FCPA settlement, Titan made total payments of $28.5 million, the same figure Titan reserved for this purpose in 2003 and 2004. The total includes a DoJ-recommended fine of $13 million, and payments to the SEC consisting of disgorgement of $12.6 million and prejudgment interest of $2.9 million. The Hon. Roger T. Benitez, a judge of the Federal District Court in San Diego, imposed upon Titan a fine of $13 million and a three-year term of supervised probation, both of which are consistent with the DoJ's and Titan's agreed-upon recommendations to the Court. In addition, the sentence imposed by the Court incorporated Titan's agreement to implement a best-practices compliance program designed to detect and deter future violations of the FCPA.

        The IRS agreement requires Titan to file an amended corporate tax return for 2002 to correct deductions previously taken with respect to matters at issue in the investigations. The amended tax return will not result in additional taxes, but will reduce Titan's net operating loss carry forward benefit by approximately $1.3 million. The tax provision affect of the amended tax return was made in the fourth quarter of 2004. Under the Consent to Entry of Final Judgment with the SEC, Titan agreed, within 30 days, to retain a qualified independent consultant to review Titan's policies and procedures with respect to its compliance with the FCPA, and to adopt the consultant's recommendations.

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        Further, as a result of our plea agreement, we are currently unable to obtain new export licenses. We have been working with the U.S. Department of State to obtain relief from this automatic statutory provision.

        After the plea was entered, Titan and the Navy executed an administrative settlement agreement that will allow Titan to continue to conduct business under U.S. government contracts and receive U.S. government contracts. The agreement also provides for Navy monitoring of Titan's compliance activities for three years.

        On June 26, 2004, Lockheed Martin Corporation terminated the merger agreement pursuant to which Lockheed Martin was to have acquired Titan. The merger agreement was entered into in September 2003 and amended in March 2004 and April 2004 to provide additional time for Titan to resolve the FCPA investigations.

Government Contracts

        Virtually all of our revenues are dependent upon continued funding of the United States and allied government agencies that we serve. Our revenues from U.S. government customers represented approximately 97% of our total revenues for the year ended December 31, 2004. Any significant reductions in the funding of United States government agencies or in the funding of specific programs served by or targeted by our business could materially and adversely affect our operating results.

        U.S. government contracts are subject to termination for convenience by the government, as well as termination, reduction or modification in the event of budgetary constraints or any change in the government's requirements. When we subcontract with prime contractors, such subcontracts are also subject to the ability of the prime contractor to perform its obligations under its prime contract. We often have little or no control over the resources allocated by the prime contractor to the prime contract, and any failure by the prime contractor to perform its obligations under the prime contract could result in our loss of our subcontract. In 2004, approximately 20% of our revenue was derived under subcontracts with prime contractors. In addition, our contract-related costs and fees, including allocated indirect costs, are subject to audits and adjustments by negotiation between us and the U.S. government. As part of the audit process, the government audit agency verifies that all charges made by a contractor against a contract are legitimate and appropriate. Audits may result in recalculation of contract revenues and non-reimbursement of some contract costs and fees. Any audits of our contract-related costs and fees could result in material adjustments to our revenues. In addition, U.S. government contracts are conditioned upon the continuing availability of congressional appropriations. Congress usually appropriates funds on a fiscal year basis even though contract performance may take several years. Consequently, at the outset of a major program, the contract is usually incrementally funded and additional funds are normally committed to the contract by the procuring agency as Congress makes appropriations for future fiscal years. Any failure of such agencies to continue to fund such contracts or failure by Congress to make sufficient appropriations to the relevant agencies could have a material adverse effect on our operating results.

        Our business with the U.S. government and prime contractors is generally performed under cost reimbursable, fixed-price or time and materials contracts. Cost reimbursable contracts for the government provide for reimbursement of costs plus the payment of a fee. Some cost-reimbursable contracts include incentive fees that are awarded based on performance on the contract. Under fixed-price contracts, we agree to perform certain work for a fixed price. Under time and materials contracts, we are reimbursed for labor hours at negotiated hourly billing rates and are reimbursed for travel and other direct expenses at

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actual costs plus applied general and administrative expense. The following table gives the percentage of revenues realized by us from the three primary types of government contracts during the periods indicated.

Backlog

        Many of our contracts with the U.S. government are funded by the procuring agency from year to year, primarily based on its fiscal requirements. This results in two different categories of U.S. government backlog: funded and unfunded backlog. "Funded backlog" consists of the aggregate contract revenues expected to be earned by us from existing contracts at a given time, but only to the extent such amounts have been appropriated by Congress and allocated to a specific contract by the procuring government agency. Although funded backlog is appropriated by Congress, we cannot guarantee that cancellations or scope adjustments will not occur. The majority of funded backlog represents contracts under the terms of which cancellation by the customer would entitle us to all or a portion of our costs incurred and potential cancellation fees. "Unfunded backlog" consists of the aggregate contract revenues expected to be earned as our customers incrementally allot funding to existing contracts, awarded to us whether we are acting as a prime contractor or subcontractor. Unfunded backlog includes priced options on existing contracts, which consist of the aggregate contract revenues expected to be earned as a result of a customer exercising an option period that has been specifically defined in the original contract award. Unfunded backlog also includes our estimate of aggregate contract revenues expected to be earned under existing unfunded Indefinite Delivery/Indefinite Quantity Contracts and multiple-award contracts awarded to us. "Backlog" is the total of the government and commercial funded and unfunded backlog.

        Our backlog consisted of the following approximate amounts as of the following dates:

        Management believes that year-to-year comparisons of backlog are not necessarily indicative of future revenues. The actual timing of receipt of revenues, on contracts, included in backlog could change because many factors affect the scheduling of contract work and the amount of funding on contracts by the customer. In addition, cancellations or adjustments to contracts may occur. Backlog may be subject to large variations from period to period as existing contracts are renewed or new contracts are awarded. Additionally, all United States government contracts included in backlog, whether or not funded, may be terminated at the convenience of the United States government. No assurance can be given as to when and if revenue will be realized on contracts included within our backlog.

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Manufacturing

        We operate both fabrication and assembly facilities and also purchase certain components and sub-assemblies from other suppliers. We also use contract manufacturers for some of our products and systems. Other than the ship yard that is producing the X-Craft vessel, no one contract manufacturer or supplier accounts for a significant portion of total purchases or revenues. While we use care in selecting our manufacturers, our use of contract manufacturers gives us less control over the reliability of supply, quality and price of products or components than if we manufactured the products. We risk disruptions in our supply of products and components if these suppliers fail or are unable to perform because of strikes, natural disasters, financial condition or other factors. It is our practice to solicit multiple manufacturers for all critical components to the extent possible.

Patents, Trademarks and Trade Secrets

        Our policy is to apply for patents and other appropriate statutory protection when we develop new or improved technology, although we do not rely on patent protection in the normal course of our government contract operations. We presently hold a number of U.S. and foreign issued patents, as well as a number of trademarks and copyrights. We do not rely, however, solely on these statutory protections to protect our technology and intellectual property. In addition to seeking patent protection for our inventions, we rely on the laws of unfair competition and trade secrets to protect our unpatented proprietary rights. We attempt to protect our trade secrets and other unpatented proprietary information through agreements with customers, vendors, employees and consultants. In addition, various names used by us for our products and services have been registered with the United States Patent and Trademark Office.

Research and Development

        We maintain a staff of engineers, other scientific professionals and support personnel engaged in development of new applications of technology and improvement of existing products. These programs' costs are expensed as incurred. Titan-funded research and development expenditures were $15.1 million, $10.4 million and $7.8 million in the years ended December 31, 2004, 2003 and 2002, respectively. The major Titan-funded research and development activities in 2004 were a high speed modem and related antennas, secure communications devices, devices for homeland security applications, and work on further developments of our affordable weapon program.

        A portion of our research and development activities during 2004 was customer-funded and as such was paid for through contract revenues with an associated expense in cost of sales and operating expenses. None of our customer-funded research and development activity that is funded under contracts with the U.S. government is included in research and development expense.

Government and Environmental Regulations

        We must comply with and are affected by various government regulations. These regulations affect how we and our customers can do business and, in some instances, impose added costs to our businesses. Any changes in applicable laws could adversely affect the financial performance of the business affected by the changed regulations. Any failure to comply with applicable laws could result in material fines and penalties or affect how we conduct our business in the future.

        We are subject to environmental and safety laws and regulations governing the use, storage and disposal of hazardous substances or wastes and imposing liability for the cleanup of contamination from these substances. Although most of our business is not generally involved in the handling of hazardous materials, we cannot completely eliminate the risk of contamination or injury from these substances or wastes, and in the event of such an incident, we could be held liable for any damages that result. We may also become subject to liability as an owner or occupier of a facility we acquired directly or as a result of

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companies or businesses we acquire. From time to time, we have been notified of violations of government and environmental regulations. We attempt to correct these violations promptly without any material impact on our operations. In addition, we may be required to incur significant additional costs to comply with environmental laws and regulations or cleanup contamination in the future. These costs, and any future violations or liability under environmental laws or regulations, could have a material adverse effect on our business, financial condition and results of operations.

Employees

        As of February 28, 2005, we employed approximately 12,000 employees, most of whom were located in the United States. As of December 31, 2004, we were subject to collective bargaining agreements with respect to 39 employees. We believe that our relationships with our employees are satisfactory.

General Information

        We were founded in 1981 and later were merged into a company that was incorporated in Delaware in 1969. Our executive offices are at 3033 Science Park Road, San Diego, CA 92121, and our telephone number is (858) 552-9500. Our website address is www.titan.com. We make available free of charge through our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments for those reports as soon as reasonably practicable after such material is electronically furnished to the Securities and Exchange Commission.

        We also provide access on our website to our Corporate Governance Principles: our Code of Ethics, the charters of our Audit, Nominating and Corporate Governance, and Compensation Committees. Copies of these documents are available without charge to any stockholder upon written request to our corporate secretary at our executive offices. In addition, we will disclose on our website any changes to or waivers from our Code of Ethics.

Item 2. Properties.

        Our operations' facilities occupy approximately 2,959,000 square feet of space located primarily throughout the United States. The large majority of the space is office space. Substantially all of our facilities are leased. We describe our lease commitments in Note 11 to the accompanying consolidated financial statements.

        As a result of the merger of Titan Systems Corporation into The Titan Corporation in September 2002, a charge of approximately $32.2 million was taken in 2002 for the consolidation of various Titan Systems facilities into centralized locations in Virginia and California. Additionally, in 2004 we recorded a $17.8 million charge in discontinued operations for the SureBeam facilities lease obligations which Titan had previously guaranteed. These charges reflect the estimated losses, net of estimated sublease income, on future lease commitments of facilities with terms extending through fiscal year 2023 and representing approximately 548,000 square feet of excess space. We have subleased certain of these facilities and continue to actively pursue additional sublease opportunities for the remaining facilities. However, the remaining available space is in markets adversely affected by the economy and may not be subleased at attractive rates or at all. The actual amount of estimated losses on these lease commitments could change based upon Titan's ability to obtain sublease arrangements for these facilities.

Item 3. Legal Proceedings.

Foreign Corrupt Practices Act Related Investigations

        As previously disclosed, during the first quarter of 2004, Titan learned of allegations that improper payments under the Foreign Corrupt Practices Act (FCPA) had been made, or items of value had been provided, involving international consultants for Titan or its subsidiaries to foreign officials. The

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allegations were identified as part of internal reviews conducted by Titan and Lockheed Martin, and jointly reported by them to the government. Titan's board of directors established a committee of the board to oversee Titan's internal review of these matters.

        The internal review began with a focus on Titan's Datron World Communications unit, which was discontinued in June 2004 and sold in November 2004, but the internal review later was expanded to a number of Titan's international businesses, including Titan Wireless (which was discontinued in 2002 and was substantially wound down in 2003) and Titan's National ID Card contract in Saudi Arabia. Titan agreed to, and did, provide the Securities and Exchange Commission (SEC) and the Department of Justice (DoJ) with the results of the investigation on an ongoing basis. In connection with the internal review, the SEC commenced an investigation into whether payments involving Titan's international consultants were made in violation of applicable law, particularly the FCPA. In addition, the DoJ initiated a criminal inquiry into this matter, and also initiated an investigation into whether these same alleged practices violated provisions of the United States Tax Code.

        As previously disclosed, Titan had recorded a provision of $3.0 million as of December 31, 2003 for resolution of the government FCPA investigations. Titan recorded an additional provision of $25.5 million in the second quarter of 2004 to reflect the change in its estimate of the cost of resolving these investigations.

        As a result of the investigation, Titan began to implement significant expanded FCPA and ITAR policies. To lead and oversee those expanded policies, in September 2004, Titan brought in Dave Danjczek as its Vice-President for Compliance and Ethics.

        On March 1, 2005, Titan announced that it had entered into a consent to entry of a final judgment with the SEC without admitting or denying the SEC's allegations, and reached a plea agreement with the DoJ, under which Titan pled guilty to three felony FCPA counts related to its overseas operations, including in particular its operations in Benin. These counts consist of violations of the anti-bribery and the books and records provisions of the FCPA and aiding and assisting in the preparation of a false tax return. Matters resolved through the plea agreement with the DoJ involved commercial international business that Titan had discontinued and is in the process of winding down. As a part of the settlement, Titan was given credit for self reporting and cooperating with the government, and for accepting responsibility.

        On March 1, 2005, in connection with the FCPA settlement, Titan made total payments of $28.5 million, the same figure Titan reserved for this purpose in 2003 and 2004. The total includes a DoJ-recommended fine of $13 million, and payments to the SEC consisting of disgorgement of $12.6 million and prejudgment interest of $2.9 million. The Hon. Roger T. Benitez, a judge of the Federal District Court in San Diego, imposed upon Titan a fine of $13 million and a three-year term of supervised probation, both of which are consistent with the DoJ's and Titan's agreed-upon recommendations to the Court. In addition, the sentence imposed by the Court incorporated Titan's agreement to implement a best-practices compliance program designed to detect and deter future violations of the FCPA.

        The IRS agreement requires Titan to file an amended corporate tax return for 2002 to correct deductions previously taken with respect to matters at issue in the investigations. The amended tax return will not result in additional taxes, but will reduce Titan's net operating loss carry forward benefit by approximately $1.3 million. The tax provision affect of the amended tax return was made in the fourth quarter of 2004. Under the Consent to Entry of Final Judgment with the SEC, Titan agreed, within 30 days, to retain a qualified independent consultant to review Titan's policies and procedures with respect to its compliance with the FCPA, and to adopt the consultant's recommendations.

        Further, as a result of our plea agreement, we are currently unable to obtain new export licenses. We have been working with the U.S. Department of State to obtain relief from this automatic statutory provision.

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        After the plea was entered, Titan and the Navy executed an administrative settlement agreement that will allow Titan to continue to conduct business under U.S. government contracts and receive U.S. government contracts. The agreement also provides for Navy monitoring of Titan's compliance activities for three years.

        On June 26, 2004, Lockheed Martin Corporation terminated the merger agreement pursuant to which Lockheed Martin was to have acquired Titan. The merger agreement was entered into in September 2003 and amended in March 2004 and April 2004 to provide additional time for Titan to resolve the FCPA investigations.

Stockholder Class Actions

        Since April 2, 2004, two stockholder class action lawsuits have been filed against Titan and certain of its officers, asserting claims under the federal securities laws, which we refer to collectively as the federal securities actions. On September 17, 2004, these class action lawsuits were consolidated as In re Titan Inc. Securities Litigation, No. 04-CV-0701-K(NLS), a consolidated purported class action filed before the U.S. District Court for the Southern District of California. The federal securities action purports to be brought on behalf of all purchasers of Titan common stock during the period from July 24, 2003 through and including March 22, 2004. The complaint seeks an unspecified amount of damages. The complaint alleges, among other things, that the defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), and SEC Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act, by issuing a series of press releases, public statements and filings disclosing significant historical and future revenue growth, but omitting to mention certain allegedly improper payments involving international consultants in connection with Titan's international operations, thereby artificially inflating the trading price of Titan's common stock. On January 14, 2005, Titan and certain individual defendants jointly filed a motion to dismiss. The hearing on the defendants' motion is currently scheduled to be heard on May 9, 2005. Titan intends to defend the claims vigorously.

        Since April 7, 2004, two stockholder class action complaints have been filed against certain Titan officers, asserting that these officers breached their fiduciary duties to Titan's stockholders. The complaints, which we refer to as the fiduciary duty actions, were filed in the Superior Court for the State of California in and for San Diego County. The cases include Paul Berger v. Gene W. Ray, et al., No. GIC 828346, and Robert Garfield v. Mark W. Sopp , et al., No. GIC 828345. The fiduciary duty actions purport to be brought on behalf of all holders of Titan common stock as of April 7, 2004. The fiduciary duty actions allege, among other things, that the defendants breached their fiduciary duties by acquiescing in or condoning Titan's alleged violations of the FCPA by failing to establish adequate procedures to prevent the alleged FCPA violations, and by failing, in bad faith, to voluntarily report the alleged FCPA violations to government officials. The complaints seek compensatory damages in respect of the loss of value sustained by Titan stockholders as a result of the reduction in merger consideration payable to them under the terms of the amendment to the merger agreement with Lockheed Martin delivered on April 7, 2004. The Berger and Garfield matters have been consolidated and are now treated, for all purposes, as the Garfield matter. Additionally, plaintiffs and defendants have agreed that defendants are not required to answer or otherwise respond to the Garfield complaint until the motions to dismiss in the federal securities action have been denied or granted with prejudice. Titan intends to defend the claims vigorously.

        Since June 28, 2004, three shareholder derivative lawsuits have been filed against Titan directors and certain Titan officers, naming Titan as a nominal defendant, which we refer to collectively as the derivative actions. The derivative actions include Theodore Weisgerber v. Gene Ray, et al., No. 832018, which was filed in the Superior Court for the State of California, San Diego; Robert Ridgeway v. Gene Ray, et al., No. 542-N, which was filed in Delaware Court of Chancery, New Castle County; and Bernd Bildstein v. Gene Ray, et al., No. 833701, which was filed in the Superior Court for the State of California, San Diego County. The derivative actions purport to be brought for the benefit of the nominal defendant, Titan, and allege that the defendants breached their fiduciary duties by failing to monitor and supervise management in a way

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that would have either prevented alleged FCPA violations or would have detected the FCPA violations. The Weisgerber complaint was subsequently amended to include allegations that the defendants breached their fiduciary duties by failing to monitor and supervise management in a way that would have prevented the alleged mistreatment of prisoners at the Abu Ghraib prison in Iraq, alleged billing errors relating to work performed by foreign nationals, and the loss of contracts with the government. The plaintiffs seek to recover the costs incurred in the internal and external investigations, penalties or damages paid to settle private litigation or government proceedings, and lost goodwill. The Weisgerber and Bildstein matters have been consolidated and are now treated, for all purposes, as the Weisgerber matter. Titan intends to defend the claims vigorously.

SureBeam Related Litigation

        In August 2002, Titan completed the spin-off of its former subsidiary, SureBeam Corporation. On January 19, 2004, SureBeam voluntarily filed for bankruptcy relief to be liquidated under Chapter 7 of the United States Bankruptcy Court. Various lawsuits have been filed against Titan and/or certain directors and executive officers of Titan in connection with SureBeam.

        Since August 2003, Titan, certain corporate officers of SureBeam Corporation, a former subsidiary of Titan, Dr. Gene Ray and Susan Golding, as SureBeam directors, and certain investment banks that served as lead underwriters for SureBeam's March 2001 initial public offering, have been named as defendants in several purported class action lawsuits filed by holders of common stock of SureBeam in the U.S. District Court. On October 6, 2003, these class action lawsuits were consolidated into In re SureBeam Corporation Securities Litigation, No. 03-CV-001721-JM (POR), a single class action for which an amended consolidated class action complaint was filed on March 24, 2004, with the U.S. District Court for the Southern District of California. The complaint seeks an unspecified amount of damages. The SureBeam class action complaint alleges that each of the defendants, including Titan, as a "control person" of SureBeam within the meaning of Section 15 of the Securities Act of 1933, as amended (the Securities Act), should be held liable under Section 11 of the Securities Act because the prospectus for SureBeam's initial public offering was allegedly inaccurate and misleading, contained untrue statements of material facts, and omitted to state other facts necessary to make the statements made not misleading. The SureBeam class action complaint also alleges that the defendants, including Titan, as a control person of SureBeam within the meaning of Section 20(a) of the Exchange Act, should be held liable under Section 10(b) of the Exchange Act for false and misleading statements made during the period from March 16, 2001 to August 27, 2003. On January 3, 2005, the court granted in part and denied in part motions to dismiss the amended consolidated complaint. The court granted plaintiffs 45 days leave to amend their complaint, which amended complaint has been filed. Titan intends to defend the claims vigorously.

        On September 17, 2004, the bankruptcy trustee in the SureBeam Corporation bankruptcy pending in the United States Bankruptcy Court for the Southern District of California brought an action in San Diego Superior Court, on behalf of the bankruptcy estate, against certain directors and current and former executive officers of Titan who served at one time as directors or officers of SureBeam. Titan is not named as defendant in this litigation and received a prior release of claims from the bankruptcy trustee. Because the defendants were named by reason of the fact that they were serving as directors or officers of SureBeam at the request of Titan, Titan is covering the costs of defense of these claims, subject to indemnification agreements and bylaw provisions.

Other Legal Proceedings

        Since June 9, 2004, two lawsuits have been filed alleging that Titan and other defendants either participated in, approved of, or condoned the mistreatment of prisoners by United States military officials in certain prison facilities in Iraq in violation of federal, state and international law. The first of these cases, Saleh v. Titan Corporation, No. 04-CV-1143 R, was filed in the United States District Court for the Southern District of California against The Titan Corporation, CACI International, Inc. (CACI), and its

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affiliates, and three individuals (one formally employed by Titan and one by a Titan subcontractor). Plaintiffs in Saleh seek class certification. The second case, Ibrahim v. Titan Corporation, NO. 04-CV-1248, was filed on July 27, 2004, on behalf of five individual plaintiffs against Titan, CACI and CACI affiliates, and contains allegations similar to those in Saleh. Class certification has not been requested in Ibrahim. Titan intends to defend these lawsuits vigorously.

        On August 16, 2002, Perimex International Corporation (Perimex) filed a complaint against Titan, Titan Wireless, Inc. (Titan Wireless) and a former Titan Wireless employee in San Diego Superior Court in San Diego, California. The complaint alleged breach of contract, breach of the covenant of good faith and fair dealing, intentional interference with existing contractual relationships and prospective business advantage and violation of the California unfair competition law arising from an alleged failure of Titan Wireless to enter a joint venture with Perimex to develop a telecommunications network in Argentina and other related alleged misconduct. The complaint sought damages of $52.7 million and sought injunctive relief prohibiting Titan and Titan Wireless from transferring any of Titan Wireless's assets. The court denied Perimex's request for a preliminary injunction, sustained Titan's and Titan Wireless's demurrer as to all causes of action in the complaint and granted Perimex leave to amend the complaint. Perimex dismissed its complaint voluntarily without prejudice. On May 22, 2003, however, Perimex filed a new complaint in the United States District Court for the Southern District of California, NO. 03cv 1037 IEG (WMC), alleging substantially similar causes of action and claiming a similar amount of damages. Perimex twice amended this federal complaint to add additional claims. Titan intends to defend the claims vigorously.

        On January 23, 2004, Titan, together with its wholly-owned subsidiary, Titan Wireless, Inc., and Titan Wireless's wholly-owned subsidiary, Titan Africa, Inc., were named as defendants in Gonzales Communications, Inc. v. Titan Wireless, Inc., Titan Africa, Inc., The Titan Corporation, Geolution International Inc., and Mundi development, Inc., a lawsuit filed in the U.S. District Court for the Southern District of California, NO. 04cv0147 WQH (WMc). The complaint relates to the purchase by Gonzales Communications of equipment and related services under an equipment purchase agreement entered into with Titan Wireless in June 2001. Gonzales Communications contends that the equipment and services delivered were unsatisfactory. In the complaint, Gonzales Communications seeks direct damages in the amount of $0.9 million plus interest, representing the amount Gonzales Communications alleges to have previously paid under the agreement, and consequential damages of approximately $16.3 million. To date, Titan and its subsidiaries have not received payment in full under the agreement for the equipment and services that were delivered to Gonzales Communications. Titan has filed a counterclaim against Gonzales Communications for in excess of $1.2 million. Titan intends to defend its position vigorously.

        In October 2002, Titan received a grand jury subpoena from the Antitrust Division of the DoJ requesting the production of documents relating to information technology services performed for the Air Force at Hanscom Air Force Base in Massachusetts. Titan has been informed that other companies who have performed similar services have received subpoenas as well. Titan is not aware of any illegal or inappropriate conduct and has been cooperating and will continue to cooperate fully with the investigation.

        In March 2003, Titan received a subpoena from the Office of Inspector General for the National Aeronautics and Space Administration, or NASA, seeking certain records relating to billing for labor services in connection with our contracts with NASA. Titan also received a subpoena from the Office of Inspector General for the General Services Administration, or GSA, seeking similar records relating to billing for labor categories in connection with contracts with GSA. Titan is not aware of any illegal or inappropriate conduct and has been cooperating and will continue to cooperate fully with the investigation.

        Titan is involved in legal actions in the normal course of its business, including audits and investigations by various governmental agencies that result from its work as a defense contractor. Titan and its subsidiaries are named as defendants in legal proceedings from time to time and third parties, including the government, may assert claims against Titan from time to time. In addition, Titan has acquired

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companies from time to time that have legal actions pending against them at the time of acquisition. Based upon current information, including consultation with its lawyers, Titan does not believe that the ultimate liability arising from any of these actions will materially affect its consolidated financial position. The March 1, 2005 FCPA settlement payment will materially impact cash flow in the first quarter of 2005. Titan's evaluation of the likely impact of these actions could change in the future and Titan could have unfavorable outcomes that it does not expect. Any of these events could have a material adverse effect on Titan's results of operations or cash flows in a future period and could have other adverse effects on Titan's business.

Item 4. Submission of Matters To a Vote of Security Holders.

        None.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

        Titan's common stock is traded on the New York Stock Exchange (NYSE). As of March 4, 2005, there were approximately 3,400 holders of record of our common stock, excluding beneficial owners of shares held in the names of brokers or other nominees. The closing price for the common stock on the NYSE as of March 4, 2005, was $17.82. The quarterly market price ranges based on the high and low sales prices for our common stock on the NYSE in 2004 and 2003 were as follows:

Common Stock

        No cash dividends were declared or paid on Titan's common stock in 2004 or 2003. Titan does not anticipate paying cash dividends in the foreseeable future.

        On March 15, 2004, Titan redeemed all outstanding shares of its cumulative convertible preferred stock. The redemption was a condition to the closing of the then-proposed merger with Lockheed Martin. An aggregate of 625,846 shares were redeemed at $20 per share, plus cumulative dividends in arrears of $0.03 per share, which utilized cash of approximately $12.5 million, and the remaining 60,983 shares of preferred stock were converted by shareholders into 47,580 shares of common stock. The redemption of the preferred stock is recorded as a reduction to stockholders' equity.

Item 6. Selected Financial Data (in thousands of dollars, except per share data)

        The following selected consolidated financial data should be read in conjunction with the consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The selected consolidated statement of operations data presented below for each of the years ended December 31, 2004, 2003 and 2002, and the balance sheet data at December 31, 2004 and 2003 are derived from the consolidated financial statements included in this filing. The consolidated statement of operations data for the years ended December 31, 2001 and 2000 and the balance sheet data at December 31, 2002, 2001, and 2000 are derived from audited consolidated financial statements not included in this document, and have been retroactively restated to account for the

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discontinuance of our Datron World Communications business and our Titan Scan Technologies service business, which were discontinued in the second quarter of 2004.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

(Amounts in thousands, except share and per share data, or as otherwise noted.)

        The following discussion is qualified in its entirety by the more detailed information and consolidated financial statements, including the notes thereto, included in this document. The following discussion of our financial condition and results of operations contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from what is discussed in the forward-looking statements. Factors that might cause such differences include those discussed below under the heading "Risk Factors."

Overview and Outlook

        The Titan Corporation is a leading provider of comprehensive information and communications systems solutions and services to the Department of Defense, the Department of Homeland Security, and intelligence and other key government agencies. These systems, solutions, and services include research and development, design, assembly, installation, integration, test and evaluation, deployment, logistics and operations support, maintenance, and training. Systems and products we provide to military and government agencies include transformational weapons systems, sophisticated satellite communications systems, antennas/telemetry systems, tactical radios, signals intelligence systems, encryption devices, classified systems, and complex computer-based information systems for information processing, information fusion, dissemination, and data mining.

        Our services include system procurement selection and acquisition management services, program management, systems engineering and integration for mission-critical defense platforms and communications systems, enterprise information technology network design, integration, deployment, and

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operations support, translation and interpreter services, military and first responder training and situational exercises and evaluation, and test, modeling, and continuity of operations analysis for blast, nuclear, electro-magnetic, and chemical/biological threats.

        Our consolidated revenues were over $2 billion for the year ended December 31, 2004.

        We apply our core capabilities to provide technology, products, and services with a focus in four often overlapping and synergetic market areas: C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance), Transformational Military Programs, Government Enterprise Information Technology, and the War on Terrorism/Homeland Security. These markets are described in greater detail in the Corporate Overview discussion above, under the heading "Business", including specific examples of the work we are doing in ea