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Titan Reports Second Quarter Results: - Government Information Technology Business with Annualized Revenues Of Nearly $900 Million Continues to Demonstrate Outstanding Performance - |
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SAN DIEGO, CA - August 14, 2001 /PRNewswire/ - The Titan Corporation (NYSE:TTN)
today reported revenues of $280.0 million for the second quarter of fiscal 2001, an
increase of 10% over $253.7 million for the second quarter of fiscal 2000.
Pro forma* operating income was $16.3 million for the second quarter, compared
to $20.5 million in the same period last year. The decrease in operating
income was largely the result of SureBeam's (Nasdaq: SURE) planned advertising
and branding campaign, which significantly increased consolidated operating
expenses. Pro forma net income for the second quarter was $4.0 million or
$0.06 per share (diluted), compared to $10.0 million or $0.17 per share
(diluted) for the second quarter of fiscal 2000. Including amortization of goodwill, deferred compensation, and
acquisition, integration and other charges, reported net loss in accordance
with generally accepted accounting principles for the second quarter of fiscal
2001 was $7.8 million or $0.16 per share compared to a net loss of
$12.5 million (including an extraordinary loss and a loss from discontinued
operations) or $0.24 per share in the same period last year. "In the second quarter of 2001, our government information technology
business continued to demonstrate outstanding performance and to exceed our
growth expectations. Our strong level of bookings for the entire first half
of 2001 has provided us with excellent visibility into 2002 and has made us
optimistic about the future of this business. In addition, our success in
winning larger contracts, such as the Prophet award from the Army for the next
generation communication intercept system, continues to demonstrate that our
acquisition strategy is working," said Gene W. Ray, Chairman, President, and
CEO of Titan. "Titan Systems continues to be the cash and technology engine for the
corporation. Our internal growth remains strong at approximately 8-9%, and
with the acquisition of Datron, we believe this business should approach
$1 billion in revenues next year," Ray concluded. "On the commercial side, Titan Wireless and SureBeam continue to meet our
growth objectives and we have been able to return Cayenta to profitability
(excluding goodwill amortization). Following the completion of our follow on
equity offering, where we raised net proceeds of approximately $140 million,
we are now in an excellent position to continue executing our value creation
strategy. The money raised in the offering gives us the resources to continue
making accretive acquisitions, and it gives us the opportunity to pay down
some debt, strengthening our balance sheet," said Eric M. DeMarco, Executive
Vice President and Chief Operating Officer.
Highlights of Business Segments SureBeam's pro forma operating loss for the second quarter of fiscal 2001 was $3.6 million compared to a profit of $1.3 million in fiscal 2000. The pro forma operating loss was a direct result of planned increases in SureBeam's advertising, and branding campaign following the successful completion of the SureBeam IPO in the first quarter. SureBeam's reported operating loss for the second quarter of fiscal 2001 was $9.4 million compared to a profit of $0.8 million a year ago, primarily as a result of non-cash deferred compensation amortization in addition to the aforementioned planned spending increases. Revenues in Titan's communications subsidiary, Titan Wireless, increased 21% to $23.0 million in the second quarter of fiscal 2001 from $19.0 million in the second quarter of fiscal 2000. Increased revenues were primarily due to increased service revenues. Titan Wireless' pro forma operating profit for the second quarter of fiscal 2001 was $1.8 million compared to an operating profit of $3.1 million in fiscal 2000. In the second quarter, fixed wireless service targeted at the corporate market was launched in four African countries with several additional new operations planned throughout the balance of the year. Decreased margins were primarily the result of increased investment in the development of Titan Wireless' corporate fixed wireless business, a key component of Titan Wireless' future growth strategy. Titan Wireless' reported operating profit was $1.4 million compared to $3.1 million a year ago. Revenues in Titan's e-business solutions subsidiary, Cayenta, were $15.6 million in the second quarter of fiscal 2001 compared to $19.1 million in the second quarter of fiscal 2000. Decreased year over year revenues were a direct result of economic conditions and weakness in the market for commercial information technology services and e-business software applications. Pro forma operating profit for the second quarter of 2001 was $0.1 million compared to an operating profit of $0.3 million in fiscal 2000. Cayenta's reported operating loss for the second quarter of fiscal 2001 was $3.6 million compared to a loss of $3.2 million a year ago. Revenues in Titan's Emerging Technologies and Businesses segment decreased slightly to $13.1 million in the second quarter of fiscal 2001 from $13.7 million in the second quarter of fiscal 2000 as a result of decreased revenue in our fingerprint scanner business. Four businesses currently comprise the majority of the revenue in the Emerging Technologies segment. These businesses are Titan's digitized fingerprint scanner business (ImagClear), Titan's business that builds Internet portals and provides integration services primarily for the financial services industry (AverCom), Titan's wireless networking chipset business (LinCom Wireless), and Titan's medical product sterilization business (Titan Scan). Pro forma operating profit in the Emerging Technologies and Businesses segment was $1.4 million for the second quarter of fiscal 2001, up 40% compared to an operating profit of $1.0 million in fiscal 2000. Reported operating profit in the Emerging Technologies and Businesses segment increased slightly to $1.1 million from $0.9 million a year ago. Headquartered in San Diego, California, The Titan Corporation creates, builds and launches technology-based businesses, offering innovative technical solutions. Three of Titan's four core businesses develop and deploy communications and information technology solutions and services. In addition, through its SureBeam subsidiary (Nasdaq: SURE), Titan markets the leading technology for the electronic pasteurization of food products and the company is continually identifying promising technologies suitable for commercialization. Titan has 7,800 employees and annualized sales of approximately $1.1 billion. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Examples of such forward looking statements include the Company's beliefs that it has excellent visibility into the future in its government information technology business, that the government information technology business should reach $1 billion next year, that it can continue to make accretive acquisitions, that it can continue to win larger government contracts, and that Cayenta will remain profitable. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include the risks associated with dependence on continued funding of U.S. Department of Defense and federal civilian agency programs, contract termination risks, risks associated with acquiring other companies, including integration risks, the risks of doing business in developing countries and international markets including foreign currency risks, and other risks described in the Company's Securities and Exchange Commission filings.
A conference call to discuss Titan's second quarter results will be available
live over the Internet at 2:00 p.m. PST at Contact: Rochelle Bold, Vice President Investor Relations (858) 552-9400 or
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Press Releases and other Titan information are available on The Titan
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THE TITAN CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
From Continuing Operations Excluding Acquisition and Integration Related
Charges and Other, Amortization of Goodwill, Deferred Compensation and
Extraordinary Items
(in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
Revenues $279,967 $253,719 $540,080 $473,940
Costs and expenses:
Cost of revenues 209,558 189,791 399,835 356,071
Selling, general and
administrative
expense 49,307 40,310 104,063 76,023
Research and
development expense 4,792 3,077 9,051 5,324
Total costs and
expenses 263,657 233,178 512,949 437,418
Operating profit 16,310 20,541 27,131 36,522
Interest expense
- net (10,959) (8,531) (21,266) (15,019)
Income before income
taxes and minority
interests 5,351 12,010 5,865 21,503
Income tax provision 2,140 2,601 2,346 5,147
Income before minority
interests 3,211 9,409 3,519 16,356
Minority interests 770 543 1,503 797
Net income 3,981 9,952 5,022 17,153
Dividend requirements
on preferred stock (173) (173) (345) (347)
Net income applicable
to common stock $3,808 $9,779 $4,677 $16,806
Basic earnings per share:
Net income $0.06 $0.18 $0.07 $0.31
Weighted average
shares 53,663 52,624 53,521 52,536
Diluted earnings per share:
Net income $0.06 $0.17 $0.07 $0.29
Weighted average
shares 55,830 56,132 55,756 56,139
The above pro forma amounts have been adjusted to eliminate acquisition
and integration related charges and other, amortization of goodwill,
deferred compensation and an extraordinary loss from early extinguishments
of debt, net of the related tax benefit. The variance in the GAAP and pro
forma income tax rates is a result of significant non-deductible items for
goodwill amortization, deferred compensation and acquisition and
integration related charges and other. This pro forma information is not
prepared in accordance with generally accepted accounting principles.
THE TITAN CORPORATION
PRO FORMA SEGMENT INFORMATION
EXCLUDING ACQUISITION AND INTEGRATION RELATED CHARGES AND OTHER,
AMORTIZATION OF GOODWILL, AND DEFERRED COMPENSATION
(in thousands of dollars)
Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
Revenues:
Titan Systems $219,661 $196,804 $426,007 $371,324
SureBeam 8,616 5,181 14,092 9,261
Titan Wireless 23,002 18,988 44,016 35,612
Titan Software Systems
(including Cayenta) 15,570 19,077 30,558 34,977
Emerging Technologies
and Businesses 13,118 13,669 25,407 22,766
$279,967 $253,719 $540,080 $473,940
Operating profit
(loss):
Titan Systems $20,184 $17,950 $39,327 $31,947
SureBeam (3,607) 1,257 (7,421) 1,907
Titan Wireless 1,809 3,086 2,693 5,626
Titan Software Systems
(including Cayenta) 57 287 (2,184) 664
Emerging Technologies
and Businesses 1,397 973 1,778 2,067
Segment operating profit
before Corporate 19,840 23,553 34,193 42,211
Corporate (3,530) (3,012) (7,062) (5,689)
$16,310 $20,541 $27,131 $36,522
The above pro forma amounts have been adjusted to eliminate acquisition
and integration related charges and other, amortization of goodwill,
deferred compensation and an extraordinary loss from early extinguishments
of debt, net of the related tax benefit. This pro forma information is
not prepared in accordance with generally accepted accounting principles.
THE TITAN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
Revenues $279,967 $253,719 $540,080 $473,940
Costs and expenses:
Cost of revenues 209,558 189,791 399,835 356,071
Selling, general and
administrative
expense 49,307 40,310 104,063 76,023
Research and
development expense 4,792 3,077 9,051 5,324
Amortization of
goodwill 7,428 6,249 14,656 14,881
Deferred compensation 6,178 314 46,166 524
Acquisition and
integration related
charges and other 2,644 20,924 34,818 38,994
Total costs and
expenses 279,907 260,665 608,589 491,817
Operating profit (loss) 60 (6,946) (68,509) (17,877)
Interest expense
- net (10,959) (8,531) (21,266) (15,019)
Loss from continuing
operations before
income taxes,
minority interests
and extraordinary
loss (10,899) (15,477) (89,775) (32,896)
Income tax benefit (937) (3,871) (7,720) (8,226)
Loss from continuing
operations before
minority interests
and extraordinary
loss (9,962) (11,606) (82,055) (24,670)
Minority interests 2,157 837 14,379 2,215
Loss from continuing
operations before
extraordinary loss (7,805) (10,769) (67,676) (22,455)
Loss from discontinued
operations, net of taxes -- (426) -- (523)
Extraordinary loss from
early extinguishments
of debt, net of taxes -- (1,290) -- (4,744)
Net loss (7,805) (12,485) (67,676) (27,722)
Dividend requirements
on preferred stock (173) (173) (345) (347)
Net loss applicable
to common stock $(7,978) $(12,658) $(68,021) $(28,069)
Basic earnings (loss)
per share:
Loss from continuing
operations before
extraordinary loss $(0.16) $(0.21) $(1.41) $(0.44)
Loss from discontinued
operations, net of taxes -- (0.01) -- (0.01)
Extraordinary loss from
early extinguishments of
debt, net of taxes -- (0.02) -- (0.09)
Net loss $(0.16) $(0.24) $(1.41) $(0.54)
Weighted average
shares 53,663 52,624 53,521 52,536
Diluted earnings (loss)
per share:
Loss from continuing
operations before
extraordinary loss $(0.16) $(0.21) $(1.41) $(0.44)
Loss from discontinued
operations, net of taxes -- (0.01) -- (0.01)
Extraordinary loss from
early extinguishments of
debt, net of taxes -- (0.02) -- (0.09)
Net loss $(0.16) $(0.24) $(1.41) $(0.54)
Weighted average
shares 53,663 52,624 53,521 52,536
THE TITAN CORPORATION
SEGMENT INFORMATION
(in thousands of dollars)
Three months ended Six months ended
June 30, June 30,
2001 2000 2001 2000
Revenues:
Titan Systems $219,661 $196,804 $426,007 $371,324
SureBeam 8,616 5,181 14,092 9,261
Titan Wireless 23,002 18,988 44,016 35,612
Titan Software Systems
(including Cayenta) 15,570 19,077 30,558 34,977
Emerging Technologies
and Businesses 13,118 13,669 25,407 22,766
$279,967 $253,719 $540,080 $473,940
Operating profit (loss):
Titan Systems $17,729 $15,371 $34,528 $27,235
SureBeam (9,410) 817 (52,838) 1,467
Titan Wireless 1,402 3,086 1,852 5,626
Titan Software Systems
(including Cayenta) (3,571) (3,222) (9,439) (9,534)
Emerging Technologies
and Businesses 1,057 938 1,214 2,012
Acquisition related
charges and other (2,644) (20,924) (34,818) (38,994)
Segment operating
profit (loss) before
Corporate 4,563 (3,934) (59,501) (12,188)
Corporate (4,503) (3,012) (9,008) (5,689)
$60 $(6,946) $(68,509) $(17,877)
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