9/26/2002 - In conjunction with its recently announced decision to focus on the Company's core national security business, Titan Corporation announced that it has merged its subsidiary, Titan Systems Corporation, into The Titan Corporation, effective September 25, 2002. As part of the merger, Titan has organized its core national security business into six sectors, and the general manager of each has been elected a Senior Vice President of the Titan Corporation. In addition, consistent with Titan's focused strategy in National Security, two additional Senior Vice Presidents were elected for Business Development and National Security Solutions.
"Combining Titan Systems and Titan Corporation at this time creates a more efficient and customer-oriented organization and strengthens our ability to further build our national security business. We will reduce cost by eliminating duplicate functions within Titan and Titan Systems, and the general managers who have been responsible for executing on our contracts and winning new business will play a more important role across the entire organization," said Gene W. Ray, Chairman and CEO of Titan Corporation.
As a result of the merger, outstanding options in Titan Systems Corporation will be exchanged using an exchange ratio of .8371, for approximately 5.4 million options in the Titan Corporation. The exchange ratio was determined by using a valuation of Titan Systems Corporation, as determined by a nationally-recognized independent firm, and the average Titan Corporation closing stock price for the 20 trading days ending on the day before the merger. The exchange of the Titan Systems options for Titan options will not result in any changes to the Company's previous revenue and pro forma EPS (earnings per share) guidance for both 2002 and 2003, as the dilutive effect of the Titan Systems options has already been reflected in historical results and had been factored into Titan's pro forma earnings per share guidance for the rest of 2002 and 2003. The exchange of Titan Corporation options for non-liquid Titan Systems options will, however, result in a non-cash, deferred compensation charge of approximately $21.3 million in the third quarter of 2002. Additional non-cash deferred compensation of approximately $8.2 million will be amortized over the next three years, with approximately $1.9 million amortized in the fourth quarter of 2002 and approximately $4.8 million amortized in 2003. Non-cash deferred compensation charges affect earnings on a GAAP basis, but are not included in pro forma results, which exclude charges for non-cash deferred compensation and amortization of purchased intangibles. Through the merger, the interests of the employees of Titan's core national security business, which comprises over 95% of annualized revenue, will be directly aligned with the financial performance of Titan Corporation.
Headquartered in San Diego, The Titan Corporation is a leading provider of comprehensive information and communications solutions and services to the Department of Defense, intelligence agencies, and other federal government customers. The company has approximately 11,000 employees and annualized sales of approximately $1.6 billion.
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