4/30/2003 - The Titan Corporation (NYSE: TTN) reported revenues for the first quarter of fiscal 2003 of $377.9 million, an increase of 20% compared to $314.3 million for the first quarter of fiscal 2002. Net income was $7.0 million or $.09 per share (fully diluted) compared to a net loss of $33.6 million or $.47 per share in the same period last year, which included a loss of $40.1 million net of tax from the cumulative effect of a change in accounting principle. Pro forma net income for the first quarter of 2003 was $10.4 million, or $.13 per fully diluted share, compared to pro forma net income of $10.8 million, or $.14 per share for the first quarter of fiscal 2002. Pro forma* results are from continuing operations and exclude $1.2 million from the amortization of purchased intangibles and $2.8 million of deferred compensation in 2003, and exclude $1.4 million from the amortization of purchased intangibles, $1.0 million of deferred compensation and exit charges of $1.5 million in 2002. A reconciliation between pro forma results and results in accordance with Generally Accepted Accounting Principles (GAAP) is attached to this release.
"We had an excellent performance in the first quarter, recording strong revenues in our core national security business, which comprised over 99% of revenue for the period. While our overall year over year organic growth rate was approximately 14%, our organic growth rate in our national security solutions government business was approximately 17%, driven by strong demand for our mission-critical C4ISR systems and services, and also for our homeland security and enterprise information technology services for military and intelligence customers. We continued to substantially outpace revenues with new contract awards, securing bookings** of nearly $800 million for the quarter, and generating a record backlog of $4.4 billion at quarter end," said Gene W. Ray, Chairman, President and CEO of Titan.
"Our national security business performed much better on a stand alone basis than the consolidated results indicate when the results of operations of our non-core commercial businesses, mostly comprised of our electron beam medical products sterilization and mail sanitation businesses ("electron beam businesses"), are considered." The national security business had revenues and pro forma operating profit of $375.3 million and $26.0 million in 2003, which excludes amortization of purchased intangibles of $1.2 million and deferred compensation of $2.8 million, compared to revenues and pro forma operating profit of $304.9 million and $21.8 million in the first quarter of 2002, which excludes amortization of purchased intangibles of $1.4 million and deferred compensation of $0.9 million. Our commercial and electron beam businesses had revenues of $2.6 million and an operating loss of $1.2 million in the first quarter of 2003, compared to an exceptionally strong first quarter last year, with revenues and pro forma operating profit of $9.4 million and $4.4 million, which excludes exit charges of $1.5 million. The operating profit in accordance with GAAP for the national security business was $21.9 million in the first quarter of 2003, compared to $19.4 million in the first quarter of 2002, and for the commercial and electron beam businesses was an operating loss of $1.2 million in the first quarter of 2003, and operating income of $2.9 million in the first quarter of 2002. The operating results of the first quarter of 2002 were impacted favorably by the Company's contract with the U.S. Postal Service to provide electron beam mail sanitization systems.
"We also are continuing to make good progress on winning and executing contracts in transformational programs. One such contract announced in the first quarter was the $59.9 million contract to develop and build the Navy's X-Craft -- a very important new transformational program for Titan. We believe this high-speed aluminum catamaran, which will be used by the Office of Naval Research for hydrodynamic experimentation, will position the Company well for future business."
"With a backlog that is now $4.4 billion, we remain comfortable with our prior guidance of pro forma EPS of $.65 for 2003, which translates to GAAP EPS from continuing operations of $.57, after taking into account deferred compensation and the amortization of purchased intangibles. Consistent with our goal of increasing margins throughout the year and maintaining our current level of days sales outstanding on receivables, we also remain comfortable with our prior guidance of free cash flow from continuing operations of $65 to $75 million in 2003," Ray concluded.
Headquartered in San Diego, The Titan Corporation is a leading provider of national security solutions and comprehensive information and communications systems solutions and services to the Department of Defense, intelligence agencies, and other federal government customers. The company has approximately 10,400 employees and current annualized sales of approximately $1.5 billion.
* The Company believes that pro forma operating results are a meaningful measurement of operating performance due to the non-cash nature of the amortization of purchased intangibles and deferred compensation.
** Bookings are defined as additions to Backlog, as calculated under SEC guidelines.
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