|
Titan to Exit International Telecommunications Operations. Titan plans to exit its international telecommunications business through a combination of selling and winding down its operations within its Titan Wireless segment. |
||||
|
|
|
|||
|
SAN DIEGO, CA - July 11, 2002 - The Titan Corporation (NYSE:TTN) today announced that it plans to exit its international telecommunications business through a combination of selling and winding down its operations within its Titan Wireless segment. Titan will begin implementing these actions immediately and expects to complete the majority of these actions by the end of 2002. "For the past several years, Titan has benefited from our Titan Wireless business which has consistently produced operating profits of 10% or greater. However, the past three months in particular have been very difficult for this business as the telecommunications industry as a whole has continued to deteriorate. Our long distance business has been particularly challenging over the past month as certain competitors, now operating in bankruptcy or undergoing significant reorganizations, have sought to generate revenue by reducing pricing, creating significant margin pressure. In light of these dramatic changes in the telecommunications industry, particularly in the international long distance market, we believe it is in our shareholders' best interests to take these steps to eliminate our exposure to the telecommunications market," said Eric M. DeMarco, President and Chief Operating Officer of Titan. "We are extremely fortunate to have built a government information technology and communications business that we will expect will generate over $1.35 billion in revenues this year. We are well positioned to capitalize on increased federal government spending in areas related to national security, homeland defense, and transformational military programs. Eliminating our involvement in the international telecommunications industry will allow us to better focus on our core defense business," said Gene W. Ray, Chairman and CEO of Titan. Titan expects to record an after tax nonrecurring charge in the third quarter of 2002 of up to $200 million related to these actions. The estimated charge reflects impairments in the values of certain Titan Wireless investments and assets, including goodwill and fixed assets, as well as exit costs associated with infrastructure reductions including costs for employee terminations and excess facilities. The estimated charge also includes restructuring costs associated with the reduction of operating expenses in the wholesale long distance business. The net cash impact related to the charge over the next 12 months is expected to be approximately $13 million. The ongoing operations of Titan Wireless, primarily its wholesale long distance businesses, will continue to be reported in the Titan Wireless segment until Titan has sold these operations or otherwise reduced its ownership interest to below 20%. Titan will be engaging an investment banker to assist in the sale. These actions are expected to be completed by the end of the year. Titan expects that the actions announced today, including the restructuring of the wholesale long distance business, will essentially eliminate future operating losses in the Titan Wireless segment. If the long distance operations cannot be sold or operated without incurring future operating losses, the Company plans to shut down the operations and sell the assets. The Company also announced that as a result of these changes in its telecommunications business, it now expects to for the second quarter of fiscal 2002 report pro forma earnings per share from continuing operations excluding deferred compensation, amortization of purchased intangibles, a one time charge for exit costs related to the previously announced discontinuance of certain commercial IT operations, and a previously announced extraordinary item related to the extinguishment of Titan's prior credit facility of approximately $.09 (diluted) on revenues of approximately $395 to $400 million. Previous guidance for the Company's core government information technology business is unaffected by this revised guidance for the consolidated corporation. In addition, as a result of the continued decline of the telecommunications industry, and the actions the company is taking to address the situation, Titan no longer expects to record any profit from Titan Wireless for the balance of 2002 or 2003. A conference call to discuss the actions related to Titan Wireless will be held today at 2:00 p.m. pacific daylight time and will be available live over the internet at www.titan.com/corp/events.html. Actual results for the second quarter of 2002 will be released August 13, 2002. A conference call to discuss detailed results of the quarter and the Company's revised outlook for 2002 and 2003 will be held at that time. About Titan
|
||||
|
|
|
|||