Survivial Guide: Perspectives from the field
- By Roseanne Gerin
- Nov 06, 2004
It sounds like a stereotypical soap opera saga: A 23-year-old corporate up-and-comer is accused of bribing foreign officials for business, investigated by the feds, rejected by a high-profile suitor and denounced for alleged involvement in a prison abuse scandal.
Gene Ray, chairman and chief executive officer of Titan Corp.
WT file photo
This has been a rough year for Titan Corp. The San Diego defense company is awaiting the outcome of probes by the Justice Department and Securities and Exchange Commission for alleged violations of the Foreign Corrupt Practices Act. The company also has been named in an internal Army report on prisoner abuse in Iraq. And it suffered a major blow in June when Lockheed Martin Corp. killed an agreement to buy Titan for $2.2 billion.
Staff Writer Roseanne Gerin talked with Gene Ray, Titan's chairman and chief executive officer, about how the company intends to bounce back.
WT: It's been nearly four months since the deal with Lockheed Martin fell through. What lessons did Titan learn from the canceled take-over?
Ray:Our focus has been 100 percent going forward. ?We were very, very fortunate that all of our operational managers were on board with us. We didn't lose any of them during that transition. And we're very fortunate four months later that we haven't lost any of them since then.
Immediately after the merger fell through, some of our people put together a little plan of action as to what to do, and we followed that.
WT:Has Titan lost any contracts or closed any units because the deal collapsed?
Ray: No. To the best of my knowledge, we have not lost a single contract that had anything to do ? in fact, I'm not sure that we've lost a major contract of more than $100 million since the merger fell through. That's why I'm knocking on wood. We've been on a very good streak.
WT:Looking back, what would you have done differently?
Ray: Maybe not gotten into it in the first place. We did what we thought was in the best interest of our shareholders. Of course, we would always do that.
WT: The deal's cancellation was a somewhat painful process. Has going through it changed anything internally?
Ray: It really hasn't. What we did was go back to doing business as we had before.
WT: Is Titan more or less likely to entertain a sale at this point?
Ray: Titan was not for sale when Lockheed came to see us, as explained in detail in the proxy statement that went out. Lockheed had approached us for quite some time before that deal was announced. And we're not for sale now.
Our board will do what it perceives to be in the best interest of our shareholders. Every public company can be bought if somebody comes in and makes a high enough offer that is in the best interest of shareholders.
WT: Why is Titan betting on a standalone growth strategy?
Ray: Because of our win rate. We've won 13 of 17 procurements in excess of $100 million, and we've won more this year already than we bid last year. There are a number of outstanding ones we've submitted that we're waiting to hear of from the government. ? We grew 26 percent internally in 2003.
In the first half of this year, we grew 20 percent over last year, even with the distraction that came from the merger. So Titan has been able to grow and gain market share over the last few years, and we believe we can continue to do that going forward.
WT: When does the company expect to hear from the Justice Department and the Securities and Exchange Commission about the outcome of their respective investigations?
Ray: As you know from covering government contractors, it's almost impossible to predict when the government will do anything. We really can't predict this with any more accuracy than we can predict when a government's going to decide who's going to win a procurement.
WT:In terms of the company's future, has Titan's board found a successor for you yet?
Ray: As we have announced publicly, we are looking. And as you may or may not know, we had started that process before the Lockheed deal came along.
We have restarted that process, and we are looking for the very best person we can find to come into Titan and be the next CEO of the Titan Corp. It's not a timing element, it's finding the very best person. As soon as we find the person, we are prepared to move.
WT:What advice would you offer to other companies that get entangled in the long arms of the law and are jilted by a high-profile suitor?
Ray: On the company investigation, I have no comment. On the latter one, just be careful who you date. n