Titan ups cash reserve to cover investigation costs
- By Roseanne Gerin
- Jul 09, 2004
Titan Corp. has increased the cash reserve it has set aside to resolve the two federal investigations into corporate bribery allegations, the company said yesterday.
The San Diego defense contractor increased the reserve to between $26 million and $32 million from $3 million. The charge is part of Titan's estimated projected net loss of $62 million to $78 million for the second quarter. This includes costs associated with its failed $2.2 billion merger agreement with Lockheed Martin Corp. last month and anticipated costs for exiting some of its noncore business units.
Titan expects to record after-tax charges of $24 million to $28 million to sell its Datron World Communications Inc. subsidiary and its Titan Scan Technologies unit, the company said. The company also expects an $11 million after-tax hit for discontinuing Titan Wireless Inc.'s operations in Benin in western Africa.
At the end of last year, Titan set aside $3 million to cover the outcomes of investigations by the Securities and Exchange Commission and the Justice Department as to whether the company violated the Foreign Corrupt Practices Act. Titan employees at the company's subsidiaries abroad allegedly bribed foreign government officials to get business.
During a conference call with analysts yesterday to announce Titan's preliminary second quarter financial results, Gene Ray, chairman and chief executive officer, said the company is cooperating fully with the government to resolve the investigations, but he declined to give any details. Ray said it is his "strong desire and that of the board of directors to resolve these issues at an early date and on acceptable terms."
The company's final earnings will be released during the first week of August.
Titan employs 11,500 workers and had 2003 revenue of $1.8 billion. The company is No. 9 on Washington Technology's 2004 list of federal prime contractors.