QuickLinks — Click here to rapidly navigatethrough this document!

----

----

**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION****WASHINGTON,D.C. 20549**

----

**FORM10-Q**

| x | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR15(d)   OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---|---------------------------------------------------------------------------------------------------|

**For thequarterly period ended March 31, 2003**

**or**

| o | **TRANSITION REPORT PURSUANT TO SECTION 13 OR15(d)   OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---|----------------------------------------------------------------------------------------------------|

**For thetransition periodfrom                 to                 **

**Commission file number 1-6035**

----

**THETITAN CORPORATION**(Exact name of registrant as specified in its charter)

| **DELAWARE**(State or other jurisdiction of incorporation or organization) |     | **95-2588754**(I.R.S. Employer Identification No.) |
|----------------------------------------------------------------------------|--------------------|----------------------------------------------------|

**3033Science Park RoadSan Diego, California 92121-1199**(Address ofprincipal executive offices, zip code)

(Registrant's telephone number, including areacode)**(858) 552-9500**

                                                                                                                                                   (Former name, former address and former fiscal year, if changedsince last report.)

----

      Indicate bycheck mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file suchreports), and (2) has been subject to such filing requirementsfor the past 90 days.  Yes x  No o.

      Indicate bycheck mark whether the registrant is an accelerated filer asdefined in rule 12b-2 of the Securities Exchange Act of1934.  Yes x  No o.

      The number ofshares of registrant's common stock outstanding at May 5, 2003, was79,406,518.

----

----

**Part I—FINANCIALINFORMATION**

**Item 1. Financial Statements**

**THE TITAN CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS****(Unaudited) (in thousands, except per share data)**

****

| ** **                                                                                                                                     | **   ** | **Threemonths ended March 31,** | **   ** |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|---------------------------------|------------------------|
|                                                                                                                                                |                        |                                 |                        |
|                                                                                                                                                |                        | **2003**                        |                        | **2002** |  |
|                                                                                                                                                |                        |                                 |                        |  |  |
| Revenues                                                                                                                                       |                        | $                               | 377,880                |  | $ | 314,348 |  |
|                                                                                                                                                |                        |                                 |                        |  |  |
| Costs andexpenses:                                                                                                                             |                   |                            |                        |  |   |  |  |
|       Cost of revenues                                                                                           |                   |                                 | 315,276                |  |   | 253,425 |  |
|       Selling, general and administrative                                                                        |                   |                                 | 39,517                 |  |   | 34,653 |  |
|       Research and development                                                                                   |                   |                                 | 2,368                  |  |   | 2,447 |  |
|       Exit and restructuring charges and other (Note2)                                                           |                   |                                 | —                |  |   | 1,486 |  |
|                                                                                                                                                |                        |                                 |                        |  |  |
|             Total costs and expenses                                               |                   |                            | 357,161                |  |  | 292,011 |  |
|                                                                                                                                                |                        |                                 |                        |  |  |
| Operatingprofit                                                                                                                                |                   |                                 | 20,719                 |  |  | 22,337 |  |
| Interestexpense                                                                                                                                |                   |                                 | (8,099                 | ) |  | (8,322 | ) |
| Interest income                                                                                                                                |                   |                                 | 612                    |  |  | 135 |  |
|                                                                                                                                                |                        |                                 |                        |  |  |
| Income from continuingoperations before income taxes and cumulative effect of changein       accountingprinciple |                        |                                 | 13,232                 |  |  | 14,150 |  |
| Income taxprovision                                                                                                                            |                   |                                 | 5,293                  |  |  | 6,237 |  |
|                                                                                                                                                |                        |                                 |                        |  |  |
| Income from continuingoperations before cumulative effect of change in accountingprinciple                                                     |                   |                                 | 7,939                  |  |  | 7,913 |  |
| Loss from discontinuedoperations, net of tax benefit (Note 4)                                                                                  |                   |                                 | (938                   | ) |  | (1,426 | ) |
| Cumulative effect ofchange in accounting principle, net of tax benefit (discontinuedoperations)       (Note 3)   |                   |                                 | —                |  |  | (40,111 | ) |
|                                                                                                                                                |                        |                                 |                        |  |  |
| Net income(loss)                                                                                                                               |                   |                                 | 7,001                  |  |  | (33,624 | ) |
| Dividend requirements onpreferred stock                                                                                                        |                   |                                 | (172                   | ) |  | (172 | ) |
|                                                                                                                                                |                        |                                 |                        |  |  |
| Net income (loss)applicable to common stock                                                                                                    |                        | $                               | 6,829                  |  | $ | (33,796 | ) |
|                                                                                                                                                |                        |                                 |                        |  |  |
| Basic earnings (loss) pershare:                                                                                                                |                   |                            |                        |  |  |   |  |  |
|       Income fromcontinuing operations before cumulative effect of change inaccounting principle                 |                        | $                               | 0.10                   |  | $ | 0.11 |  |
|       Loss fromdiscontinued operations, net of tax benefit                                                       |                   |                                 | (0.01                  | ) |  | (0.02 | ) |
|       Cumulativeeffect of change in accounting principle, net of tax benefit(discontinued operations)            |                   |                                 | —                |  |  | (0.57 | ) |
|                                                                                                                                                |                        |                                 |                        |  |  |
|       Net income(loss)                                                                                           |                        | $                               | 0.09                   |  | $ | (0.48 | ) |
|                                                                                                                                                |                        |                                 |                        |  |  |
|       Weightedaverage shares                                                                                     |                   |                                 | 78,622                 |  |  | 70,771 |  |
|                                                                                                                                                |                        |                                 |                        |  |  |
| Diluted earnings (loss)per share:                                                                                                              |                   |                            |                        |  |  |   |  |  |
|       Income fromcontinuing operations before cumulative effect of change inaccounting principle                 |                        | $                               | 0.10                   |  | $ | 0.11 |  |
|       Loss fromdiscontinued operations, net of tax benefit                                                       |                   |                                 | (0.01                  | ) |  | (0.03 | ) |
|       Cumulativeeffect of change in accounting principle, net of tax benefit(discontinued operations)            |                   |                                 | —                |  |  | (0.55 | ) |
|                                                                                                                                                |                        |                                 |                        |  |  |
|       Net income(loss)                                                                                           |                        | $                               | 0.09                   |  | $ | (0.47 | ) |
|                                                                                                                                                |                        |                                 |                        |  |  |
|       Weightedaverage shares                                                                                     |                   |                                 | 81,097                 |  |  | 72,385 |  |
|                                                                                                                                                |                        |                                 |                        |  |  |

Theaccompanying notes are an integral part of these consolidatedfinancial statements.

**THE TITAN CORPORATIONCONSOLIDATED BALANCE SHEETS  (in thousands, except share and per sharedata)**

|                                                                                                                                                                                                                                                                                                |            | **March31, 2003** | ** ** | **December 31, 2002** |            |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|----------------------------|------------|
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
| **Assets**                                                                                                                                                                                                                                                                                     |       | **(Unaudited)**   |       |                       |            |  |
| Current Assets:                                                                                                                                                                                                                                                                                |       |              |       |                       |       |  |  |
|       Cash and cashequivalents                                                                                                                                                                                                                                   |       | $                 | 36,311     |                            | $          | 34,123 |  |
|       Restrictedcash                                                                                                                                                                                                                                             |       |                   | 135        |                            |            | 394 |  |
|       Accounts receivable—net                                                                                                                                                                                                                              |       |              | 340,714    |                            |       | 314,363 |  |
|       Inventories                                                                                                                                                                                                                                                |       |              | 31,383     |                            |       | 31,280 |  |
|       Prepaid expenses and other                                                                                                                                                                                                                                 |       |              | 22,098     |                            |       | 19,441 |  |
|       Deferred income taxes                                                                                                                                                                                                                                      |       |              | 103,258    |                            |       | 108,046 |  |
|       Current assets of discontinued operations                                                                                                                                                                                                                  |       |              | 100,166    |                            |       | 103,871 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
|           Total current assets                                                                                                                                                                                                               |       |              | 634,065    |                            |       | 611,518 |  |
| Property and equipment — net                                                                                                                                                                                                                                                             |       |              | 61,492     |                            |       | 63,705 |  |
| Goodwill                                                                                                                                                                                                                                                                                       |       |              | 462,199    |                            |       | 462,719 |  |
| Other assets —net                                                                                                                                                                                                                                                                        |       |              | 92,544     |                            |       | 99,903 |  |
| Deferred incometaxes                                                                                                                                                                                                                                                                           |            |                   | 53,015     |                            |            | 53,015 |  |
| Non-current assets ofdiscontinued operations                                                                                                                                                                                                                                                   |       |              | 6,836      |                            |       | 6,582 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
|           Total assets                                                                                                                                                                                                                       |       | $                 | 1,310,151  |                            | $          | 1,297,442 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
| **Liabilities and Stockholders'Equity**                                                                                                                                                                                                                                                        |       |              |            |                            |       |  |  |
| CurrentLiabilities:                                                                                                                                                                                                                                                                            |       |              |            |                            |       |  |  |
|       Current portion of amounts outstanding under line ofcredit                                                                                                                                                                                                 |       | $                 | 3,500      |                            | $          | 3,500 |  |
|       Accounts payable                                                                                                                                                                                                                                           |       |              | 73,495     |                            |       | 81,376 |  |
|       Current portion of long-term debt                                                                                                                                                                                                                          |       |              | 855        |                            |       | 847 |  |
|       Accrued compensation and benefits                                                                                                                                                                                                                          |       |              | 79,879     |                            |       | 66,639 |  |
|       Other accrued liabilities                                                                                                                                                                                                                                  |       |              | 82,281     |                            |       | 87,602 |  |
|       Current liabilities of discontinued operations                                                                                                                                                                                                             |       |              | 46,273     |                            |       | 49,143 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
|           Total current liabilities                                                                                                                                                                                                          |       |              | 286,283    |                            |       | 289,107 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
| Long-term portion ofamounts outstanding under line of credit                                                                                                                                                                                                                                   |       |              | 344,750    |                            |       | 344,750 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
| Other long-termdebt                                                                                                                                                                                                                                                                            |       |              | 1,817      |                            |       | 2,045 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
| Other non-currentliabilities                                                                                                                                                                                                                                                                   |       |              | 56,802     |                            |       | 54,401 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
| Non-current liabilities ofdiscontinued operations                                                                                                                                                                                                                                              |            |                   | 43,700     |                            |            | 44,826 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
| Company obligatedmandatory redeemable convertible preferred securities of asubsidiary trust whose sole assets are senior       subordinated debentures ofTitan                                                                                                   |       |              | 250,000    |                            |       | 250,000 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
| Stockholders'Equity:                                                                                                                                                                                                                                                                           |       |              |            |                            |       |  |  |
|       Preferred stock: $1 par value, authorized 5,000,000shares:                                                                                                                                                                                                 |       |              |            |                            |       |  |  |
|           Cumulative convertible, $13,800 liquidationpreference, designated 1,068,102 shares: 688,129 shares issuedand                 outstanding |       |              | 688        |                            |       | 688 |  |
|           Series A junior participating: designated 1,000,000authorized shares:  None issued                                                                                                                                       |       |              |            |                            |       | — |  |
|       Common stock:  $.01 par value, authorized200,000,000 shares, issued and outstanding: 79,182,497 and78,344,550 shares                                                                                                                        |       |              | 792        |                            |       | 783 |  |
|       Capital in excess of par value                                                                                                                                                                                                                             |       |              | 652,371    |                            |       | 647,752 |  |
|       Deferred compensation                                                                                                                                                                                                                                      |       |              | (5,951     | )                          |       | (8,791 | ) |
|       Retained earnings (deficit)                                                                                                                                                                                                                                |       |              | (320,317   | )                          |       | (327,318 | ) |
|       Accumulated other comprehensive income (loss)                                                                                                                                                                                                              |       |              | (115       | )                          |       | (132 | ) |
|       Treasury stock (245,750 shares), at cost                                                                                                                                                                                                                   |       |              | (669       | )                          |       | (669 | ) |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
|           Total stockholders' equity                                                                                                                                                                                                         |            |              | 326,799    |                            |       | 312,313 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |
|           Total liabilities and stockholders'equity                                                                                                                                                                                          |       | $                 | 1,310,151  |                            | $          | 1,297,442 |  |
| ** **                                                                                                                                                                                                                                                                                     | ** ** |                   |            |                            | ** ** |

Theaccompanying notes are an integral part of these consolidatedfinancial statements.

**THE TITAN CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS****(Unaudited)  (in thousands of dollars)**

|                                                                                                                                                                                           |            |          | **Threemonths ended March 31,** |            |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|---------------------------------|------------|
| ** **                                                                                                                                                                                | ** ** |          |                                 | ** ** |
| ** **                                                                                                                                                                                |            | **2003** |                                 | **2002**   | ** ** |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| **Cash Flows fromOperating Activities:**                                                                                                                                             |       |          |                            |       |   |   |   |
| Income from continuingoperations before cumulative effect of change in accountingprinciple                                                                                                |       | $        | 7,939                           |            | $ | 7,913 |  |
| Adjustments to reconcileincome from continuing operations to net cash provided byoperating       activities, net of effects ofbusinesses acquired and sold: |       |          |                                 |       |  |  |
|       Depreciationand amortization                                                                                                                          |       | 4,878    |                                 |       | 4,660 |  |
|       Deferredincome taxes and other                                                                                                                        |       | 5,801    |                                 |       | 5,286 |  |
|       Deferredcompensation                                                                                                                                  |       | 2,840    |                                 |       | 973 |  |
|       Changes inoperating assets and liabilities, net of the effects of businessesacquired and sold:                                                        |       |          |                                 |       |  |  |
|             Accountsreceivable                                                                                                |       | (26,351  | )                               |       | 12,202 |  |
|             Inventories                                                                                                       |       | 935      |                                 |       | 28 |  |
|             Prepaidexpenses and other assets                                                                                  |       | 1,901    |                                 |       | (7,062 | ) |
|             Accountspayable                                                                                                   |       | (7,881   | )                               |       | 21,388 |  |
|             Accruedcompensation and benefits                                                                                  |       | 13,240   |                                 |       | (1,761 | ) |
|             Incometaxes payable                                                                                               |       | —  |                                 |       | 7,800 |  |
|             Otherliabilities                                                                                                  |       | 2,324    |                                 |       | (3,963 | ) |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| Net cash provided bycontinuing operations                                                                                                                                                 |       | 5,626    |                                 |       | 47,464 |  |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| Loss from discontinuedoperations                                                                                                                                                          |       | (938     | )                               |       | (1,426 | ) |
| Minority interestattributable to discontinued operations                                                                                                                                  |       | —  |                                 |       | (112 | ) |
| Issuance of stock insubsidiaries                                                                                                                                                          |       | —  |                                 |       | 130 |  |
| Acquisition of businesses,net of cash acquired                                                                                                                                            |            | —  |                                 |            | 71 |  |
| Deferred compensationcharge attributable to discontinued operations                                                                                                                       |       | —  |                                 |       | 3,890 |  |
| Changes in net assets andliabilities of discontinued operations                                                                                                                           |       | (1,080   | )                               |       | (44,793 | ) |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| Net cash used fordiscontinued operations                                                                                                                                                  |       | (2,018   | )                               |       | (42,240 | ) |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| Net cash provided byoperating activities                                                                                                                                                  |       | 3,608    |                                 |       | 5,224 |  |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| **Cash Flows fromInvesting Activities:**                                                                                                                                                  |       |          |                                 |       |  |  |
| Capitalexpenditures                                                                                                                                                                       |       | (2,500   | )                               |       | (5,378 | ) |
| Acquisition of businesses,net of cash acquired                                                                                                                                            |       | —  |                                 |       | 26,767 |  |
| Proceeds from sale ofinvestments and business                                                                                                                                             |       | —  |                                 |       | 1,500 |  |
| Otherinvestments                                                                                                                                                                          |       | (62      | )                               |       | (945 | ) |
| Other                                                                                                                                                                                     |       | 89       |                                 |       | 109 |  |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| Net cash provided by (usedfor) investing activities                                                                                                                                       |       | (2,473   | )                               |       | 22,053 |  |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| **Cash Flows fromFinancing Activities:**                                                                                                                                                  |       |          |                                 |       |  |  |
| Retirements ofdebt                                                                                                                                                                        |       | (220     | )                               |       | (18,349 | ) |
| Issuance of stock bysubsidiaries                                                                                                                                                          |       | —  |                                 |       | 123 |  |
| Deferred debt issuancecosts                                                                                                                                                               |       | —  |                                 |       | (1,132 | ) |
| Decrease (increase) inrestricted cash                                                                                                                                                     |       | 259      |                                 |       | (1,104 | ) |
| Dividends paid                                                                                                                                                                            |       | (172     | )                               |       | (172 | ) |
| Proceeds from stockissuances                                                                                                                                                              |       | 1,233    |                                 |       | 2,605 |  |
| Other                                                                                                                                                                                     |       | (64      | )                               |       | (11 | ) |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| Net cash provided by (usedfor) financing activities                                                                                                                                       |       | 1,036    |                                 |       | (18,040 | ) |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| Effect of exchange ratechanges on cash                                                                                                                                                    |       | 17       |                                 |       | 67 |  |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| Net increase in cash andcash equivalents                                                                                                                                                  |       | 2,188    |                                 |       | 9,304 |  |
| Cash and cash equivalentsat beginning of period                                                                                                                                           |       | 34,123   |                                 |       | 18,621 |  |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |
| Cash and cash equivalentsat end of period                                                                                                                                                 |       | $        | 36,311                          |            | $ | 27,925 |  |
| ** **                                                                                                                                                                                | ** ** |          |                                 |            |  |

Theaccompanying notes are an integral part of these consolidatedfinancial statements.

**THE TITAN CORPORATIONCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(Unaudited) (In thousands of dollars, except per share data)**

| ** **                                                                                                                                                                                          | ** ** | **Cumulative Convertible Preferred Stock****** | ** ** | **Common Stock****** | ** ** | **Capital In Excess of Par Value****** | ** ** | **Deferred Compen- sation****** | ** ** | **Retained Earnings (Deficit)****** | ** ** | **Accumulated Other Comprehensive Income****(Loss)** | ** ** | **Treasury Stock****** | ** ** | **Total****** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------|------------|----------------------|------------|----------------------------------------|------------|---------------------------------|------------|-------------------------------------|------------|------------------------------------------------------|------------|------------------------|------------|---------------|------------|
| ** **                                                                                                                                                                                          | ** ** | ****                                           | ** ** | ****                 | ** ** | ****                                   | ** ** | ****                            | ** ** | ****                                | ** ** | ****                                                 | ** ** | ****                   | ** ** | ****          | ** ** |
| **Three MonthsEnded March 31, 2003**                                                                                                                                                                |            |                                           |
| Balances at December 31, 2002                                                                                                                                                                  |       | $                                              | 688        |                 | $          | 783                                    |       | $                               | 647,752    |                                | $          | (8,791                                               | )          | $                      | (327,318   | )             | $          | (132 | ) | $ | (669 | ) | $ | 312,313 |  |
|    Exercise of stock options       and other                                                                                                           |       |                                           |            |                      |            | 5                                      |       |                                 | 1,228      |                                     |       |                                                      |            |                   |            |               |       |  |  |   |   |   |   | 1,233 |  |
|    Amortization of deferred      compensation                                                                                                          |       |                                           |       |                 |            |                                        |       |                                 |            |                                |       | 2,840                                                |       |                   |            |               |       |  |  |   |   |   |   | 2,840 |  |
|    Foreign currency      translation adjustment                                                                                                        |       |                                           |       |                 |            |                                        |       |                                 |            |                                |       |                                                      |       |                   |            |               |       | 17 |  |  |  |  |  | 17 |  |
|    Shares contributed to       employee benefitplans                                                                                                   |       |                                           |       |                 |       | 4                                      |            |                                 | 3,563      |                                |       |                                                      |       |                   |            |               |       |  |  |   |  |   |   | 3,567 |  |
|    Dividends on preferred       stock - Cumulative       convertible, $.25 per       share |       |                                           |       |                 |       |                                        |       |                                 | (172       | )                                   |       |                                                 |       |                   |            |               |       |   |   |   |   |   |   | (172 | ) |
|    Net income                                                                                                                                                                        |       |                                           |       |                 |       |                                   |       |                                 |            |                                |       |                                                 |       |                   | 7,001      |               |       |   |   |   |   |   |   | 7,001 |  |
| ** **                                                                                                                                                                                          | ** ** | ****                                           | ** ** | ****                 | ** ** | ****                                   | ** ** | ****                            | ** ** | ****                                | ** ** | ****                                                 | ** ** | ****                   | ** ** | ****          | ** ** |
| Balances at March 31, 2003                                                                                                                                                                          |       | $                                              | 688        |                      | $          | 792                                    |            | $                               | 652,371    |                                     | $          | (5,951                                               | )          | $                      | (320,317   | )             | $          | (115 | ) | $ | (669 | ) | $ | 326,799 |  |
| ** **                                                                                                                                                                                          | ** ** | ****                                           | ** ** | ****                 | ** ** | ****                                   | ** ** | ****                            | ** ** | ****                                | ** ** | ****                                                 | ** ** | ****                   | ** ** | ****          | ** ** |
| **Three MonthsEnded March 31, 2002**                                                                                                                                                                |            |                                           |
| Balances at December 31, 2001                                                                                                                                                                  |       | $                                              | 690        |                 | $          | 701                                    |       | $                               | 586,802    |                                | $          | (34,519                                              | )          | $                      | (55,857    | )             | $          | 128 |  | $ | (987 | ) | $ | 496,958 |   |
|    Issuanceof stock for       acquisitions                                                                                                             |       |                                           |       |                      |            | 66                                     |       |                            | 134,071    |                                |       |                                                 |       |                   |       |          |       |   |   |   | 39 |  |  | 134,176 |   |
|    Exercise of stock options       and other                                                                                                           |       |                                           |       |                      |            | 4                                      |       |                            | 2,601      |                                |       |                                                 |       |                   |       |          |       |   |   |   |  |  |  | 2,605 |   |
|    Amortization of deferred      compensation                                                                                                          |       |                                           |       |                 |            |                                   |       |                                 |       |                                |       | 4,863                                                |       |                   |       |          |       |   |   |   |   |   |   | 4,863 |   |
|    Foreign currency      translation adjustment                                                                                                        |       |                                           |       |                 |            |                                   |       |                                 |       |                                |       |                                                 |       |                   |       |          |       | 67 |   |   |   |   |   | 67 |   |
|    Sharescontributed to       employee benefitplans                                                                                                    |       |                                           |       |                 |       | 2                                      |            |                                 | 3,596      |                                |       |                                                 |       |                   |            |               |       |   |   |   | 6 |   |   | 3,604 |  |
|    Dividends on preferred       stock -Cumulative      convertible, $.25 per       share   |       |                                           |       |                 |       |                                   |       |                                 | (172       | )                                   |       |                                                 |       |                   |            |               |       |   |   |   |   |   |   | (172 | ) |
| Net loss                                                                                                                                                                                            |       |                                           |       |                 |       |                                   |       |                                 |            |                                |       |                                                 |       |                   | (33,624    | )             |       |   |   |   |   |   |   | (33,624 | ) |
| ** **                                                                                                                                                                                          | ** ** | ****                                           | ** ** | ****                 | ** ** | ****                                   | ** ** | ****                            | ** ** | ****                                | ** ** | ****                                                 | ** ** | ****                   | ** ** | ****          | ** ** |
| Balances at March 31, 2002                                                                                                                                                                          |       | $                                              | 690        |                 | $          | 773                                    |       | $                               | 726,898    |                                | $          | (29,656                                              | )          | $                      | (89,481    | )             | $          | 195 |  | $ | (942 | ) | $ | 608,477 |   |
| ** **                                                                                                                                                                                          | ** ** | ****                                           | ** ** | ****                 | ** ** | ****                                   | ** ** | ****                            | ** ** | ****                                | ** ** | ****                                                 | ** ** | ****                   | ** ** | ****          | ** ** |

Theaccompanying notes are an integral part of these consolidatedfinancial statements.

**THETITAN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003(in thousands, except share and per share data, or as otherwisenoted)**

**Note (1) Basis of Financial StatementPreparation**

      Theaccompanying consolidated financial information of The TitanCorporation and its subsidiaries ("Titan" or the "Company") shouldbe read in conjunction with the Notes to Consolidated FinancialStatements contained in the Company's Annual Report on Form10-K**to the Securities and Exchange Commission for the yearended December 31, 2002.  The accompanying financialinformation includes substantially all subsidiaries on aconsolidated basis and all normal recurring adjustments which areconsidered necessary by the Company's management for a fairpresentation of the financial position, results of operations andcash flows for the periods presented.  However, these resultsare not necessarily indicative of results for a full fiscalyear.  Additionally, certain prior period amounts have beenreclassified to conform to the current periodpresentation.

      Thepreparation of financial statements in conformity with accountingprinciples generally accepted in the United States of Americarequires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses duringthe reporting period.  Actual results could differ from thoseestimates.

      Prior to thediscontinuance of certain operations in 2002 and 2001, the Companygrouped its businesses into five business segments – TitanSystems, Titan Wireless, Software Systems (including Cayenta),Titan Technologies and the SureBeam business.  As discussed inNote 4, Titan is no longer reporting the results of operations bythese segments, however, reference may be made to these segments indiscussions of other historical information.  In accordancewith Statement of Financial Accounting Standards(“SFAS”) No. 131, “Disclosures about Segments ofan Enterprise and Related Information,” substantially all ofthe Company’s operations are aggregated into one reportablesegment given the similarities of economic characteristics betweenthe operations and the common nature of the products, services, andcustomers.

**Recent AccountingPronouncements**

***      Stock-BasedCompensation.***  The Company has elected to adopt thedisclosure only provisions of SFAS No. 123, "Accounting forStock-Based Compensation".  Accordingly, the Company accountsfor its stock-based compensation plans under the provisions of APBNo. 25.  The Company also follows the disclosure requirementsof SFAS No. 148, “Accounting for Stock-Based Compensation– Transition and Disclosure,” which amends SFAS No.123.

      As allowed bySFAS No. 123, the Company has elected to continue to apply theintrinsic value based method of accounting described in APB No. 25and has adopted the disclosure only provisions of SFAS No.123.  Compensation cost, if any, is measured as the excess ofthe quoted market price of the Company's stock on the date of grantover the exercise price of the grant.  Had compensation costfor the Company's stock-based compensation plans been determinedbased on the fair value at the grant dates for awards under thoseplans consistent with the method of SFAS No. 123, the Company'sresults of operations would have been reduced to the pro formaamounts indicated below:

|                                                                                                                                                                                                                                                                                |            |            |            | **Threemonths ended March 31,** |            |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|---------------------------------|------------|
| ** **                                                                                                                                                                                                                                                                     | ** ** | ** ** | ** ** | **2003**                        | ** ** | **2002** | ** ** |
| ** **                                                                                                                                                                                                                                                                     | ** ** | ** ** | ** ** | ****                            | ** ** | **** | ** ** |
| Net income (loss), asreported                                                                                                                                                                                                                                                  |       | $          | 7,001      |                                 | $          | (33,624 | ) |
| Less:  Additional stock-based employeecompensation           expensedetermined under fair value based method for           allawards, net of related tax effects |            |            | (361       | )                               |            | (851 | ) |
| ** **                                                                                                                                                                                                                                                                     | ** ** | ** ** | ** ** | ****                            | ** ** | **** | ** ** |
| ***Net income (loss),pro forma***                                                                                                                                                                                                                                              |       |            |       | $                               | 6,640      |  | $ | (34,475 | ) |
|                                                                                                                                                                                                                                                                                |            | ****       |            | ****                            |            |
| Earnings (loss) pershare:                                                                                                                                                                                                                                                      |       |            |            |                                 |            |  |  |
|       Basic asreported                                                                                                                                                                                                                           |            |            |            | $                               | 0.09       |  | $ | (0.48 | ) |
|       Basic proforma                                                                                                                                                                                                                             |       |            |       | $                               | 0.08       |  | $ | (0.49 | ) |
|                                                                                                                                                                                                                                                                                |            |            |            |                                 |            |  |  |
|       Diluted asreported                                                                                                                                                                                                                         |       | $          | 0.09       |                                 | $          | (0.47 | ) |
|       Diluted proforma                                                                                                                                                                                                                           |       |            |       | $                               | 0.08       |  | $ | (0.49 | ) |

**Note (2) Exit and Restructuring Charges andOther**

      Included inthe quarter ended March 31, 2002 is $1.5 million ofrestructuring costs related to the shutdown of Cayenta’sheadquarters office and network operations center. 

      At December31, 2002, accruals for all exit and restructuring charges totaled$37.8 million, comprised primarily of restructuring chargesrelated to the merger of Titan Systems into Titan on September 25,2002 and exit charges related to the shutdown of Cayenta’sheadquarters office.  These exit and restructuring activitieswere accounted for under the Financial Accounting StandardsBoard’s (“FASB”) Emerging Issues Task Force(EITF) Issue No. 94-3.  Effective January 1, 2003, the Companywas required to adopt Statement of Financial Accounting Standards(“SFAS”) No. 146 “Accounting for Costs Associatedwith Exit or Disposal Activities”.  SFAS No. 146requires companies to record a liability for a cost associated withan exit or disposal activity when that liability is incurred andcan be measured at fair value.  A summary of the utilizationof exit and restructuring accruals during the quarter ended March31, 2003 is as follows (in millions):

|                                                                                   |  | **EndingBalance December 31, 2002** |      | **  Cash paid 2003** |   | **EndingBalance March 31, 2003** |   |
|-----------------------------------------------------------------------------------|--|-------------------------------------|------|---------------------------|---|----------------------------------|---|
|                                                                                   |  |                                     |      |                           |   |                                  |   |
| Titan Systemsrestructuring:                                                       |  |                                     |      |                           |   |                                  |   |  |  |  |
|       Estimatedfacilities consolidation costs       |  | $                                   | 32.1 |                           | $ | (0.7                             | ) | $ | 31.4 |  |
|       Employeetermination/retention costs and other |  |                                     | 1.7  |                           |   | (1.5                             | ) |  | 0.2 |  |
|                                                                                   |  |                                     |      |                           |   |                                  |   |
|                                                                                   |  |                                     | 33.8 |                           |   | (2.2                             | ) |  | 31.6 |  |
| Unsuccessful transactioncosts                                                     |  |                                     | 0.6  |                           |   | (0.6                             | ) |  | — |  |
|                                                                                   |  |                                     |      |                           |   |                                  |   |
|                                                                                   |  |                                     | 34.4 |                           |   | (2.8                             | ) |  | 31.6 |  |
|                                                                                   |  |                                     |      |                           |   |                                  |   |
| Cayenta headquarters exitcosts:                                                   |  |                                     |      |                           |   |                                  |   |  |  |  |
|       Leasecommitment costs                         |  |                                     | 3.2  |                           |   | (0.6                             | ) |  | 2.6 |  |
|       Employeetermination costs and other           |  |                                     | 0.2  |                           |   | (0.1                             | ) |  | 0.1 |  |
|                                                                                   |  |                                     |      |                           |   |                                  |   |
|                                                                                   |  |                                     | 3.4  |                           |   | (0.7                             | ) |  | 2.7 |  |
|                                                                                   |  |                                     |      |                           |   |                                  |   |
|                                                                                   |  | $                                   | 37.8 |                           | $ | (3.5                             | ) | $ | 34.3 |  |
|                                                                                   |  |                                     |      |                           |   |                                  |   |

****

      At March 31,2003, $18.1 million of the exit and restructuring accruals areincluded in Other Accrued Liabilities on the consolidated balancesheet and $16.2 million are included in Other Non-currentLiabilities.  The remaining liability balance is primarilycomprised of amounts due under the facilities consolidation, whichrequires payments in 2003 and 2004 for certain lease cancellationfees and other lease costs, with the remainder expected to be paidover the remaining lease terms, which expire in 2009.

**Note (3) Cumulative Effect of Change inAccounting Principle**

      EffectiveJanuary 1, 2002, the Company adopted SFAS No. 142,"Goodwill and Other Intangible Assets," which establishes financialaccounting and reporting for acquired goodwill and other intangibleassets andsupersedesAPB Opinion No. 17, "Intangible Assets". Goodwill and intangible assetsacquired in a purchase business combination and determined to havean indefinite useful life are not amortized, but instead tested forimpairment at least annually in accordance with the provisions ofSFAS No. 142. SFAS No. 142 also requires thatintangible assets with estimable useful lives be amortized overtheir respective estimated useful lives to their estimated residualvalues, and reviewed for impairment in accordance with SFASNo. 144, “Accounting for Impairment or Disposal ofLong-Lived Assets.”  

      SFASNo. 142 requires that goodwill be tested for impairment at thereporting unit level at adoption and at least annually thereafter,utilizing a two step methodology.  The initial step requiresthe Company to assess whether indications of impairmentexist.  If indications of impairment are determined to exist,the second step of measuring impairment is performed, wherein thefair value of the relevant reporting unit is compared to thecarrying value, including goodwill, of such unit.  If the fairvalue exceeds the carrying value, no impairment loss isrecognized.  However,if the carrying value of the reporting unitexceeds its fair value, the goodwill of the reporting unit isimpaired. 

      In connectionwith the initial adoption of this standard as ofJanuary 1, 2002, during the first quarter of 2002, theCompany’s independent valuation consultant, Bearing Point(formerly KPMG Consulting, Inc.), completed step one of the testfor impairment, which indicated that the carrying values of certainreporting units exceeded their estimated fair values, as determinedutilizing various evaluation techniques including discounted cashflow and comparative market analysis.  Thereafter, given theindication of a potential impairment, the Company completed steptwo of the test.  Based on that analysis, a transitionalimpairment loss of $40.1 million, which was net of a$10.0 million tax benefit, was recognized in the first quarterof 2002 as the cumulative effect of an accounting change.  Theimpairment charge resulted from a change in the criteria forthemeasurement of theimpairment loss from an undiscounted cash flow method, as requiredby SFAS No. 121, "Accounting for the Impairment of Long-LivedAssets and for Long-Lived Assets to Be Disposed Of," to anestimated fair value analysis as required by SFASNo. 142. The gross $50.1 million impairment charge recorded in thefirst quarter of 2002 was comprised of approximately$27.5 million in certain components of our Cayenta business,approximately $14.9 million in our AverCom business, which waspreviously reported in our Titan Technologies segment, bothattributable to lower valuations and weakened outlook in commercialIT services, and approximately $7.7 million in our TitanWireless business.  The entire $50.1 million charge wasrelated to discontinued businesses; approximately$42.4 million of this charge pertained to businesses that werediscontinued by the Company on March 1, 2002 with theremaining charge of $7.7 million related to theCompany’s long distance telecommunications business that wasdiscontinued in the third quarter of 2002.

**Note (4) DiscontinuedOperations**

      InAugust 2002, the Company’s board of directors made thedecision to sell or otherwise divest its LinCom Wireless businessand to sell a remaining commercial information technology business,both of which were previously reported in the Company’s TitanTechnologies segment.  Accordingly, Titan has reflected bothoperations as discontinued in accordance with SFASNo. 144.

      InJuly 2002, the Company’s board of directors made thedecision to exit all of its international telecommunicationsbusiness through a combination of selling its operations within itsTitan Wireless segment.  Titan began implementing theseactions immediately and expects to complete these actions during2003.  The Company has reported this exit of the TitanWireless segment as a discontinued operation in accordance withSFAS No. 144.

      During thefirst quarter of 2002, the Company’s board of directors madethe decision to sell certain of its commercial informationtechnology operations within its Cayenta segment and the AverCombusiness within the Titan Technologies segment.  In accordancewith SFAS No. 144, all commercial operations that have beensold or that are held for sale have been reflected as discontinuedoperations for all periods presented in Titan’s consolidatedfinancial statements.

      OnMarch 16, 2001, SureBeam Corporation, Titan's subsidiary thatprovides electronic food irradiation systems and services,completed an initial public offering ("IPO") of 6,700,000 shares ofClass A common stock at a price of $10 per share.  OnOctober 16, 2001, Titan adopted a definitive plan to spin offSureBeam in the form of a tax-free dividend to Titan stockholderswithin the next 12 months from that date.  The plan involvedfiling a letter ruling request with the Internal Revenue Service("IRS") to obtain approval of the tax-free distribution. Titan received a favorable ruling in May 2002, and on August 5,2002, Titan’s remaining ownership interest in SureBeam wasspun-off to Titan stockholders as a tax-freedividend. 

      Following isa summary in tabular format of the loss from discontinuedoperations for 2003 (amounts in millions):

|                       |        | **Threemonths ended March 31, 2003** |      |
|-----------------------|--------|-------------------------------------------|------|
|                       |        |                                           |      |
|                       | ****   | **Titan Wireless**                        | **** | **Titan Technologies** |  | **Cayenta** |  | **SureBeam** |  | **Total** |  |
|                       |        | ****                                      |      | **** |  | **** |  | **** |  | **** |  |
| Losses fromoperations |   | $                                         | (0.5 | ) | $ | (0.9 | ) | $ | — |  | $ | — |  | $ | (1.4 | ) |
| Tax benefit           |   |                                      | (0.2 | ) |  | (0.3 | ) |  | — |  |  | — |  |  | (0.5 | ) |
|                       |   |                                           |      |  |  |  |  |  |  |  |  |
| Net loss              |        | $                                         | (0.3 | ) | $ | (0.6 | ) | $ | — |  | $ | — |  | $ | (0.9 | ) |
|                       |   |                                           |      |  |  |  |  |  |  |  |  |

**Balance SheetSummary**

      Following isa table of all related balance sheet categories for eachdiscontinued operation:

|                                                  |   | **Asof March 31, 2003** |    | **Asof December 31, 2002** |   |
|-------------------------------------------------------|--------|-------------------------|---------|---------------------------------|--------|
|                                                       |        |                         |         |                                 |        |
| Current assets ofdiscontinued operations:             |   |                         |         |                            |        |  |   |
|       TitanWireless     |   | $                       | 88,299  |                                 | $      | 93,145 |  |
|       Cayenta           |   |                         | 661     |                                 |        | 661 |   |
|       SureBeam          |   |                         | — |                                 |        | — |  |
|       TitanTechnologies |   |                         | 11,206  |                                 |        | 10,065 |  |
|                                                       |        |                         |         |                                 |        |
|                                                       |        | $                       | 100,166 |                                 | $      | 103,871 |  |
|                                                       |        |                         |         |                                 |        |
| Non-current assets ofdiscontinued operations:         |   |                    |         |                                 |   |  |  |
|       TitanWireless     |   | $                       | 4,426   |                                 | $      | 4,212 |  |
|       Cayenta           |   |                         | — |                                 |        | — |   |
|       SureBeam          |   |                         | — |                                 |        | — |  |
|       TitanTechnologies |   |                         | 2,410   |                                 |        | 2,370 |  |
|                                                       |        |                         |         |                                 |        |
|                                                       |        | $                       | 6,836   |                                 | $      | 6,582 |  |
|                                                       |        |                         |         |                                 |        |
| Current liabilities ofdiscontinued operations:        |   |                         |         |                                 |        |  |   |
|       TitanWireless     |   | $                       | 36,447  |                                 | $      | 38,603 |  |
|       Cayenta           |   |                         | 1,419   |                                 |        | 2,155 |   |
|       SureBeam          |   |                         | 205     |                                 |        | 187 |  |
|       TitanTechnologies |   |                         | 8,202   |                                 |        | 8,198 |  |
|                                                       |        |                         |         |                                 |        |
|                                                       |        | $                       | 46,273  |                                 | $      | 49,143 |  |
|                                                       |        |                         |         |                                 |        |
| Non-current liabilities ofdiscontinued operations:    |   |                    |         |                                 |   |  |  |
|       TitanWireless     |   | $                       | 42,003  |                                 | $      | 42,821 |  |
|       Cayenta           |   |                         | 928     |                                 |        | 1,205 |   |
|       SureBeam          |   |                         | — |                                 |        | — |  |
|       TitanTechnologies |   |                         | 769     |                                 |        | 800 |  |
|                                                       |        |                         |         |                                 |        |
|                                                       |        | $                       | 43,700  |                                 | $      | 44,826 |  |
|                                                       |        |                         |         |                                 |        |

      Included inthe total assets of Titan Wireless as of March 31, 2003 areapproximately $90.2 million of gross accounts receivable, lessapproximately $40.5 million (classified as a non-currentliability) representing the amounts drawn on the non-recourse loanfacility with the African Merchant Bank to cover subcontract costson Titan Wireless’s contract with the Office of Post andTelecommunications (OPT).  The net accounts receivable of$49.7 million are comprised of approximately$31.8 million due from the OPT, $14.4 million due fromTitan Wireless’s customer in Nigeria, and $3.5 milliondue from customers of the GlobalNet business.  The currentliabilities of $36.4 million of Titan Wireless includeapproximately $8.7 million of remaining exit costs andapproximately $17.9 million of accounts payable and leaseobligations of GlobalNet.  Titan is endeavoring to divestthese businesses through stock and asset sales and is currently innegotiations with a number of potential buyers of GlobalNet. In the event that Titan is unsuccessful in its endeavors to sellGlobalNet, Titan may incur a net cash outlay of approximately$12.6 million, the net liability balance of GlobalNet, to shutdown the business.

      The currentassets of Titan Technologies are primarily comprised of accountsreceivable balances and prepaid assets.

**Note (5) Debt**

      AtMarch 31, 2003, total borrowings outstanding under theCompany's senior credit facility were $348.3 million at aweighted average interest rate of 4.15%.  Commitments underletters of credit were $12.3 million at March 31, 2003,$12.2 million of which reduces availability of the workingcapital line.  Of the total borrowings, $3.5 million wasshort-term.  At March 31, 2003, the Company was in compliancewith all financial covenants under its various debtagreements.

      On May 9,2003, the Companypriced a private placement of $200 million of its8% senior subordinated notes due 2011.  Titan intends to usethe net proceeds of this offering, together with proceeds fromborrowings of $50 million the Company expects to make under itsexisting revolving senior credit facility plus additional cash onhand, to redeem in their entirety its 53/4%HIGH TIDES convertible preferred securities and to pay associatedfees and expenses.  This offering is conditioned upon theeffectiveness of an amendment to our existing senior creditfacility to permit the offering and the redemption of the53/4% HIGH TIDES.  The amendment hasbeen approved by the requisite lenders in our bank group andbecomes effective upon the funding of the senior subordinatednotes, which is expected to occur on May 15, 2003.  Theamendment to the senior credit facility includes the modificationof certain financial covenants, specifically the total debt toEBITDA (as defined) ratio and a new total senior debt to EBITDAratio.  In addition, the amendment to the senior creditfacility also includes increased interest rate margins for loansmade or outstanding under the senior credit facility at times whenthe ratio of our total debt to EBITDA equals or exceeds 3.5 to1. The terms ofthe53/4% HIGH TIDES require that we provide holdersat least 20 days notice prior to any optional redemption ofthe53/4% HIGH TIDES.  The Company will providethat notice to the holders upon the consummation of the offering,and will deposit the net proceeds of the offering, together withenough additional cash to permit the mandatory redemption of thenotes, into a secured proceeds account for investment in UnitedStates Treasury securities.  The 8% senior subordinated notesare subject to mandatory redemption by Titan in the event that wedo not redeem the53/4% HIGH TIDES on or prior to the date 30 daysafter the date of issuance of the notes.  The redemption pricefor the mandatory redemption of the 8% senior subordinated notes is101% of the issue price of the notes, plus accrued and unpaidinterest to the redemption date.  The Company will incurapproximately $12.4 million in charges related to theextinguishment of the HIGH TIDES, comprised of the write-off of$7.9 million of remaining deferred financing costs of HIGHTIDES, a call premium of $3.6 million to redeem the HIGHTIDES, and approximately $0.9 million of interest during thecall period.  All extinguishment charges will be recorded inthe second quarter of 2003 as a charge to income from continuingoperations.  Following the redemption of the HIGH TIDES,availability on the working capital line will be reduced by$50 million for the borrowings expected on the Company’srevolving line of credit.  In addition, the borrowing capacityavailable on the line of credit is subject to compliance withfinancial and other covenants included in our senior creditfacility.

**Note (6) Other FinancialInformation**

      The Company'sonly element of other comprehensive income resulted from foreigncurrency translation adjustments in all periods reported, which isreflected in the Consolidated Statements of Stockholders'Equity.

      In connectionwith the determination of the fair value of assets acquired inconnection with acquisitions in 2001, 2000 and 1999, and pursuantto the provisions of SFAS No. 141, the Company has valued acquiredcontracts in process at contract price, minus the estimated coststo complete and an allowance for the normal industry profit on itseffort to complete such contracts.  This adjustment has beenreflected in the accompanying consolidated balance sheet as anincrease to goodwill and a corresponding increase to deferredprofit.  The Company recognized approximately$1.0 million and $0 million as a reduction of costsagainst the deferred profit in the first quarter of 2002 and 2003,respectively.  The remaining amount of $0.8 million atMarch 31, 2003 is estimated to reduce costs through2007.

*Earnings PerShare*

      The followingdata summarize information relating to the per share computationsfor income from continuing operations before the cumulative effectof a change in accounting principle:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **Threemonths ended March 31, 2003** |    | **Threemonths ended March 31, 2002** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        |                                      |         |                                      |        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **Income (Numerator)**               |    | **Shares (000's) (Denominator)**     |   | **Per Share Amounts** |   | **Income (Numerator)** |   | **Shares (000's) (Denominator)** |   | **Per Share Amounts** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        |                                      |         |                                      |        |  |  |  |  |  |  |  |  |
| Income from continuingoperations       before cumulative effectof       change in accountingprinciple                                                                                                                                                                                                                                                                                              |   | $                                    | 7,939   |                                      |        |   |   |   |   | $ | 7,913 |  |   |   |   |   |   |
| Less preferred stockdividends                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | (172    | )                                    |   |   |   |   |   |   | (172 | ) |   |   |   |   |   |
| Effect of minorityinterests                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 | — |                                      |        |   |   |   |   |   | (104 | ) |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        |                                      |         |                                      |        |  |  |  |  |  |  |  |  |
| Basic EPS:                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                 |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Income fromcontinuing operations             beforecumulative effect of             changein accounting principle             availableto common             stockholders  |   |                                 | 7,767   |                                      | 78,622 |   | $ | 0.10 |  |  | 7,637 |  | 70,771 |   | $ | 0.11 |  |
| Effect of dilutivesecurities:                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Stock optionsand warrants                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                 | — |                                      | 2,475  |   |   | — |  |   | — |   | 1,614 |   |   | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        |                                      |         |                                      |        |  |  |  |  |  |  |  |  |
| Diluted EPS:                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                 |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Income fromcontinuing operations             beforecumulative effect of             change in accounting principle             availableto common             stockholders |   | $                                    | 7,767   |                                      | 81,097 |   | $ | 0.10 |  | $ | 7,637 |  | 72,385 |   | $ | 0.11 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        |                                      |         |                                      |        |  |  |  |  |  |  |  |  |

      The effect ofthe minority interests primarily represents the dilutive effect ofoutstanding stock options of Titan’s subsidiaries, notablyTitan Systems in 2002.

      In the threemonths ended March 31, 2003, options and warrants to purchaseapproximately 4,689,100 shares of common stock at pricesranging from $9.76 to $29.74 per share were not included in thecomputation of diluted EPS as the effect would have beenanti-dilutive due to the exercise price.  Options to purchaseapproximately 1,218,400 shares of common stock at pricesranging from $20.70 to $47.50 per share were not includedin the computation of diluted EPS for the three month period endedMarch 31, 2002, as the effect would have been anti-dilutivedue to the exercise price.

      Approximately6,776,500 and 5,038,000 shares in 2003 and 2002, respectively, fromthe potential conversion of remarketable term income deferrableequity securities (HIGH TIDES) were not included in thecomputations as their effect was anti-dilutive.  Approximately537,400 and 460,000 shares of common stock in the three months in2003 and 2002, respectively, that could result from the conversionof cumulative convertible preferred stock were not included in thecomputations of diluted EPS, as the effect would have beenanti-dilutive.  The primary change in potential dilution from2002 to 2003 for the HIGH TIDES and preferred stock is the changein conversion ratios due to the SureBeam spin-off (see Note4).

*Select Balance SheetData*

      Following aredetails concerning certain balance sheet data:

|                                                |   | **March 31, 2003** |   | **December 31, 2002** |
|-----------------------------------------------------|--------|-------------------------|--------|----------------------------|
|                                                     |        |                         |        |                            |
| Inventories:                                        |   |                    |   |                       |   |   |
|       Materials       |   | $                       | 10,587 |                       | $ | 11,213 |
|       Work-in-process |   |                    | 12,600 |                       |   | 9,947 |
|       Finishedgoods   |   |                    | 8,196  |                       |   | 10,120 |
|                                                     |        |                         |        |                            |
|                                                |   | $                       | 31,383 |                       | $ | 31,280 |
|                                                     |        |                         |        |                            |

*Supplemental Cash FlowInformation*

      Supplementaldisclosure of cash flow information:

| ** **                                                                      | ** ** | **Threemonths ended March 31,****** |            |
|---------------------------------------------------------------------------------|------------|------------------------------------------|------------|
|                                                                                 |            |                                          |            |
| ** **                                                                      | ** ** | **2003**                                 | ** ** | **2002** |  |
|                                                                                 |            |                                          |            |  |  |
| Noncash investing andfinancing activities:                                      |       |                                     |       |   |   |   |  |
|       Issuance ofstock for acquisitions           |       | $                                        | —    |   | $ | 134,176 |  |
|       Sharescontributed to employee benefit plans |       |                                     | 3,567      |   |   | 3,604 |  |
|                                                                                 |            |                                          |            |  |  |
| Cash paid forinterest                                                           |       | $                                        | 8,085      |   | $ | 8,605 |  |
| Cash paid for (providedby) income tax                                           |       |                                     | 338        |  |  | (574 | ) |

      In addition,net cash proceeds of $26.8 million resulting from theacquisition of businesses, net of cash acquired was reported forthe three months ended March 31, 2002.  This was primarily theresult of cash acquired from Jaycor, which was a stock transactioncompleted in March 2002.

**Note (7) Commitments andContingencies**

*      *During the first quarter of2003, the Company entered into new long-term lease and subleaseagreements for office space in Virginia and Maryland as part of theCompany’s efforts to consolidate various facilities of itsgovernment business into centralized locations (see Note 2). The lease and subleases in Virginia require future minimum leasepayments of approximately $100.4 million over approximately 13years, commencing at various dates from May 2003 through May2004.  The lease in Maryland requires future minimum leasepayments of approximately $45.8 million over 10 years,commencing approximately July 1, 2004.

      OnAugust 16, 2002, Perimex International Corporation(“Perimex”) filed a complaint against Titan, TitanWireless and a former Titan Wireless employee in San Diego SuperiorCourt in San Diego, California.  The complaint alleges breachof contract, breach of the covenant of good faith and fair dealing,intentional interference with existing contractual relationshipsand prospective business advantage and violation of the Californiaunfair competition law arising from an alleged failure of TitanWireless to enter a joint venture with Perimex to provide wirelesstelecommunication services in Argentina and other related allegedmisconduct.  The complaint seeks damages of$53.65 million and seeks injunctive relief prohibiting Titanand Titan Wireless from transferring any of Titan Wireless’assets.  The court recently denied Perimex’s request fora preliminary injunction, sustained Titan and Titan Wireless’demurrer as to all causes of action in the complaint and grantedPerimex leave to amend the complaint.  The court also orderedPerimex to post a bond for $0.09 million to secure payment ofTitan and Titan Wireless’ costs if Titan prevails, or ifPerimex does not prevail.  Perimex elected not to post thebond and the complaint was voluntarily dismissed without prejudiceby Perimex.  However, Perimex has the right to file a newcomplaint.  The Company believes that Perimex’s claimsare without merit and the Company intends to defend its positionvigorously.

      We areinvolved in legal actions in the normal course of our business,including audits and investigations by various governmentalagencies that result from our work as a defense contractor. We and our subsidiaries are named as defendants in legalproceedings from time to time and we or our subsidiariesmay assert claims from time to time.  In addition, weacquire companies from time to time that have legal actions pendingagainst them at the time of acquisition. The Company has received a grand jurysubpoena from the Antitrust Division of the Department of Justicerequesting the production of documents relating to informationtechnology service we performed for the Air Force at Hanscom AirForce Base in Massachusetts.  The Company has been informedthat other companies who have performed such services have receivedsubpoenas as well.  We have been cooperating and will continueto cooperate fully with the investigation.

      The Company received a subpoena from theoffice of Inspector General for the National Aeronautics and SpaceAdministration, or NASA, seeking certain records relating tobilling for labor services in connection with our contracts withNASA. We also received a subpoena from the office of InspectorGeneral for the General Services Administration, or GSA, seekingsimilar records relating to billing for labor categories inconnection with contracts with GSA. We are fully cooperating withthe government’s inquiries in these areas.

      Based uponcurrent information and review, we believe the ultimate liabilityor recovery with respect to pending actions would not materiallyaffect our consolidated financial position or results ofoperations.  However, our evaluation of the likely impact ofthese actions could change in the future and an unfavorableoutcome, depending upon the amount and timing, could have amaterial adverse effect on the Company’s results ofoperations or cash flows in a future period.

**Note (8) Related PartyTransactions**

*Agreements WithExecutive Officers*

      In 2000, theCompany entered into an agreement with the Company’s Chairmanof the Board, President and Chief Executive Officer and theCompany’s General Counsel (hereinafter referred to as the"Executives") to reinforce and encourage their continued dedicationwithout distraction arising from the possibility of a change incontrol of Titan. The terms of the agreements provide that, in theevent of a Change in Control (as defined), and the termination ofthe Executive's employment at any time during the three-year periodthereafter by the Company other than for cause (as defined) or bythe Executive for good reason (as defined), the Executives will bepaid a lump sum amount equal to three times their base salary plusmaximum annual bonus. Additionally, the Executives will receive aprorated bonus for the year of termination and continuation ofmedical and dental benefits covering the Executives and theirdependents for three years following the termination.

      Under theagreements, Change in Control is deemed to have occurred in theevent of (i) the acquisition by any person, together with itsaffiliates, of beneficial ownership of our voting securitiespossessing 20% or more of the combined voting power of ouroutstanding voting securities, (ii) the majority of themembers of the board being comprised of individuals other thanthose who were members at the time of execution of the agreements,unless the new members elected were approved or nominated by amajority of the members of the then-incumbent board or(iii) the consummation of a merger, reorganization,consolidation or sale or other disposition of all or substantiallyall of our assets, subject to certain exceptions.

      OnApril 2, 2003, the Company entered into an EmploymentAgreement with the Company’s Chairman of the Board, Presidentand Chief Executive Officer (hereinafter referred to as the“CEO”) in connection with his duties in thesepositions.  Among other things, the terms of the agreementprovide for continued employment of the CEO by Titan for a term ofthree years, eligibility to receive annual incentive awards and toparticipate in long-term incentive, employee benefit and retirementprograms.  In the event that the CEO is terminated withoutcause, or retires at the end of the term of the agreement, he willbe entitled to a lump sum equal to three times the sum of hiscurrent base salary and target bonus, a prorated bonus for the yearof termination, vesting of all outstanding stock options andparticipation for the CEO and his dependents in our extended healthbenefits program for retired senior executives.

      Also, onApril 2, 2003 the Company entered into Employment Agreementswith the Company’s General Counsel and the Company’sChief Financial Officer (hereinafter referred to as the“Officers”) in connection with their duties in thosepositions. Among other things, the terms of their agreementsprovide for continued employment by Titan for a term of two years,eligibility to receive annual incentive awards and to participatein long-term incentive, employee benefit and retirement programs.In the event of termination without cause, the Officers will eachbe entitled to a lump sum equal to two times the sum of theirrespective current base salaries and target bonuses, a proratedbonus for the year of termination, vesting of all outstanding stockoptions and continued medical and dental benefits coverage for aperiod of two years. The Chairman and Officers have agreed to noncompetition and non solicitation covenants in connection with theirrespective employment agreements.

*Certain RelationshipsAnd Related Transactions*

      Inconjunction with Titan’s plan to exit its internationaltelecommunications business, Titan entered into an agreement withGeolutions, Inc. (“Geolutions”) to assume and performall of Titan Wireless’s outstanding warrantyobligations.  Geolutions is a newly formed company, founded bya former executive of Titan Wireless and former officer ofTitan.  Titan has a fixed price contract of $1.9 million,plus incidental expenses of up to $0.6 million and other thirdparty costs of an aggregate maximum of $1.4 million, which ispayable through mid 2004, the period over which Titan’swarranty obligations exist on its existing customercontracts.  The contract is cancelable by Titan under certaincircumstances of non-performance by Geolutions.  Inconjunction with Titan’s agreement with Geolutions, Titan hasassigned its existing warranty obligations in its internationaltelecommunications business with its existing customers toGeolutions.  If Geolutions fails to perform these contractedobligations, Titan Wireless remains obligated to perform them andmay incur costs in excess of these contracted amounts.

      InMarch 2002, our Board of Directors adopted a stock optionrelinquishment program, the primary purpose of which was to alignthe interests of our directors and senior executives more closelywith our stockholders' interests by allowing directors and seniorexecutives to participate in the appreciation in our equityvalue:
|        | ·       | without requiring ourDirectors and executive officers to trade shares of our commonstock obtained through the exercise of options on the open market;and |
|--------------------------------------|----------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                | *      *                                                                                                                   |
|                                 |                | ·                                                                                                                   | without the dilutive andpotentially stock-price depressive effects associated with theexercise and subsequent sale of stock option shares. |

        Theprogram also was intended to assist the participants with theirindividual financial planning. Under the program, a participant wasallowed to relinquish eligible, in-the-money stock options inexchange for a loan, the principal amount of which was 150% of thedifference between the aggregate exercise price of the options andthe product of (i) the number of shares issuable upon exerciseof the options and (ii) a 20 day trailing average of thedaily high and low sales price of our common stock prior torelinquishment. The loans bear interest at a rate equal to theapplicable federal rate as published by the Internal RevenueService for the month in which the loan was made. The loans weremade contingent upon the participant's utilizing a portion of theloan proceeds to purchase a life insurance policy with a deathbenefit sufficient to repay the loan and accrued interest thereonupon maturity.

        Underthe program the following transactions have occurred:
|        | ·       | Dr. Ray, Chairman ofthe Board and Chief Executive Officer: 222,380 options relinquishedon June 18, 2002, $3,985,725 principal amount of loan, 5.48%interest per annum; |
|--------------------------------------|----------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                | *      *                                                                                                                                           |
|                                 |                | ·                                                                                                                                           | Mr. Fink, Director:15,000 options relinquished on June 27, 2002, $336,337.50principal amount of loan, 5.48% interest per annum; and |
|        |                | *      *                                                                                                                                           |
|                                 |                | ·                                                                                                                                           | Mr. Alexander,Director: 19,972 options relinquished effective June 19, 2002,$499,999 principal amount of loan, 5.48% interest perannum. |

      The amount ofthe stock options relinquished under the program do not reflect anyadjustment as a result of the spin-off of our subsidiary SureBeamCorporation August 5, 2002, since the relinquishment occurredbefore the date for said adjustment. Titan has recorded interest income of $0.2million to date related to the accrued interest on the outstandingloans due from the directors noted above. 

      As of theeffective date of the Sarbanes-Oxley Act in July 2002, whichprecludes such loans to company officers and directors, the StockOption and Relinquishment Plan was no longer available to ourDirectors and executive officers.

*SureBeamAgreements*

      Prior to thespin-off of SureBeam Corporation, Titan and SureBeam entered into anumber of agreements.

      *CreditAgreement*.  We have extended a $50 million seniorsecured revolving loan commitment to SureBeam that allows SureBeamto borrow up to $29.5 million through the third quarter of2002, and up to $12.5 million per quarter beginning in thefourth quarter of 2002 through the fourth quarter of 2003, subjectto the $50 million limitation on borrowing.  The amountavailable for borrowing in the second, third and fourth quarters of2003 is based upon SureBeam’s earnings before interest,taxes, depreciation and amortization (EBITDA) for the prior quarteras a percentage of the EBITDA target in its financial plansubmitted to Titan.  As of March 31, 2003, SureBeam hadborrowed $25 million on this facility, of which$21.6 million is reflected as a non-current asset in OtherAssets and $3.4 million is reflected as a current asset inPrepaid expenses and other on the consolidated balance sheet. On February 3, 2003, SureBeam filed a Form 8-K with the Securitiesand Exchange Commission wherein SureBeam stated that they do notanticipate borrowing additional amounts on the credit facilityduring 2003 or during the remaining period that the credit facilityis outstanding.  There have been no additional borrowings in2003.

      SureBeam isobligated to make quarterly principal payments on the creditfacility as follows:  13.75% of the outstanding principalbalance as of December 31, 2003 during each quarter in 2004;25% of the outstanding principal balance as of December 31,2004 during each quarter in 2005; and all remaining principal byDecember 31, 2005.  In March 2003, SureBeam and Titanentered into an agreement amending the credit agreement.  Thatamendment waived, subject to certain conditions, SureBeam’sobligation to use net proceeds from the sale of up to$25 million of its equity securities to make mandatorypayments under the credit agreement during the period of March 2003through September 2004.  In connection therewith, SureBeamagreed to provide for certain change orders and the furnishing ofmaintenance services under the Equipment ServicesAgreement.

      In addition,Titan has guaranteed certain lease obligations of SureBeam, andSureBeam is obligated to reimburse Titan for any payments we makeunder these guarantees.  Any guarantee payments Titan makesreduce amounts available for future borrowing under the creditagreement.  The aggregate amount of the lease obligationsTitan has guaranteed as of March 31, 2003 is approximately$23.1 million.  The leases extend through periods endingin 2020.

      In relationto SureBeam's strategic alliance with Hawaii Pride, Titan hasguaranteed up to the greater of SureBeam's equity interest inHawaii Pride (which is currently zero), or 19.9% of Hawaii Pride's$6.8 million, 15-year loan from its lender, Web Bank.  Asof March 31, 2003, Titan has guaranteed approximately$1.2 million, or 19.9% of the current loan balance of$6.0 million.  In the event that Hawaii Pride defaults onthe loan, Titan may be obligated to cover any defaults on theentire outstanding balance of the loan. 

      *TaxAllocation Agreement and Tax Disaffiliation and Tax SharingAgreement*.  We have agreed to pay SureBeam for any taxbenefits we realized through our use of net operating lossesgenerated by SureBeam while it was a member of our consolidatedgroup for federal income tax purposes.  Through 2001, Titanutilized net operating losses previously generated by SureBeamwhich resulted in an estimated liability of approximately$6.2 million.  The Company estimates that in 2002 it willutilize net operating losses previously generated by SureBeam whichmay result in a liability of approximately $1.9 million, whichwill be finalized upon completion of the Company’s 2002corporate tax return.  As of March 31, 2003, all amounts havebeen accrued related to the estimated liability related to theutilization of the net operating losses previously generated bySureBeam.  Payment is due the earlier of the first year inwhich SureBeam could have used those losses to reduce its taxes orwhen the net operating losses expire.  SureBeam has notgenerated taxable income since its inception, and we do not know ifand when SureBeam will generate taxable income and, accordingly,when such payment will become due.  The net operating lossesgenerated in 2001 and 2002 expire in 2021 and 2022,respectively.

      *OtherAgreements.*  In connection with the license Titanpurchased to use SureBeam’s intellectual property, theremaining unamortized balance of $7.4 million at March 31,2003, is reflected as a non-current asset in Other Assets in theconsolidated balance sheet.  The license is being amortizedover a 15 year life, the average life of the relatedpatents.

      Titan hasagreed to purchase all of its requirements for electron beamaccelerators from SureBeam through December 31, 2003 unlessSureBeam does not offer competitive pricing or cannot meet requireddelivery schedules.  The equipment and services are priced atSureBeam’s cost plus a 20% markup unless Titan agrees to analternative pricing arrangement for a purchaseorder. 

      Titan hassubleased to SureBeam approximately 70,522 square feet used for itsservice center in Sioux City, Iowa, as well as facilities inDublin, California, Omaha, Nebraska and Saudi Arabia. Generally, SureBeam is paying Titan sublease payments equal toTitan’s monthly expense under these leases plus a 10%markup.  SureBeam is obligated to continue to seek to haveitself substituted as the direct lessee under each master lease sothat the sublease can be terminated.

**THE TITAN CORPORATION**

**Item 2.    Management’sDiscussion and Analysis of Financial Condition and Results ofOperations**

**(Dollaramounts in thousands, except share and per share data, or asotherwise noted)**

## **Results ofOperations**

      As a result of Titan’s decision in the third quarterof 2002 to exit substantially all of its remaining commercialbusinesses and because most of Titan’s remaining operationsare its government businesses, Titan is no longer reporting theresults of operations by segments in accordance with SFASNo. 131, “Disclosures about Segments of an Enterpriseand Related Information.”  Also, as a result of thesedecisions, the Company merged its Titan Systems Corporationsubsidiary, which encompassed its primary government businesses,into The Titan Corporation on September 25,2002. 

### ***Revenues***

      Ourconsolidated revenues increased from $314.3 million in thefirst quarter of 2002 to $377.9 million in the first quarterof 2003, reflecting a 20% increase.  Increased revenues wereattributable to our core national security business, whichcomprised over 99% of our revenue for the period.  The mostnotable contributors to the increase in revenues were continuedgrowth on our enterprise information technology contract with theSpecial Operations Command, which contributed approximately$12.6 million of increased revenues and increased demand fromthe intelligence community for technical services including systemsintegration services, including our contact with the Army’sIntelligence and Security Command for linguist support, whichexperienced increased demand resulting from the war on terrorismand the war in Iraq, which resulted in approximately$11.3 million of increased revenues.  In addition,increased revenues were due in part to increased work in areasrelated to homeland security such as continuity of operationsplanning and emergency response training and work for the AirForce’s Electronic Systems Center (ESC) on a variety oftechnical, engineering, systems integration and acquisition supportcontracts.  Revenues from the Navy also increased in the firstquarter in large part as a result of increased work for the NavalAir Systems Command for systems engineering and program supportservices.  Also, the acquisitions of Jaycor in the firstquarter of 2002 and Wave Science in the fourth quarter of 2002,contributed $19.7 million of the increase.

***Selling, General andAdministrative***

      Our SG&Aexpenses increased from $34.7 million in the first quarter of2002, to $39.5 million in the first quarter of 2003, a 14%increase.  The increase is primarily a result of the increasedrevenues discussed above and increased deferred compensationamortization in 2003.  Included in SG&A was amortizationof purchased intangibles of $1.4 million and$1.2 million, respectively, and deferred compensationamortization expense of $1.0 million and $2.8 million,respectively, in the quarters ended March 31, 2002 and 2003. The increase in the deferred compensation in the quarter endedMarch 31, 2003 resulted from the merger of Titan’s defensesubsidiary, Titan Systems, into Titan, which occurred onSeptember 25, 2002, and resulted in the exchange of alloutstanding Titan Systems stock options for Titan Corporation stockoptions.  Excluding the amortization of purchased intangiblesand deferred compensation, SG&A decreased as a percentage ofrevenues from 10.3% of revenues in the quarter ended March 31,2002 to 9.4% in the quarter ended March 31, 2003.  Thedecrease in 2003 is primarily attributable to overall increasedeconomies of scale with higher revenues.

***Research andDevelopment***

      Our R&Dexpenses remained fairly constant at $2.4 million in the firstquarters of 2002 and 2003.  As a percentage of revenues,R&D expenses decreased slightly from 0.8% in the first quarterof 2002 to 0.6% in the first quarter of 2003.

### ***Exit andRestructuring Charges and Other***

*Fiscal 2002Charges*

      Exit andrestructuring charges and other of $1.5 million in the firstquarter of 2002 were related to the shut-down of Cayenta’sheadquarters office and network operations center. 

***OperatingProfit***

*      *Our operating profit decreased from operating profitof $22.3 million in the three months ended March 31, 2002 tooperating profit of $20.7 million in the three months endedMarch 31, 2003.  Included in the operating results for thethree months ended March 31, 2002 is deferred compensationamortization expense of $1.0 million, amortization ofpurchased intangibles of $1.4 million and exit andrestructuring charges and other of $1.5 million. Included in the operating results for the three months ended March31, 2003 is deferred compensation amortization expense of$2.8 million and amortization of purchased intangibles of$1.2 million.  Excluding the impact of these charges,operating income decreased from $26.2 million in the firstquarter of 2002 to $24.8 million in the first quarter of2003.  The year over year decline in overall operating profitwas primarily related to our non-core commercial electron beammedical products sterilization and mail sanitation business, whichhad particularly strong results in the first quarter of 2002related to our contract with the United States Postal Service todeliver mail sanitation systems.  Conversely, operating marginin the first quarter of 2003 was adversely impacted by a$1 million loss in this business, which experienced higherthan expected costs in delivering medical sterilization systems totwo customers.

***Interest Expense,Net***

       Our netinterest expense decreased from $8.2 million in the firstquarter of 2002, to $7.5 million in the first quarter of2003.  Net interest expense decreased primarily as a result ofreduced effective interest rates on our credit facility as well asan increase of interest income in 2003.  The increase ininterest income was primarily related to interest income due fromSureBeam on the outstanding balance of its creditfacility.*** *** Borrowings from our senior creditfacility, excluding working capital lines from acquired companies,averaged $354.3 million for the three months ended March 31,2003, at a weighted average rate of 4.68%, compared to$312.5 million in the three months ended March 31, 2002, atweighted average interest rates of 5.04%. 

***IncomeTaxes***

       Consolidatedincome taxes reflect effective rates of 44% in the quarter endedMarch 31, 2002, compared to 40% in the quarter ended March 31,2003.  The 2003 rate reflects the expected provision rate forthe full year.

***Loss FromDiscontinued Operations***

      In thequarter ended March 31, 2002, loss from discontinuedoperations was $1.4 million, net of a tax benefit of$1.5 million.  The net loss was primarily related to netoperating losses of $1.9 million and $0.7 million in theCompany’s LinCom Wireless and Titan Wireless businesses,respectively, offset in part by net income of $1.2 milliongenerated in our commercial information technologybusiness.

      In thequarter ended March 31, 2003, loss from discontinued operations was$0.9 million, net of a tax benefit of $0.5 million. The net loss included $0.3 million in net operating lossesrelated to the exit of the Company’s internationaltelecommunications business, Titan Wireless, and $0.6 millionin net operating losses from the disposal or wind-down of theCompany’s commercial information technology business and theLinCom Wireless business which were discontinued in the first andthird quarters of 2002.

***Net Income(Loss)***

      In thequarter ended March 31, 2002, we reported a net loss of$33.6 million, compared to net income of $7.0 million inthe quarter ended March 31, 2003.  Loss from discontinuedoperations was $1.4 million in the quarter ended March 31,2002, compared to a loss of $0.9 million in the quarter endedMarch 31, 2003.  Included in the net loss for the three monthsended March 31, 2002, is a charge of $40.1 million for theCompany’s adoption of SFAS No. 142, all related todiscontinued operations, which is reported as a cumulative effectof a change in accounting principle.

## **Liquidity and CapitalResources**

      We generatedcash of approximately $5.6 million from our continuingoperations during the three months ended March 31, 2003, primarilyresulting from our core government business, net of an increase inreceivable balances of approximately $26.4 million. Accounts receivable collections and billings of unbilledreceivables have historically been more difficult for us in thefirst quarter of the year, which this year was further adverselyaffected by the delayed passage of the government budget for 2003,which impacted funding for some of our federal civilian agencycontracts.  Our investing activities used net cash ofapproximately $2.5 million, primarily for capitalexpenditures.  Financing activities provided$1.0 million, primarily from the exercise of stockoptions.

      At March 31,2003, total borrowings under our credit facility were$348.3 million at a weighted average interest rate of4.15%.  Commitments under letters of credit were$12.3 million at March 31, 2003, $12.2 million of whichreduce availability of our working capital line, resulting in$122.8 million of availability on our working capital line atMarch 31, 2003.  Of the total borrowings, $3.5 millionwas short-term.  At March 31, 2003, the Company was incompliance with all financial covenants. 

      On May 9,2003, the Companypriced a private placement of $200 million of its8% senior subordinated notes due 2011.  Titan intends to usethe net proceeds of this offering, together with proceeds fromborrowings of $50 million the Company expects to make under itsexisting revolving senior credit facility plus additional cash onhand, to redeem in their entirety its 53/4%HIGH TIDES convertible preferred securities and to pay associatedfees and expenses.  This offering is conditioned upon theeffectiveness of an amendment to our existing senior creditfacility to permit the offering and the redemption of the53/4% HIGH TIDES.  The amendment hasbeen approved by the requisite lenders in our bank group andbecomes effective upon the funding of the senior subordinatednotes, which is expected to occur on May 15, 2003.  Theamendment to the senior credit facility includes the modificationof certain financial covenants, specifically the total debt toEBITDA (as defined) ratio and a new total senior debt to EBITDAratio.  In addition, the amendment to the senior creditfacility also includes increased interest rate margins for loansmade or outstanding under the senior credit facility at times whenthe ratio of our total debt to EBITDA equals or exceeds 3.5 to1. The terms ofthe53/4% HIGH TIDES require that we provide holdersat least 20 days notice prior to any optional redemption ofthe53/4% HIGH TIDES.  The Company will providethat notice to the holders upon the consummation of the offering,and will deposit the net proceeds of the offering, together withenough additional cash to permit the mandatory redemption of thenotes, into a secured proceeds account for investment in UnitedStates Treasury securities.  The 8% senior subordinated notesare subject to mandatory redemption by Titan in the event that wedo not redeem the53/4% HIGH TIDES on or prior to the date 30 daysafter the date of issuance of the notes.  The redemption pricefor the mandatory redemption of the 8% senior subordinated notes is101% of the issue price of the notes, plus accrued and unpaidinterest to the redemption date.  The Company will incurapproximately $12.4 million in charges related to theextinguishment of the HIGH TIDES, comprised of the write-off of$7.9 million of remaining deferred financing costs of HIGHTIDES, a call premium of $3.6 million to redeem the HIGHTIDES, and approximately $0.9 million of interest during thecall period.  All extinguishment charges will be recorded inthe second quarter of 2003 as a charge to income from continuingoperations.  Following the redemption of the HIGH TIDES,availability on the working capital line will be reduced by$50 million for the borrowings expected on the Company’srevolving line of credit.  In addition, the borrowing capacityavailable on the line of credit is subject to compliance withfinancial and other covenants included in our senior creditfacility.

      Related tothe Company’s contract with the national telephone company ofBenin (the “OPT”), Titan has a $72.3 million grossreceivable due from the OPT, which is reflected in Non-currentAssets of Discontinued Operations as of March 31, 2003.  Inaddition, approximately $40.5 million was drawn on thenon-recourse loan with the Africa Merchant Bank, which has beenreflected in Non-Current Liabilities of Discontinued Operations inthe accompanying consolidated balance sheet.  The$40.5 million drawn on the facility reflects the amount thathas been funded by the Africa Merchant Bank to cover subcontractcosts.  As of March 31, 2003, the carrying value, net ofnon-recourse debt, due on this contract was approximately$31.8 million.  During 2002, approximately$2.4 million was collected on the Company’s receivablefrom the OPT, and approximately $3.7 million has beencollected in the quarter ended March 31, 2003. 

      Titan isendeavoring to divest discontinued businesses through stock andasset sales, and is currently in negotiations with a number ofpotential buyers, including buyers interested in GlobalNet. In the event that Titan is unsuccessful in its endeavors specificto sell GlobalNet, Titan may have to pay the remaining netliabilities and incur a net cash outlay of approximately$12.6 million to shut down the business.  Titan may alsoincur unforeseen liabilities if it decides to shut downGlobalNet.

      There are noTitan guarantees of debt, either directly or indirectly, associatedwith Ivoire Telecom or Sakon or any other unconsolidatedsubsidiaries other than approximately $1.4 million ofequipment financing.

      TheCompany’s $50 million senior secured revolving loancommitment to SureBeam provides for borrowings up to$29.5 million through the third quarter of 2002, and up to$12.5 million per quarter beginning in the fourth quarter of2002 through the fourth quarter of 2003, subject to the$50 million limitation on borrowing.  The amountavailable for borrowing in the second, third and fourth quarters of2003 is based upon SureBeam’s earnings before interest,taxes, depreciation and amortization (EBITDA) for the prior quarteras a percentage of the EBITDA target in its financial plansubmitted to Titan.  Our aggregate levelof indebtedness, and our debt service requirements, may increase tothe extent we loan additional funds to SureBeam under the creditfacility. SureBeam is obligated to make quarterly principalpayments on the credit facility as follows:  13.75% of theoutstanding principal balance as of December 31, 2003 during eachquarter in 2004; 25% of the outstanding principal balance as ofDecember 31, 2004 during each quarter in 2005; and all remainingprincipal by December 31, 2005.  In addition, with someexceptions, including as described below in connection with ourrecent amendment to the credit agreement, SureBeam is obligated touse net proceeds from the sale of assets and its securities torepay amounts advanced under this facility.  In March 2003,Titan and SureBeam entered into an agreement amending the creditagreement.  That amendment waived, subject to certainconditions, SureBeam’s obligation to use net proceeds fromthe sale of up to $25 million of its equity securities during theperiod from March 2003 through September 2004 to make mandatorypayments under the credit agreement.  In connection therewith,SureBeam agreed to provide for certain change orders and thefurnishing of maintenance services under the Equipment ServicesAgreement between us and SureBeam executed in February 2002. Interest is payable monthly beginning in January 2003. As of March 31, 2003, SureBeam had borrowed $25 million onthis facility.  On February 3, 2003, SureBeam filed a Form 8-Kwith the Securities and Exchange Commission wherein SureBeam statedthat they do not anticipate borrowing additional amounts on thecredit facility during 2003 or during the remaining period that thecredit facility is outstanding.  There have been no additionalborrowings in 2003.

      In addition,Titan has guaranteed certain lease obligations of SureBeamand SureBeam is obligated toreimburse us for any payments we make under these guarantees. Any guarantee payments we make reduce amounts available for futureborrowing under the credit agreement.  Some of the guaranteedleases have longer terms than the credit facility.  If Titanremains a guarantor at the maturity date for the credit facility,then SureBeam will enter into a reimbursement agreement with Titancovering the outstanding guarantees.  The aggregate amount of the leaseobligations Titan has guaranteed as of March 31, 2003 isapproximately $23.1 million.  The leases extend throughperiods ending in 2020.  In relation to SureBeam’sstrategic alliance with Hawaii Pride, Titan has guaranteed up tothe greater of SureBeam’s equity interest in Hawaii Pride(which is currently zero), or 19.9% of Hawaii Pride’s $6.8million, 15-year loan from its lender, Web Bank.  As of March31, 2003, Titan has guaranteed approximately $1.2 million, or19.9% of the current loan balance of $6.0 million.  Inthe event Hawaii Pride defaults on the loan, Titan may be obligatedto cover any defaults on the entire outstanding balance of theloan. 

      Titan andSureBeam have entered into an exclusive contract for the purchaseand sale of electronic beam accelerators through December 31, 2003unless SureBeam does not offer competitive pricing.

      Our strategicgoals include the pay down of indebtedness, continued funding ofcapital expenditures and the funding of potential strategicacquisitions.  We plan to finance these requirements from acombination of sources, which include cash generation from our corebusinesses, our credit facility and potential cash generated fromthe disposal of discontinued businesses.  Management believesthat the combination of our existing cash, amounts available underour credit facility and cash flow expected to be generated from ouroperations will be sufficient to fund planned investments andworking capital requirements for at least the next twelvemonths.  However, we could elect, or we could be required, toraise additional funds during that period and we may need to raiseadditional capital in the future.  Additional capital may notbe available at all, or may not be available on terms favorable tous.  Any additional issuance of equity or equity-linkedsecurities may result in substantial dilution to ourstockholders.  Management is continually monitoring andreevaluating its level of investment in all of its operations andthe financing sources available to achieve our goals.

**Forward LookingInformation: Certain Cautionary Statements: "Safe Harbor" Statementunder the Private Securities Litigation Reform Act of1995:**

      Statementscontained in this Management's Discussion and Analysis of FinancialCondition and Results of Operations and otherwise which are nothistorical facts are forward looking statements within the meaningof Section 27A of the Securities Act of 1933 andSection 21E of the Securities Exchange Act of 1934. Examples of such forward looking statements include ourexpectations regarding our continuing funding for the advancementof our strategic goals, including the intent to pay downindebtedness, acquisitions, the Company’s expectationsregarding the operations of Titan Wireless, that it believes thatit will be able to complete planned exit actions in Titan Wireless,that it will collect remaining receivable balances and sellGlobalNet in Titan Wireless, that the Company will be able to sellor dispose of any assets which are not material to its corebusiness, that the Company’s collection cycle will improve,and management’s belief as to the outcome of pendinglitigation or claims and any other expressions of belief,expectation, anticipation, plan, strategies, intention,possibilities or elections, including statements of events orcontingencies that may or could occur or similarstatements.  Actual results may differ materially fromthose stated or implied in the forward looking statements. Further, certain forward looking statements are based uponassumptions of future events which may not prove to beaccurate and are subject to risks and uncertainties that couldcause actual results to differ materially from those set forth orimplied by forward looking statements.  These risks anduncertainties include but are not limited to those referred to inthe Company's Annual Report on Form 10-K for the year endedDecember 31, 2002, including its ability to access the capitalmarkets, dependence on continued funding of U.S. Department ofDefense and federal civilian agency programs, that the Governmentwill fund, continue to make awards or exercise options, and issuetask orders against the potential funding ceiling of contracts,contract termination risks, risks associated with acquiring othercompanies, including integration risks, risks associated withdivesting its discontinued commercial businesses, and other risksdescribed in the Company's Securities and Exchange Commissionfilings.

**Item 4.  Controls andProcedures.**

      Evaluation ofDisclosure Control and Procedures.

      Under thesupervision and with the participation of our executive management,including our Chief Executive Officer and Chief Financial Officer,we performed an evaluation of the effectiveness and design of ourdisclosure controls and procedures within 90 days before the filingdate of this quarterly report.  Based on that evaluation, ourexecutive management, including our Chief Executive Officer and ourChief Financial Officer, concluded that our disclosure controls andprocedures are effective.

      Changes ininternal controls.

      There havebeen no significant changes in our internal controls or proceduresor other factors that could significantly affect our internalcontrols.

**PARTII—OTHER INFORMATIONTHE TITAN CORPORATION**

**Item 1.  LegalProceedings.**

      OnAugust 16, 2002, Perimex International Corporation(“Perimex”) filed a complaint against Titan, TitanWireless and a former Titan Wireless employee in San Diego SuperiorCourt in San Diego, California.  The complaint alleges breachof contract, breach of the covenant of good faith and fair dealing,intentional interference with existing contractual relationshipsand prospective business advantage and violation of the Californiaunfair competition law arising from an alleged failure of TitanWireless to enter a joint venture with Perimex to provide wirelesstelecommunication services in Argentina and other related allegedmisconduct.  The complaint seeks damages of$53.65 million and seeks injunctive relief prohibiting Titanand Titan Wireless from transferring any of Titan Wireless’assets.  The court recently denied Perimex’s request fora preliminary injunction, sustained Titan and Titan Wireless’demurrer as to all causes of action in the complaint and grantedPerimex leave to amend the complaint.  The court also orderedPerimex to post a bond for $0.09 million to secure payment ofTitan and Titan Wireless’ costs if Titan prevails, or ifPerimex does not prevail.  Perimex elected not to post thebond and the complaint was voluntarily dismissed without prejudiceby Perimex.  However, Perimex has the right to file a newcomplaint.  The Company believes that Perimex’s claimsare without merit and the Company intends to defend its positionvigorously.

      In theordinary course of business, defense contractors are subject tomany levels of audit and investigation by various governmentagencies. TheCompany has received a grand jury subpoena from the AntitrustDivision of the Department of Justice requesting the production ofdocuments relating to information technology service we performedfor the Air Force at Hanscom Air Force Base in Massachusetts. The Company has been informed that other companies who haveperformed such services have received subpoenas as well.  Wehave been cooperating and will continue to cooperate fully with theinvestigation. 

      We received asubpoena from the office of Inspector General for the NationalAeronautics and Space Administration, or NASA, seeking certainrecords relating to billing for labor services in connection withour contracts with NASA. We also received a subpoena from theoffice of Inspector General for the General ServicesAdministration, or GSA, seeking similar records relating to billingfor labor categories in connection with contracts with GSA. We arefully cooperating with the government’s inquiries in theseareas. 

      Further, we are subject to claimsand from time to time are named as defendants in various types oflegal proceedings.  We may also assert claims from timeto time.  Based upon current information and review, in theopinion of management, the amount of ultimate liability or recoverywith respect to these actions will not materially affect ourfinancial position or results of operations taken as a whole. However, our evaluation of the likely impact of these actions couldchange in the future and an unfavorable outcome, depending upon theamount and timing, could have a material adverse effect on ourresults of operations or our cash flows in a futureperiod.

**Item 6.  Exhibits and Reportson Form 8-K.**

| a.                                                              |        | List ofexhibits:                                                                                                                      |
|--------------------------------------------------------------------------------|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
|                                                                           |
|               | 10.1                                 |                                                                                                         | Agreement of Leaseby and between NBP 220, LLC and The TitanCorporation (“220 National Business Park”), dated March31, 2003, including all exhibits and attachments. |
|                                                                                |                                      |                                                                                                                                       |
|               | 10.2                                 |                                                                                                         | Deed of Lease dated April1, 2003, by and between Two Freedom Square, L.L.C. and The TitanCorporation, including all exhibits andattachments. |
|                                                                                |                                      |                                                                                                                                       |
|               | 10.3                                 |                                                                                                         | Employment Agreement, madeand entered into as of April 3, 2003 by and between The TitanCorporation, a Delaware corporation, and Dr. Gene W.Ray. |
|                                                                                |                                      |                                                                                                                                       |
|               | 10.4                                 |                                                                                                         | Employment Agreement, madeand entered into as of April 3, 2003 by and between The TitanCorporation, a Delaware corporation, and Mark Sopp. |
|                                                                                |                                      |                                   |
|               | 10.5                                 |                                                                                                         | Employment Agreement, madeand entered into as of April 3, 2003 by and between The TitanCorporation, a Delaware corporation, and Nicholas J.Costanza. |
|                                                                                |                                      |                                   |
|               | 99.1                                 |                                                                                                         | Certification of PeriodicFinancial Reports pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of2002. |
|                                                                                |                                      |                                   |
| b.                                                                             |                                 | During the three monthsended March 31, 2003, and through the date of this filing, theCompany filed the following Forms 8-K and 8-K/A: |
|                                                                           |
|                                                                           | (1)                                  |                                                                                                                                  | Current Report on Form 8-Kdated April 29, 2003 and filed on April 30, 2003 to furnishRegulation FD Disclosure pursuant to “Item 12.  Resultsof Operations and Financial Condition” on Form 8-K inaccordance with the Securities and Exchange Commission’sRelease Nos. 33-8216 and 34-47583. |
|                                                                           |
|                                                                           | (2)                                  |                                                                                                                                  | Current Report on Form 8-Kdated and filed on April 30, 2003, to announce the Company’sintention to offer $200 million of senior subordinated notesdue 2001 for sale in a private placement. |
|                                                                                |

**THE TITAN CORPORATIONSIGNATURES**

      Pursuant tothe requirements of the Securities Exchange Act of 1934, theRegistrant has duly caused this report to be signed on its behalfby the undersigned, thereunto duly authorized.

| Dated:  May 13,2003 |   | THE TITANCORPORATION |
|-------------------------------|--------|----------------------|
|                          |   | By:                  | /s/ GENE W. RAY |
|                               |        |                      |  |
|                               |        |                      | Gene W.Ray*Chief Executive Officer, Chairman of the Board* |
|                          |   | By:                  | /s/ MARK W. SOPP |
|                               |        |                      |  |
|                               |        |                      | Mark W.Sopp*Senior Vice President, Chief Financial Officer* |
|                          |   | By:                  | /s/ DEANNA J. HOM |
|                               |        |                      |  |
|                               |        |                      | Deanna J.Hom*Vice President, Corporate Controller (Principal Accounting Officer)* |

CERTIFICATION

I, Gene W. Ray, certifythat:

1. I havereviewed this quarterly report on Form 10-Q of The TitanCorporation;

2. Basedon my knowledge, this quarterly report does not contain any untruestatement of a material fact or omit to state a material factnecessary to make the statements made, in light of thecircumstances under which such statements were made, not misleadingwith respect to the period covered by this quarterlyreport;

3. Basedon my knowledge, the financial statements, and other financialinformation included in this quarterly report, fairly present inall material respects the financial condition, results ofoperations and cash flows of The Titan Corporation as of, and for,the periods presented in this quarterly report;

4. TitanCorporation’s other certifying officers and I are responsiblefor establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

a)designed such disclosure controls and procedures to ensure thatmaterial information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which thisquarterly report is being prepared;

b)evaluated the effectiveness of the registrant's disclosure controlsand procedures as of a date within 90 days prior to the filing dateof this quarterly report (the "Evaluation Date"); and

c)presented in this quarterly report our conclusions about theeffectiveness of the disclosure controls and procedures based onour evaluation as of the Evaluation Date;

5. TitanCorporation’s other certifying officers and I have disclosed,based on our most recent evaluation, to the registrant's auditorsand the audit committee of registrant's board of directors (orpersons performing the equivalent function):

a) allsignificant deficiencies in the design or operation of internalcontrols which could adversely affect the registrant's ability torecord, process, summarize and report financial data and haveidentified for the registrant's auditors any material weaknesses ininternal controls; and

b) anyfraud, whether or not material, that involves management or otheremployees who have a significant role in the registrant's internalcontrols; and

6. TitanCorporation's other certifying officers and I have indicated inthis quarterly report whether or not there were significant changesin internal controls or in other factors that could significantlyaffect internal controls subsequent to the date of our most recentevaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

Date:  May 13, 2003

| /s/ GENE W. RAY                    |                                                                                                                                                                                                                                                                                                                                         |                         |
|------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|
|                                    |                                                                                                                       |
| Gene W.Ray Chief Executive Officer |                                                                |

CERTIFICATION

I, Mark W. Sopp, certifythat:

1. I havereviewed this quarterly report on Form 10-Q of The TitanCorporation;

2. Basedon my knowledge, this quarterly report does not contain any untruestatement of a material fact or omit to state a material factnecessary to make the statements made, in light of thecircumstances under which such statements were made, not misleadingwith respect to the period covered by this quarterlyreport;

3. Basedon my knowledge, the financial statements, and other financialinformation included in this quarterly report, fairly present inall material respects the financial condition, results ofoperations and cash flows of The Titan Corporation as of, and for,the periods presented in this quarterly report;

4. TitanCorporation’s other certifying officers and I are responsiblefor establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

a)designed such disclosure controls and procedures to ensure thatmaterial information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which thisquarterly report is being prepared;

b)evaluated the effectiveness of the registrant's disclosure controlsand procedures as of a date within 90 days prior to the filing dateof this quarterly report (the "Evaluation Date"); and

c)presented in this quarterly report our conclusions about theeffectiveness of the disclosure controls and procedures based onour evaluation as of the Evaluation Date;

5. TitanCorporation’s other certifying officers and I have disclosed,based on our most recent evaluation, to the registrant's auditorsand the audit committee of registrant's board of directors (orpersons performing the equivalent function):

a) allsignificant deficiencies in the design or operation of internalcontrols which could adversely affect the registrant's ability torecord, process, summarize and report financial data and haveidentified for the registrant's auditors any material weaknesses ininternal controls; and

b) anyfraud, whether or not material, that involves management or otheremployees who have a significant role in the registrant's internalcontrols; and

6. TitanCorporation's other certifying officers and I have indicated inthis quarterly report whether or not there were significant changesin internal controls or in other factors that could significantlyaffect internal controls subsequent to the date of our most recentevaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

Date:  May 13, 2003

| /s/ MARK W. SOPP                     |                                                                                                                                                                                                                                                                                                                                         |                         |
|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|
|                                      |                                                                                                                       |
| Mark W.Sopp**Chief Financial Officer |                                                                |

QuickLinks

Part I — FinancialInformation

        Item1.  Financial Statements

                  Consolidated Statements ofOperations                  Consolidated Balance Sheets                  Consolidated Statements of CashFlows                  Consolidated Statements ofStockholders' Equity

                  NotesTo Consolidated Financial Statements                          Note (1) Basis of Financial StatementPreparation                          Note (2) Exit and Restructuring Charges andOther                          Note (3) Cumulative Effect of Change inAccounting Principle                          Note (4) Discontinued Operations                          Note (5) Debt                          Note (6) Other Financial Information                           Note (7) Commitments andContingencies                          Note (8) Related PartyTransactions

        Item 2.  Management's Discussion AndAnalysis Of Financial Condition And Results of Operations        Item 4.  Controls andProcedures.

Part II — OtherInformation

        Item 1.  LegalProceedings.        Item 6.  Exhibits andReports on Form 8-K.

Signatures

Certifications

Exhibit 99.1  Certification Pursuant toSection 906 of the Public Company Accounting Reform and InvestorProtection Act of 2002