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**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549**

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**FORM10-Q**

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

**For thequarterly period ended March 31, 2002**

**or**

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

**For thetransition period from              to              **

**Commission file number 1-6035**

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**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 of principal 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.)

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    Indicate by check markwhether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Actof 1934 during the preceding 12 months (or for such shorterperiod that the registrant was required to file such reports), and(2) has been subject to such filing requirements for the past90 days.  Yes x  No o.

    The number of shares ofregistrant's common stock outstanding at May 9, 2002, was77,072,202.

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**Part I—FINANCIAL INFORMATION**

**Item 1. Financial Statements**

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

| ** **                                                                                                                                                                                                                        | ** ** | **Threemonths ended March 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
|                                                                                                                                                                                                                                   |            |                                 |            |
| ** **                                                                                                                                                                                                                        | ** ** | **2002**                        | ** ** | **2001** | ** ** |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
| Revenues                                                                                                                                                                                                                     |       | $                               | 340,545    |   | $ | 239,116 |   |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
| Costs andexpenses:                                                                                                                                                                                                                |       |                            |       |   |   |   |   |
|     Cost of revenues                                                                                                                                                                                          |       |                            | 271,774    |   |   | 179,029 |   |
|     Selling, general and administrative expense                                                                                                                                                               |       |                            | 42,768     |   |   | 43,773 |   |
|     Research and development expense                                                                                                                                                                          |       |                            | 4,868      |   |   | 3,387 |   |
|     Acquisition and integration related charges andother                                                                                                                                                      |       |                            | —    |   |   | 13,376 |   |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
|         Total costs and expenses                                                                                                                                                          |       |                            | 319,410    |   |   | 239,565 |   |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
| Operating profit(loss)                                                                                                                                                                                                            |       |                            | 21,135     |   |   | (449 | ) |
| Interestexpense                                                                                                                                                                                                                   |       |                            | (8,473     | ) |   | (8,902 | ) |
| Interest income                                                                                                                                                                                                                   |       |                            | 140        |   |   | 278 |   |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
| Income (loss) fromcontinuing operation before income taxes, minority interest     and cumulative effect of change inaccounting principle                                                                      |            |                                 | 12,802     |  |  | (9,073 | ) |
| Income tax provision(benefit)                                                                                                                                                                                                     |       |                            | 5,377      |  |  | (611 | ) |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
| Income (loss) fromcontinuing operations before minority interest and cumulative      effect of change in accountingprinciple                                                                                  |       |                            | 7,425      |  |   | (8,462 | ) |
| Minorityinterest                                                                                                                                                                                                                  |       |                            | —    |  |   | 649 |   |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
| Income (loss) fromcontinuing operations before cumulative effect of change in     accounting principle                                                                                                        |       |                            | 7,425      |  |   | (7,813 | ) |
| Loss from discontinuedoperations, net of tax benefit                                                                                                                                                                              |       |                            | (938       | ) |   | (52,058 | ) |
| Cumulative effect ofchange in accounting principle, net of tax benefit (from     continuing operations $6,144, fromdiscontinued operations $33,967)                                                           |       |                            | (40,111    | ) |   | — |  |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
| Net loss                                                                                                                                                                                                                          |       |                            | (33,624    | ) |   | (59,871 | ) |
| Dividend requirements onpreferred stock                                                                                                                                                                                           |       |                            | (172       | ) |   | (172 | ) |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
| Net loss applicable tocommon stock                                                                                                                                                                                                |       | $                               | (33,796    | ) | $ | (60,043 | ) |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
| Basic earnings (loss) pershare:                                                                                                                                                                                                   |       |                            |       |   |   |   |   |
|     Income (loss) fromcontinuing operations before cumulative effect of change in         accountingprinciple                                                         |       | $                               | 0.10       |  | $ | (0.16 | ) |
|     Loss from discontinuedoperations, net of tax benefit                                                                                                                                                      |       |                            | (0.01      | ) |   | (1.13 | ) |
|     Cumulative effect ofchange in accounting principle, net of tax benefit(continuing          operations($0.09) per share, discontinued operations ($0.48) pershare) |       |                            | (0.57      | ) |   | — |  |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
|     Net loss                                                                                                                                                                                                  |       | $                               | (0.48      | ) | $ | (1.29 | ) |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
|     Weighted averageshares                                                                                                                                                                                    |       |                            | 70,771     |   |   | 53,377 |   |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
| Diluted earnings (loss)per share:                                                                                                                                                                                                 |       |                            |       |   |   |   |   |
|     Loss from continuingoperations before cumulative effect of change in accounting         principle                                                                 |       | $                               | 0.09       |  | $ | (0.16 | ) |
|     Loss from discontinuedoperations, net of tax benefit                                                                                                                                                      |       |                            | (0.01      | ) |   | (1.13 | ) |
|     Cumulative effect ofchange in accounting principle, net of tax benefit(continuing         operations ($0.08)per share, discontinued operations ($0.47) per share) |       |                            | (0.55      | ) |   | — |  |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
|     Net loss                                                                                                                                                                                                  |       | $                               | (0.47      | ) | $ | (1.29 | ) |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |
|     Weighted averageshares                                                                                                                                                                                    |       |                            | 72,385     |   |   | 53,377 |   |
|                                                                                                                                                                                                                                   |            |                                 |            |  |  |

Theaccompanying notes are an integral part of these consolidatedfinancial statements.

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

| ** **                                                                                                                                                                                                                                                              | ** ** | **March31, 2002** | ** ** | **December31, 2001** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|----------------------|------------|
|                                                                                                                                                                                                                                                                         |            |                   |            |                      |            |
| ** **                                                                                                                                                                                                                                                              | ** ** | **(Unaudited)**   | ** ** | ** **           | ** ** |
| **Assets**                                                                                                                                                                                                                                                              |       |              |       |                 |       |   |   |
| Current Assets:                                                                                                                                                                                                                                                         |       |              |       |                 |       |   |   |
|     Cash and cashequivalents                                                                                                                                                                                                                        |       | $                 | 28,569     |                 | $          | 28,957 |   |
|     Restrictedcash                                                                                                                                                                                                                                  |            |                   | 1,104      |                      |            | — |  |
|     Accountsreceivable—net                                                                                                                                                                                                                 |       |              | 397,929    |                 |       | 374,728 |   |
|     Inventories                                                                                                                                                                                                                                  |       |              | 29,583     |                 |       | 29,112 |   |
|     Prepaid expenses andother                                                                                                                                                                                                                    |       |              | 27,682     |                 |       | 19,286 |   |
|     Deferred incometaxes                                                                                                                                                                                                                            |       |              | 63,260     |                 |       | 57,983 |   |
|     Current assets ofdiscontinued operations                                                                                                                                                                                                        |       |              | 64,439     |                 |       | 61,317 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
|         Total current assets                                                                                                                                                                                                    |       |              | 612,566    |                 |       | 571,383 |   |
|                                                                                                                                                                                                                                                                         |            |                   |            |                      |            |  |  |  |  |
| Property and equipment— net                                                                                                                                                                                                                                       |       |              | 111,644    |                 |       | 95,627 |   |
| Long-term contractreceivables                                                                                                                                                                                                                                           |            |                   | 99,610     |                      |            | 93,143 |  |
| Goodwill —net                                                                                                                                                                                                                                                     |       |              | 543,122    |                 |       | 438,549 |   |
| Other assets —net                                                                                                                                                                                                                                                 |       |              | 140,336    |                 |       | 124,393 |   |
| Non-current assets ofdiscontinued operations                                                                                                                                                                                                                            |       |              | 75,010     |                 |       | 119,135 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
|          Total assets                                                                                                                                                                                                      |       | $                 | 1,582,288  |                 | $          | 1,442,230 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
| **Liabilities and Stockholders'Equity**                                                                                                                                                                                                                                 |       |              |       |                 |       |   |   |
| CurrentLiabilities:                                                                                                                                                                                                                                                     |       |              |       |                 |       |   |   |
|     Current portion ofamounts outstanding under line of credit                                                                                                                                                                                      |       | $                 | 13,750     |                 | $          | 12,813 |   |
|     Accountspayable                                                                                                                                                                                                                                 |       |              | 111,506    |                 |       | 88,845 |   |
|     Acquisitiondebt                                                                                                                                                                                                                                 |       |              | 2,000      |                 |       | 2,000 |   |
|     Current portion oflong-term debt                                                                                                                                                                                                                |       |              | 1,068      |                 |       | 1,413 |   |
|     Accrued compensation andbenefits                                                                                                                                                                                                                |       |              | 75,771     |                 |       | 68,425 |   |
|     Other accruedliabilities                                                                                                                                                                                                                        |       |              | 87,536     |                 |       | 73,915 |   |
|     Income taxespayable                                                                                                                                                                                                                             |            |                   | 243        |                      |            | 1,185 |  |
|     Current liabilities ofdiscontinued operations                                                                                                                                                                                                   |       |              | 28,855     |                 |       | 46,539 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
|         Totalcurrent liabilities                                                                                                                                                                                                |       |              | 320,729    |                 |       | 295,135 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
| Long-term portion ofamounts outstanding under line of credit                                                                                                                                                                                                            |       |              | 298,750    |                 |       | 317,187 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
| Other long-termdebt                                                                                                                                                                                                                                                     |       |              | 5,578      |                 |       | 5,612 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
| Non-recoursedebt                                                                                                                                                                                                                                                        |       |              | 46,381     |                 |       | 42,456 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
| Other non-currentliabilities                                                                                                                                                                                                                                            |       |              | 50,822     |                 |       | 40,735 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
| Non-current liabilities ofdiscontinued operations                                                                                                                                                                                                                       |            |                   | 1,403      |                      |            | 9,932 |  |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
| Company obligatedmandatory redeemable convertible preferred securities of a     subsidiary trust whose sole assets aresenior subordinated debentures of Titan                                                                                       |       |              | 250,000    |                 |       | 250,000 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
| Minorityinterests                                                                                                                                                                                                                                                       |       |              | 148        |                 |       | 23 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
| Stockholders'Equity:                                                                                                                                                                                                                                                    |       |              |       |                 |       |   |   |
|     Preferred stock: $1 par value, authorized 5,000,000shares:                                                                                                                                                                                      |       |              |       |                 |       |   |   |
|         Cumulative convertible, $13,800 liquidationpreference, designated 1,068,102             shares:  689,628and 689,678 shares issued and outstanding |       |              | 690        |                 |       | 690 |   |
|         Series A junior participating: designated 1,000,000authorized shares:  None issued                                                                                                                            |       |              | —    |                 |       | — |   |
|     Common stock:  $.01 par value, authorized 200,000,000shares, issued and outstanding:          77,268,616 and70,128,582 shares                                                            |       |              | 773        |                 |       | 701 |   |
|     Capital in excess of par value                                                                                                                                                                                                                  |       |              | 727,988    |                 |       | 571,912 |   |
|     Deferred compensation                                                                                                                                                                                                                           |       |              | (29,192    | )                    |       | (34,055 | ) |
|     Retained earnings (accumulated deficit)                                                                                                                                                                                                         |       |              | (91,035    | )                    |       | (57,239 | ) |
|     Accumulated other comprehensive income                                                                                                                                                                                                          |       |              | 195        |                      |       | 128 |   |
|     Treasury stock (345,750 and 372,050 shares), at cost                                                                                                                                                                                            |       |              | (942       | )                    |       | (987 | ) |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |
|         Total stockholders' equity                                                                                                                                                                                              |            |              | 608,477    |                 |       | 481,150 |   |
|                                                                                                                                                                                                                                                                    |       |                   |            |                      |       |
|         Total liabilities and stockholders'equity                                                                                                                                                                               |       | $                 | 1,582,288  |                 | $          | 1,442,230 |   |
|                                                                                                                                                                                                                                                                    |       |                   |       |                      |       |

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,** |            |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                                                                                                                | ** ** |                                 | ** ** |
| ** **                                                                                                                                                                | **2002**   |                                 | **2001**   | ** ** |
| ** **                                                                                                                                                                | ** ** |                                 | ** ** |  |
| **Cash Flows fromOperating Activities:**                                                                                                                             |       |                            |       |   |   |   |
| Income (loss) fromcontinuing operations before cumulative effect of change in      accounting principle                                               | $          | 7,425                           |            | $ | (7,813 | ) |
| Adjustments to reconcileloss from continuing operations to net cash used for     operating activities, net of effects ofbusinesses acquired and sold: |       |                            |       |   |   |   |
|     Depreciation andamortization                                                                                                                      |       | 5,390                           |       |   | 7,961 |   |
|     Write-offs due to assetimpairments                                                                                                                |            | —                         |            |  | 1,842 |  |
|     Deferred income taxes andother                                                                                                                    |       | 5,286                           |       |   | (417 | ) |
|     Minorityinterests                                                                                                                                 |       | —                         |            |   | (649 | ) |
|     Deferredcompensation                                                                                                                              |       | 973                             |       |   | 973 |   |
|     Changes in operatingassets and liabilities, net of the effects of businesses         acquired andsold:    |       |                            |       |   |   |   |
|         Accountsreceivable                                                                                                        |       | 5,531                           |            |   | (44,813 | ) |
|         Inventories                                                                                                               |       | (302                            | )          |   | (1,420 | ) |
|         Prepaidexpenses and other assets                                                                                          |       | (8,781                          | )          |   | (4,278 | ) |
|         Accountspayable                                                                                                           |       | 16,636                          |            |   | (9,201 | ) |
|         Accruedcompensation and benefits                                                                                          |       | 6,913                           |       |   | 8,033 |   |
|         Incometaxes payable                                                                                                       |       | (955                            | )          |   | — |  |
|         Otherliabilities                                                                                                          |       | (8,687                          | )          |   | 19,748 |  |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| Net cash provided by (usedfor) continuing operations                                                                                                                      |       | 29,429                          |            |   | (30,034 | ) |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| Loss from discontinuedoperations                                                                                                                                          |       | (938                            | )          |   | (52,058 | ) |
| Minority interestattributable to discontinued operations                                                                                                                  |       | (112                            | )          |   | (11,573 | ) |
| Issuance of stock insubsidiaries                                                                                                                                          |       | 114                             |            |   | 60,841 |  |
| Deferred compensationcharge attributable to discontinued operations                                                                                                       |       | 3,890                           |       |   | 39,015 |  |
| Changes in net assets andliabilities of discontinued operations                                                                                                           |       | (27,669                         | )          |   | (50,339 | ) |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| Net cash provided by (usedfor) discontinued operations                                                                                                                    |       | (24,715                         | )          |   | (14,114 | ) |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| Net cash provided by (usedfor) operating activities                                                                                                                       |       | 4,714                           |            |   | (44,148 | ) |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| **Cash Flows fromInvesting Activities:**                                                                                                                                  |       |                            |       |   |   |   |
| Capitalexpenditures                                                                                                                                                       |       | (6,525                          | )          |   | (14,515 | ) |
| Acquisition of businessesand other equity interests, net of cash acquired                                                                                                 |       | 26,838                          |            |   | (6,358 | ) |
| Capitalized softwaredevelopment costs                                                                                                                                     |       | (828                            | )          |   | (1,533 | ) |
| Proceeds from sale ofinvestments and business                                                                                                                             |       | 1,500                           |       |   | 3,217 |   |
| Otherinvestments                                                                                                                                                          |       | (6,156                          | )          |   | (2,541 | ) |
| Other                                                                                                                                                                     |       | 135                             |       |   | 188 |  |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| Net cash provided by (usedfor) investing activities                                                                                                                       |       | 14,964                          |            |   | (21,542 | ) |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| **Cash Flows fromFinancing Activities:**                                                                                                                                  |       |                            |       |   |   |   |
| Additions todebt                                                                                                                                                          |       | —                         |       |   | 74,375 |   |
| Retirements ofdebt                                                                                                                                                        |       | (20,444                         | )          |   | (365 | ) |
| Issuance of stock bysubsidiaries                                                                                                                                          |       | 123                             |       |   | — |   |
| Deferred financingcosts                                                                                                                                                   |       | (1,132                          | )          |   | (25 | ) |
| Increase in restrictedcash                                                                                                                                                |       | (1,104                          | )          |   | — |   |
| Dividends paid                                                                                                                                                            |       | (172                            | )          |   | (172 | ) |
| Exercise of stock optionsand other                                                                                                                                        |       | 2,605                           |       |   | 899 |   |
| Other                                                                                                                                                                     |       | (9                              | )          |   | (178 | ) |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| Net cash provided by (usedfor) financing activities                                                                                                                       |       | (20,133                         | )          |   | 74,534 |   |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| Effect of exchange ratechanges on cash                                                                                                                                    |       | 67                              |       |   | 69 |  |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| Net increase (decrease) incash and cash equivalents                                                                                                                       |       | (388                            | )          |   | 8,913 |   |
| Cash and cash equivalentsat beginning of period                                                                                                                           |       | 28,957                          |       |   | 26,263 |   |
|                                                                                                                                                                      |       |                                 |            |   |  |   |
| Cash and cash equivalentsat end of period                                                                                                                                 | $          | 28,569                          |       | $ | 35,176 |   |
|                                                                                                                                                                      |       |                                 |            |   |  |   |

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 (Accumulated Deficit)** | ** ** |        | **Accumulated Other Comprehensive Income** | ** ** |        | **Treasury Stock** | ** ** |        | **Total** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|--------|------------------|------------|--------|------------------------------------|------------|--------|----------------------------|------------|--------|---------------------------------------------|------------|--------|--------------------------------------------|------------|--------|--------------------|------------|--------|-----------|------------|
| ** **                                                                                                                                                                                                                              | ** ** |                                            | ** ** |        |                  | ** ** |        |                                    | ** ** |        |                            | ** ** |        |                                             | ** ** |        |                                            | ** ** |        |                    | ** ** |        |           | ** ** |
| **Three  MonthsEnded March 31, 2002**                                                                                                                                                                                              |            |                                       |
| Balances at December 31, 2001                                                                                                                                                                                                           |       | $                                          | 690        |   | $                | 701        |   | $                                  | 571,912    |   | $                          | (34,055    | )      | $                                           | (57,239    | )      | $                                          | 128        |   | $                  | (987       | )      | $         | 481,150    |   |
|    Issuanceof stock       for acquisitions                                                                                                                                                 |       |                                       |       |   |                  | 66         |   |                                    | 149,879    |   |                       |            |        |                                        |       |   |                                       |       |   |               | 39         |   |      | 149,984    |   |
|    Exerciseof stock       options and other                                                                                                                                                |       |                                       |       |   |                  | 4          |   |                                    | 2,601      |   |                       |            |   |                                        |       |   |                                       |       |   |               |       |   |      | 2,605      |   |
|    Amortization of       deferred       compensation                                                                                                         |       |                                       |       |   |                  |       |   |                                    |       |   |                       | 4,863      |   |                                        |       |   |                                       |            |   |               |       |   |      | 4,863      |   |
|    Foreigncurrency       translation        adjustment                                                                                                       |       |                                       |       |   |                  |       |   |                                    |       |   |                       |       |   |                                        |       |   |                                       | 67         |        |               |       |   |      | 67         |  |
|     Sharescontributed        to employee       benefit plans                                                                                                 |       |                                       |       |   |             | 2          |   |                                    | 3,596      |   |                       |       |   |                                        |       |   |                                       |       |   |               | 6          |   |      | 3,604      |   |
|    Dividends on       preferred stock -       Cumulative       convertible, $.25       per share |       |                                       |       |   |             |            |   |                                    |       |   |                       |       |   |                                        | (172       | )      |                                       |       |   |               |       |   |      | (172       | ) |
|    Netloss                                                                                                                                                                                                               |       |                                       |       |   |             |       |   |                                    |            |   |                       |       |   |                                        | (33,624    | )      |                                       |       |   |               |       |   |      | (33,624    | ) |
| ** **                                                                                                                                                                                                                              | ** ** |                                            | ** ** |        |                  | ** ** |        |                                    | ** ** |        |                            | ** ** |        |                                             | ** ** |        |                                            | ** ** |        |                    | ** ** |        |           | ** ** |
| Balances at March 31, 2002                                                                                                                                                                                                              |       | $                                          | 690        |   | $                | 773        |   | $                                  | 727,988    |   | $                          | (29,192    | )      | $                                           | (91,035    | )      | $                                          | 195        |        | $                  | (942       | )      | $         | 608,477    |   |
| ** **                                                                                                                                                                                                                              | ** ** |                                            | ** ** |        |                  | ** ** |        |                                    | ** ** |        |                            | ** ** |        |                                             | ** ** |        |                                            | ** ** |        |                    | ** ** |        |           | ** ** |
| **Three  MonthsEnded March 31, 2001**                                                                                                                                                                                              |            |                                       |
| Balances at December 31,2000                                                                                                                                                                                                            |       | $                                          | 690        |   | $                | 541        |   | $                                  | 191,358    |   | $                          | (13,882    | )      | $                                           | (9,960     | )      | $                                          | 108        |        | $                  | (1,439     | )      | $         | 167,416    |   |
|    Exerciseof stock       options and other                                                                                                                                                |       |                                       |       |        |                  | 1          |   |                               | 898        |   |                       |       |   |                                        |       |   |                                       |       |   |               |            |        |      | 899        |   |
|    Deferred       compensation,       related to the       issuance of stock       options       |       |                                       |       |   |                  |       |   |                                    | 78,604     |   |                       | (78,604    | )      |                                        |       |   |                                       |       |   |               |       |   |      | —    |   |
|    Amortization of       deferred       compensation                                                                                                         |       |                                       |       |   |                  |       |   |                                    |       |   |                       | 39,988     |   |                                        |       |   |                                       |       |   |               |       |   |      | 39,988     |   |
|    Foreigncurrency       translation       adjustment                                                                                                        |       |                                       |       |   |                  |       |   |                                    |       |   |                       |       |   |                                        |       |   |                                       | 69         |   |               |       |   |      | 69         |   |
|    Unrealized loss on       investments                                                                                                                                                    |       |                                       |       |   |                  |       |   |                                    |       |   |                       |       |   |                                        |       |   |                                       | (55        | )      |               |       |   |      | (55        | ) |
|    Gainrelated to       issuance of stock       in subsidiary                                                                                                |       |                                       |       |   |             |       |   |                                    |       |   |                       |       |   |                                        | 52,025     |   |                                       |       |   |               |       |   |      | 52,025     |   |
|    Dividends on       preferred stock -       Cumulative       convertible, $.25       per share |       |                                       |       |   |             |       |   |                                    |       |   |                       |       |   |                                        | (172       | )      |                                       |       |   |               |       |   |      | (172       | ) |
|       Netloss                                                                                                                                                                                             |       |                                       |       |   |             |       |   |                                    |            |   |                       |       |   |                                        | (59,871    | )      |                                       |       |   |               |       |   |      | (59,871    | ) |
| ** **                                                                                                                                                                                                                              | ** ** |                                            | ** ** |        |                  | ** ** |        |                                    | ** ** |        |                            | ** ** |        |                                             | ** ** |        |                                            | ** ** |        |                    | ** ** |        |           | ** ** |
| Balances at March 31, 2001                                                                                                                                                                                                              |       | $                                          | 690        |   | $                | 542        |   | $                                  | 270,860    |   | $                          | (52,498    | )      | $                                           | (17,978    | )      | $                                          | 122        |        | $                  | (1,439     | )      | $         | 200,299    |   |
| ** **                                                                                                                                                                                                                              | ** ** |                                            | ** ** |        |                  | ** ** |        |                                    | ** ** |        |                            | ** ** |        |                                             | ** ** |        |                                            | ** ** |        |                    | ** ** |        |           | ** ** |

Theaccompanying notes are an integral part of these consolidatedfinancial statements.

**THE TITAN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2002(in thousands, except share and per share data, or as otherwisenoted)**

**Note (1) Basis ofFinancial Statement Preparation**

    The accompanyingconsolidated financial information of The Titan Corporation and itssubsidiaries ("Titan" or the "Company") should be read inconjunction with the Notes to Consolidated Financial Statementscontained in the Company's Annual Report on Form 10-K to theSecurities and Exchange Commission for the year ended December 31,2001. The accompanying financial information includes allcontrolled subsidiaries on a consolidated basis and all normalrecurring adjustments which are considered necessary by theCompany's management for a fair presentation of the financialposition, results of operations and cash flows for the periodspresented. However, these results are not necessarily indicative ofresults for a full fiscal year.  Additionally, certain prioryear amounts have been reclassified to conform to the 2002presentation.

    The preparation offinancial statements in conformity with accounting principlesgenerally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect thereported 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.

    During the first quarterof 2002, the Company made the decision to sell certain of itscommercial information technology operations within Cayenta andTitan Technologies in order to allow management to focus onoperations with the most near term growth opportunities.  As aresult, Cayenta’s federal government operations are beingreported in Titan Systems, and Cayenta’s remaining operationsare being reported in Titan Technologies, formerly Titan’sEmerging Technologies and Businesses segment. In accordance withStatement of Financial Accounting Standards No. 144,“Accounting for the Impairment or Disposal of Long-livedAssets and for Long-Lived Assets to be Disposed of,” allcommercial operations that are held for sale have been reflected asdiscontinued operations for all periods presented in Titan’sconsolidated financial statements.  All prior period financialinformation has been restated to reflect the newsegments.

    InAugust 2001, the FASB issued SFAS No. 144, "Accounting for theImpairment or Disposal of Long-Lived Assets." SFAS No. 144addresses financial accounting and reporting for the impairment ordisposal of long-lived assets and supersedes SFAS No. 121,"Accounting for the Impairment of Long-Lived Assets and forLong-Lived Assets to Be Disposed Of," and the accounting andreporting provisions of APB Opinion No. 30, "Reporting the Resultsof Operations—Reporting the Effects of Disposal of a Segmentof a Business, and Extraordinary, Unusual and InfrequentlyOccurring Events and Transactions," for the disposal of a segmentof a business (as previously defined in that Opinion). Theprovisions of SFAS No. 144 are effective for financial statementsissued for fiscal years beginning after December 15, 2001. TheCompany adopted SFAS No. 144 in the first quarter of 2002 (refer toNote 5).  The Company has reported the discontinuance of itsSureBeam segment under the provisions of APB No. 30 and thediscontinuance of its commercial information technology businessesunder the provisions of SFAS No. 144. Also in August 2001, the FASBissued SFAS No. 143, "Accounting for Asset Retirement Obligations".This statement addresses financial accounting and reporting forobligations associated with the retirement of tangible long-livedassets and the associated asset retirement costs. It applies to (a)all entities and (b) legal obligations associated with theretirement of long-lived assets that result from the acquisition,construction, development and/or normal operation of long-livedassets, except for certain obligations of lessees. This statementamends SFAS No. 19, "Financial Accounting and Reporting by Oil andGas Producing Companies," and is effective for financial statementsissued for fiscal years beginning after June 15, 2002. Managementdoes not believe that the adoption of this statement will have amaterial impact on its consolidated financial position or resultsof operations.

**Note (2)Acquisitions and Investment**

    OnMarch 21, 2002, Titan completed the acquisition of GlobalNet, Inc.("GlobalNet"), a provider of international voice, data, andinternet services to further Titan’s goal of building aglobal telecommunications network. Titan issued approximately1,452,800 shares of common stock for all the common stock ofGlobalNet at an aggregate value of $28.1 million, based on $19.37per Titan share, the closing price as of March 14, 2002, andassumed stock options and warrants representing approximately77,900 shares of Titan common stock at an aggregate value of $0.8million, based on an exchange ratio of 0.3853 shares of Titancommon stock for each share of GlobalNet common stock. GlobalNet's operations are reported in our Titan Wireless segmentfrom March 22, 2002.  The transaction was accounted for as apurchase.  The excess of the purchase price of $28.9 millionover the estimated fair market value of the net liabilitiesacquired of approximately $18.9 million was approximately $47.8million.  In April 2002, the Company had an independentvaluation report completed for the purchase price allocation of theGlobalNet acquisition, in which the determination was made toallocate $47.8 million to goodwill and $0 to intangible assets. Theconsolidated balance sheet reflects this allocation togoodwill.

    OnMarch 21, 2002, Titan completed the acquisition of Jaycor, Inc.("Jaycor"), a San Diego, California, based provider of informationtechnology services and specialized communications and sensorproducts to further Titan’s goal of acquiring governmentinformation technology companies which fit strategically with TitanSystems.  Titan issued approximately 4,919,500 shares ofcommon stock for all the common stock of Jaycor, based on anexchange ratio of 0.50160 shares of Titan common stock for eachshare of Jaycor common stock at an aggregate value of $99.6million, based on $20.24 per Titan share, the 5-day closing tradingaverage ending March 20, 2002.  Jaycor's operations arereported in our Titan Systems segment from March 22, 2002. The excess of the purchase price of $99.6 million over theestimated fair market value of the net assets acquired ofapproximately $56.8 million was approximately $42.8 million. The transaction was accounted for as a purchase.  In April2002, the Company had an independent valuation report completed forthe purchase price allocation of the Jaycor acquisition, in whichthe determination was made to allocate $38.9 million to goodwilland $3.9 million to intangible assets.  The intangible assetsconsist of backlog, customer relationships and trade name of $0.7million, $1.3 million, and $1.9 million, respectively, which willbe amortized over the estimated useful lives of 1 year, 1 to 3years and 5 years, respectively.

    OnFebruary 25, 2002, Titan entered into a definitive agreement toacquire Science and Engineering Associates, Inc. ("SEA"), a NewMexico based privately held provider of engineering and informationtechnology services and specialized laser, sensor, and imagingproducts for approximately $72.0 million in Titan common stock lessa $3.8 million holdback, which is subject to the satisfaction ofcertain indemnification obligations for a one year period followingthe close date.  In addition, a potential $3.8 million earnoutmay be paid upon the attainment of certain operating performancetargets.  The exchange ratio and the number of shares of Titanstock will be determined based upon the average closing sale pricesof Titan common stock over the 20 consecutive trading days endingon the day prior to the date of the SEA special meeting ofshareholders called to approve the merger agreement.  Thespecial meeting has not yet been scheduled, but is expected to beheld in the second or third quarter of 2002, and the transaction isexpected to close shortly thereafter.

    OnFebruary 22, 2002, Titan completed the acquisition of InternationalSystems, LLC, which designs and builds low-cost combat systems forthe Department of Defense (DoD) and agencies of the DoD, to furtherTitan’s goal of acquiring government information technologycompanies which fit strategically with Titan Systems. The purchaseprice was comprised of approximately 100,000 shares of Titan commonstock, subject to post-closing adjustments and indemnificationobligations. Also, additional consideration may be paid based onthe receipt of certain potential future contract awards and theachievement of defined earnings levels on certain contracts, whichconsideration may be satisfied with cash or Titan common stock. Theoperations of International Systems are reported in our TitanSystems segment. The transaction was accounted for as a purchase,and goodwill of $2.4 million was recorded.

    OnNovember 27, 2001, the Company completed its acquisition of BTG,Inc. ("BTG"), a provider of information technology solutions andservices primarily to the U.S. military and other governmentagencies, for $13.35 per BTG share.  The acquistion was tofurther Titan’s goal of acquiring government informationtechnology companies which fit strategically with TitanSystems.  Titan issued approximately 4,024,100 shares of itscommon stock at an aggregate value of $99.9 million based on$24.814 per Titan share, the 15-day trading average ending November19, 2001 and cash of $23.4 million for all the outstanding sharesof BTG common stock and assumed BTG stock options representingapproximately 734,200 shares of Titan common stock valued at $11.8million, based on an exchange ratio of approximately 0.5380 sharesof Titan stock for each share of BTG common stock. Titan also paidoff $37.1 million of BTG's outstanding debt as of the closing date.The transaction was accounted for as a purchase.  The excessof the purchase price of approximately $135.1 million over theestimated fair market value of the net liabilities acquired ofapproximately $15.0 million was approximately $150.1 million. In connection with the determination of the fair value of assetsacquired and pursuant to the provisions of SFAS No. 141, theCompany has valued contracts in process at contract price, minusthe estimated costs to complete and an allowance for the normalindustry profit on its effort to complete such contracts whichamounted to $9.2 million. This adjustment has been reflected in theconsolidated balance sheet as additional net liabilities assumed bythe Company. The Company recognized approximately $0.3 million inthe three months ended March 31, 2002, as a reduction of costs,with the remaining $8.4 million to be recorded as a reduction ofcosts in future periods as work on certain contracts is performed,which is estimated to continue through fiscal 2016.

    InFebruary 2002, the Company had an independent valuation reportcompleted for the purchase price allocation for the BTGacquisition, in which the determination was made to allocate $140.3million to goodwill and $9.8 million to intangible assets. The intangible assets consist of backlog and customer relationshipsof $2.2 million and $7.6 million, respectively, which will beamortized over the estimated useful lives of 1 year and 2 to 5years, respectively.  The consolidated balance sheet reflectsthis allocation between goodwill and intangible assets.  Theamortization expense related to the intangible assets commenced inthe first quarter of 2002.

    OnSeptember 28, 2001, the Company completed the acquisition of theremaining shares of Datron Systems Incorporated ("Datron"), aprovider of radio and satellite-based communication systems andbroadband communication products for government and commercialmarkets, that were acquired through a stock for stock exchangetender offer that closed in August 2001.   The acquistion wasto further Titan’s goal of acquiring government informationtechnology companies which fit strategically with TitanSystems.  Titan issued approximately 2.3 million shares of itscommon stock for all the outstanding shares of Datron common stockat an aggregate value of $44.9 million, based on $19.544 per Titanshare, the 10-day trading average ending July 27, 2001, and assumedDatron stock options representing approximately 437,000 shares ofTitan common stock at an aggregate value of $4.0 million, based onan exchange ratio of approximately .81919 shares of Titan commonstock for each share of Datron common stock.  The transactionwas accounted for as a purchase.  The excess of the purchaseprice of approximately $48.9 million over the estimated fair marketvalue of the net assets acquired of approximately $15.9 million wasapproximately $33 million.  In connection with thedetermination of fair value of assets acquired and pursuant to theprovisions of SFAS No. 141, the Company has valued contracts inprocess at contract price, minus the estimated costs to completeand an allowance for the normal industry profit on its effort tocomplete such contracts, which amounted to $1.4 million.  Thisadjustment has been relected in the accompanying consolidatedbalance sheet as additional net liabilities assumed by the Company.The Company recognized approximately $0.3 million in the threemonths ended March 31, 2002, as a reduction of costs, with theremaining $0.3 million to be recorded as a reduction of costs infuture periods as work on certain contracts is performed, which isestimated to continue through fiscal 2002.

    InFebruary 2002, the Company had an independent valuation reportcompleted for the purchase price allocation for the Datronacquisition, in which the determination was made to allocate $27.4million to goodwill and $5.6 million to intangible assets. Theintangible assets consist of backlog, customer relationships andtrademarks and patents of $1.0 million, $3.2 million and $1.4million, respectively, which will be amortized over the estimateduseful lives of 1 to 2 years, 10 years and 5 years, respectively.The consolidated balance sheet reflects this allocation betweengoodwill and intangible assets. The amortization expense related tothe intangible assets commenced in the first quarter of2002.

    OnMarch 23, 2001, the Company's subsidiary, Titan SystemsCorporation, consummated an agreement to purchase certain assetsfrom Maxwell Technologies Systems Division, Inc., a subsidiaryof Maxwell Technologies, Inc., which specializes in research,development and technical services primarily for militaryapplications. The purchase price was approximately$11.5 million in cash, subject to post-closing adjustments andindemnification obligations, less a $1.7 million holdback, due180 days from the date of closing. The initial$9.8 million of the purchase price was paid on April 2,2001. The Company received approximately $0.6 million inJuly 2001 from Maxwell Technologies, Inc. resulting from theresolution of post-closing working capital adjustments. Under theagreement, the Company had full recourse to the seller for allaccounts receivable not collected within 180 days of the closingdate. In October 2001, the Company paid approximately $1.5 millionin full satisfaction of the $1.7 million holdback, as adjusted foruncollected accounts receivable. The transaction was accounted foras a purchase, and the excess of the purchase price over theestimated fair market value of the net assets acquired, which hadbeen amortized on a straight line basis over 30 years, wasapproximately $7.3 million at March 31, 2002, and is reflected asgoodwill in the Company's consolidated balance sheet.

    OnJune 28, 2000, Titan Wireless Africa, a wholly ownedsubsidiary of Titan Wireless, made an investment in a start-uptelecommunications provider, Ivoire Telecom S.A. Holding (IvoireTelecom), acquiring an 80% interest in Ivoire Telecom and throughsuch interest acquired a majority equity interest in each of theprincipal subsidiaries owned by Ivoire Telecom.  IvoireTelecom is a telecommunications service provider, conductingbusiness in several western African countries.  Ivoire Telecomprovides a number of telecommunications services including voiceand data via VSAT’s (Very Small Aperture Terminals),satellite fixed wireless and prepaid calling cards.  Theinitial investment consisted of $5.0 million in cash subjectto certain indemnification obligations, and an initial $5.5 millionworking capital note, which was funded shortly after the initialinvestment.  The investment is reflected in Other Assets inthe Company's consolidated balance sheet. In addition, Titancommitted to provide up to a maximum of $35.0 million for capitalexpenditures and other expenditures necessary to build out theIvoire Telecom network. Titan has also provided equipment as a partof its investment with an approximate aggregate value of $4.5million. At March 31, 2002, this $35 million commitment hadbeen substantially funded. Our aggregate investment in IvoireTelecom of approximately $50 million has been reflected in OtherAssets in the Company's consolidated balance sheet at March 31,2002, and has been reported on the cost method as a result of theCompany’s inability to exercise control and significantinfluence and receive reliable timely financial information.However, based upon the information available to management, webelieve Ivoire Telecom continues to incur losses and negative cashflows consistent with our original expectations at the time ofinvestment in this start-up enterprise. To the extent IvoireTelecom requires additional cash in the future to fund operations,Titan has no obligation nor commitment to fund such cash flowneeds.

    Management does, however,on a continuous basis, evaluate the build-out of the Ivoire Telecomnetwork in relation to its operation plan, has dialogue with IvoireTelecom’s operating management, and evaluates variousalternatives relative to realizing the value of itsinvestment.  Based on these factors, management believes thatthe value is properly stated at cost.  We will continue toevaluate the carrying value of our investment.

    Unaudited pro forma datagiving effect to the purchase of Jaycor, GlobalNet, BTG and Datronas if they had been acquired at the beginning of 2001 are shownbelow. Pro forma information related to the Maxwell orInternational Systems acquisitions are not included, because theeffects are not significant.

|                                                                                                                                                                      |             | **Threemonths ended March 31,** |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|---------------------------------|---------|
|                                                                                                                                                                           |                  |                                 |         |
|                                                                                                                                                                      |             | **2002**                        |    | **2001** |   |
|                                                                                                                                                                           |                  |                                 |         |  |  |
| Revenues                                                                                                                                                                  |             | $                               | 379,473 |   | $ | 354,444 |   |
|                                                                                                                                                                      |             |                                 |         |  |   |
| Income (loss) fromcontinuing operations before     cumulative effect of change in accountingprinciple                                                 |             |                            | (5,457  | ) |   | (12,127 | ) |
| Net income(loss)                                                                                                                                                          |             |                                 | (12,247 | ) |  | (64,185 | ) |
|                                                                                                                                                                      |             |                                 |         |  |   |
| Basic earnings (loss) pershare:                                                                                                                                           |             |                            |    |   |   |   |   |
|     Income (loss) fromcontinuing operations before         cumulative effectof change in accounting principle |             | $                               | (0.08   | ) | $ | (0.46 | ) |
|                                                                                                                                                                      | Net income(loss) |                            |         | (0.66 | ) |  | (1.20 | ) |
|                                                                                                                                                                      |             |                                 |         |  |   |
| Diluted earnings (loss)per share:                                                                                                                                         |             |                            |         |   |   |  |   |
|     Income (loss) fromcontinuing operations before         cumulative effectof change in accounting principle |             | $                               | (0.08   | ) | $ | (0.46 | ) |
|                                                                                                                                                                      | Net income(loss) |                            |         | (0.66 | ) |  | (1.20 | ) |

    During the three monthsended March 31, 2002, approximately $2.0 million was paid insatisfaction of purchase price holdbacks for the SenCom Corporationacquisition made in 2000, and $3.75 million for the Sakoninvestment.  All amounts had been accruedpreviously.

**Note (3)Acquisition and Integration Related Charges andOther**

    There were no acquisitionand integration related charges and other in the first quarter of2002.

    The $13.4 million chargein the first quarter of 2001 includes costs of $12.9 millionprimarily related to the integration of ACS and AverStar, and arealignment of the business around the major categories customers of Titan Systems, which together resulted in a reductionin employee workforce of approximately 50 employees and the closingof several facilities. Included in these costs is approximately$3.1 million of employee termination and retention costs, $3.5million of costs to eliminate duplicate and excess facilities andassets, $1.1 million of duplicate personnel costs to transitionprocesses and functions, and $1.5 million of asset impairment costsof certain asset balances. The recoverability of such balances wasimpaired due to our exit from a satellite services business withinthe Titan Systems segment. Approximately $3.0 million of the chargewas related to another subsidiary acquired in a prior year forcontingencies arising from matters pre-existing to Titan'sacquisition of the business. That acquisition was accounted for asa purchase, and those matters were resolved in 2001. Approximately$0.7 million of these charges were related to capitalized softwarecosts previously designed for B2B exchanges incurred in Cayentaoperations now a part of Titan’s governmentbusiness.

    Also included in theacquisition and integration related charges and other in the threemonths ended March 31, 2001 is a charge of $0.5 million in theTitan Wireless segment for employee termination costs related tocertain organizational changes within that businessunit.

    Asof March 31, 2002, approximately $1.2 million was remaining to bepaid primarily related to excess facilities which are expected tobe paid during 2002.

**Note (4) Adoptionof SFAS No. 142, “Goodwill and Other IntangibleAssets”**

    Effective January 1,2002, the Company adopted SFAS No. 142, "Goodwill and OtherIntangible Assets," which establishes financial accounting andreporting for acquired goodwill and other intangible assetsandsupersedes Accounting Principles BoardOpinion No. 17, "Intangible Assets". Under SFAS No. 142, goodwilland indefinite-lived intangible assets are no longer amortized butare reviewed at least annually for impairment. Separable intangibleassets that have finite useful lives, will continue to be amortizedover their useful lives.

    SFAS No. 142 requiresthat goodwill be tested for impairment at the reporting unit levelat adoption and at least annually thereafter, utilizing a two stepmethodology. The initial step requires the Company to determine thefair value of each reporting unit and compare it to the carryingvalue, including goodwill, of such unit. If the fair value exceedsthe carrying value, no impairment loss would be recognized.However,if the carrying value of thereporting unit exceeds its fairvalue, the goodwill of this unit may beimpaired. The amount, ifany, of the impairment would then be measured in thesecondstep.

    Inconnection with adopting this standard as ofJanuary 1, 2002, during the first quarter the Company’sindependent valuation consultant, KPMG Consulting Inc.(“KCI”) completed step one of the test for impairment,which indicated that the carrying values of certain reporting unitsexceeded their estimated fair values, as determined utilizingvarious evaluation techniques including discounted cash flow andcomparative market analysis. Thereafter, given the indication of apotential impairment, KCI has substantially completed step two ofthe test. Based on that analysis, a transitional impairment loss of$40.1 million, which was net of a $10.0 million tax benefit, or$0.57 basic loss per share and $0.55 diluted loss per share, wasrecognized as the cumulative effect of an accounting change. Theimpairment charge resulted from a change in the criteria forthemeasurement of the impairment loss from anundiscounted cash flowmethod, as required by SFAS No. 121, "Accounting for theImpairmentof Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"toa discounted cash flow method and comparative market analysis asrequired by SFAS No. 142.  The gross$50.1 million impairment charge recorded in the first quarter of2002 was comprised of approximately $27.5 million in certaincomponents of our Cayenta business, approximately $14.9 million inour AverCom business, which was reported in our Titan Technologiessegment (previously our Emerging Technologies and Businessessegment), both attributable to lower valuations and weakenedoutlook in commercial IT services, and approximately $7.7 millionin our Titan Wireless business.  Approximately $34.0 millionof this charge, net of tax, pertained to businesses that werediscontinued by the Company on March 1, 2002.

    The adjustment ofpreviously reported net income (loss) and earnings (loss) per sharebelow represents the recorded amortization of goodwill and otherpurchased intangibles. The impact on net income (loss), and basicand diluted net earnings (loss) per share for the quarters endedMarch 31, 2002 and 2001 is set forth below:

Reconciliation of NetIncome (Loss) and Earnings (Loss) Per Share:

|                                                                                                                                                                                                 | ** ** | **Threemonths ended March 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
|                                                                                                                                                                                                 |            |                                 |            |
| ** **                                                                                                                                                                                      | ** ** | **2002**                        | ** ** | **2001** | ** ** |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Reported income (loss)from continuing operations before     cumulative effect of change in accountingprinciple                                                              |       | $                               | 7,425      |   | $ | (7,813 | ) |
| Add back goodwillamortization, net of tax                                                                                                                                                       |            |                                 | —    |  |  | 3,476 |  |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Adjusted income (loss)from continuing operations before     cumulative effect of change in accountingprinciple                                                              |       |                            | 7,425      |   |   | (4,337 | ) |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Loss from discontinuedoperations, net of tax                                                                                                                                                    |       |                            | (938       | ) |   | (52,058 | ) |
| Add back goodwillamortization, net of tax                                                                                                                                                       |       |                            | —    |  |   | 3,191 |  |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Adjusted loss fromdiscontinued operations                                                                                                                                                       |            |                                 | (938       | ) |  | (48,867 | ) |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Cumulative effect ofchange in accounting principle (from     continuing operations $6,144, fromdiscontinued operations     $33,967)                     |       |                            | (40,111    | ) |   | — |   |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Adjusted netloss                                                                                                                                                                                |       |                            | (33,624    | ) |   | (53,204 | ) |
| Dividend requirements onpreferred stock                                                                                                                                                         |       |                            | (172       | ) |   | (172 | ) |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Adjusted loss applicableto common stock                                                                                                                                                         |       | $                               | (33,796    | ) | $ | (53,376 | ) |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Basic earnings pershare:                                                                                                                                                                        |       |                            |            |   |   |  |  |
| Reported income (loss)before cumulative effect of change     in accounting principle                                                                                        |       | $                               | 0.10       |  | $ | (0.16 | ) |
| Add back goodwillamortization, net of tax                                                                                                                                                       |       |                            | —    |   |   | 0.07 |   |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Adjusted income (loss)from continuing operations before     cumulative effect of change in accountingprinciple                                                              |       |                            | 0.10       |  |   | (0.09 | ) |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Loss from discontinuedoperations, net of tax benefit                                                                                                                                            |       |                            | (0.01      | ) |   | (1.13 | ) |
| Add back amortization ofgoodwill                                                                                                                                                                |       |                            | —    |  |   | 0.06 |  |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Adjusted loss fromdiscontinued operations, net of tax                                                                                                                                           |       |                            | (0.01      | ) |   | (1.07 | ) |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Cumulative effect ofchange in accounting principle,     net of tax benefit(from continuing operations ($0.09), from     discontinued operations($0.48)) |       |                            | (0.57      | ) |  | — |  |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Adjusted income (loss)applicable to common stock                                                                                                                                                |       | $                               | (0.48      | ) | $ | (1.16 | ) |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Weighted average shares– basic                                                                                                                                                            |       |                            | 70,711     |  |   | 53,377 |  |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Diluted earnings pershare:                                                                                                                                                                      |       |                                 |            |   |  |  |  |
| Reported income (loss)from continuing operations before     cumulative effect of change in accountingprinciple                                                              |            | $                               | 0.09       |  | $ | (0.16 | ) |
| Add back goodwillamortization, net of tax benefit                                                                                                                                               |       |                                 | —    |   |  | 0.07 |  |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Adjusted income (loss)from continuing operations before     cumulative effect of change in accountingprinciple                                                              |       |                            | 0.09       |   |   | (0.09 | ) |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Loss from discontinuedoperations, net of tax benefit                                                                                                                                            |       |                            | (0.01      | ) |   | (1.13 | ) |
| Add back amortization ofgoodwill                                                                                                                                                                |       |                            | —    |  |   | 0.06 |  |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Adjusted loss fromdiscontinued operations, net of tax                                                                                                                                           |       |                            | (0.01      | ) |   | (1.07 | ) |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Cumulative effect ofchange in accounting principle,     net of tax benefit (from continuingoperations     ($0.08), from discontinued operations($0.47)) |       |                            | (0.55      | ) |   | — |  |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Adjusted loss applicableto common stock                                                                                                                                                         |       | $                               | (0.47      | ) | $ | (1.16 | ) |
|                                                                                                                                                                                                 |            |                                 |            |  |  |
| Weighted averageshares                                                                                                                                                                          |       |                            | 72,385     |   |   | 53,377 |  |
|                                                                                                                                                                                                 |            |                                 |            |  |  |

**Note (5)Discontinued Operations**

*2002 DiscontinuedOperations*

    OnMarch 1, 2002, the Company made the decision to sell certain of itscommercial information technology operations within Cayenta andTitan Technologies in order to allow management to focus onoperations with the most near term growth opportunities.  As aresult, Cayenta’s federal government operations have become apart of Titan Systems, and Cayenta’s remaining operations arebeing reported in Titan Technologies, formerly Titan’sEmerging Technologies and Businesses segment. In accordance withStatement of Financial Accounting Standard No. 144,“Accounting for the Impairment or Disposal of Long-livedAssets and for Long-Lived Assets to be Disposed of,” allcommercial operations that are held for sale have been reflected asdiscontinued operations for all periods presented in Titan’sconsolidated financial statements.  All prior period financialinformation has been restated to reflect the newsegments.

    Included in the loss fromdiscontinued operations for certain components of Cayenta areacquisition and integration related charges and other in the firstquarter of 2001 of $18.8 million related to the restructuring ofCayenta as well as certain asset impairments. As a result ofreduced corporate spending on commercial information technologyservices and e-business software applications, the Companydeveloped and approved a plan to restructure the Cayenta business,which included a reduction in workforce of approximately 40personnel, resulting in a charge of approximately $1.0 millionand the elimination of duplicate and excess facilities, resultingin a charge of approximately $1.1 million. As a result ofmanagement's evaluation of the recoverability of all the assets ofCayenta, in accordance with Statement of Financial AccountingStandards No. 121, "Accounting for the Impairment ofLong-Lived Assets and for Long-Lived Assets to be Disposed Of",management concluded from this evaluation that a significantimpairment of intangible as well as long-lived assets had occurred.An impairment charge was required because the estimated fair valuewas less than the carrying value of the assets. The impairmentcharge of $15.4 million was comprised of the following:$5.9 million for fixed assets associated with Cayenta'snetwork operations center, $2.0 million for prepaidadvertising costs, $2.0 million for accounts receivable,$5.3 million for Cayenta's investment in Soliance, LLC, ajoint venture that markets and delivers information technologysystems and solutions to the utility industry, and $0.2 million forcertain other assets.  In addition, approximately $1.3 millionfor capitalized software developed for B2B exchanges was writtenoff due to impairment.

*2001 DiscontinuedOperations*

    OnMarch 16, 2001, SureBeam Corporation, Titan's subsidiary thatprovides electronic food irradiation systems and services,completed its initial public offering ("IPO"). On October 16, 2001,Titan adopted a definitive plan to spin off SureBeam in the form ofa tax-free dividend to Titan stockholders within 12 months fromthat date. The plan involves filing a letter ruling request withthe Internal Revenue Service seeking approval of the tax-freedistribution, and Titan intends to execute the spin off as soon aspractical, subject to obtaining all required third party consents.Titan has historically reported the SureBeam business as a separatesegment. In accordance with Accounting Principles Board OpinionNo. 30, "Reporting the Results of Operations—Reportingthe Effects of Disposal of a Segment of a Business, andExtraordinary, Unusual and Infrequently Occurring Events andTransactions," the consolidated financial statements of Titan forall periods presented have been restated to reflect SureBeam as adiscontinued business.

    Revenues and net lossgenerated by SureBeam for the three months ended March 31, 2002were $2.1 million and $10.5 million, respectively. Revenues and netloss generated by SureBeam for the three months ended March 31,2001 were $5.5 million and $40.6 million, respectively. At the timethe Company adopted the plan to spin-off SureBeam, the Companyrecorded a charge of $35.4 million for estimated costs of disposaland for estimated operating losses up to the date of disposal. Thischarge was recorded in the quarter ended September 30, 2001. Alllosses incurred by SureBeam since that time have been chargedagainst this accrual. The remaining balance at March 31, 2002 wasapproximately $5.4 million. Management will continue to assess theestimated disposal costs and losses, and may from time to timeadjust the allowance for such costs accordingly.

*2000 DiscontinuedOperations*

    InNovember 2000, the Company's Board of Directors adopted a planto dispose of the Company's commercial information assurance andnetwork monitoring businesses. Accordingly, the results of thesebusinesses have been accounted for as discontinued operations in2001. In addition, the accompanying consolidated financialstatements reflect operations discontinued by Titan in 2000. Allperiods presented reflect these specific operations as discontinuedoperations. Management continues to assess the estimated wind-downand/or disposal costs associated with the businesses, and may fromtime to time adjust the allowance for such costsaccordingly.

    Following is a table ofall related balance sheet categories for each discontinuedoperation as of March 31, 2002:

|                                                       |   | **Asof March 31, 2002** |    | **Asof December 31, 2001** |   |
|------------------------------------------------------------|--------|-------------------------|---------|----------------------------|--------|
|                                                            |        |                         |         |                            |        |
| Current assets ofdiscontinued operations                   |   |                         |         |                       |        |  |   |
|     SureBeam                           |   | $                       | 49,693  |                            | $      | 44,940 |  |
|     Commercial informationtechnologies |   |                         | 13,054  |                       |        | 14,685 |   |
|     Other                              |   |                    | 1,692   |                            |        | 1,692 |  |
|                                                            |        |                         |         |                            |        |
|                                                            |        | $                       | 64,439  |                            | $      | 61,317 |  |
|                                                       |   |                         |         |                            |   |
| Non-current assets ofdiscontinued operations               |   |                    |         |                            |   |  |  |
|     SureBeam                           |   | $                       | 63,500  |                            | $      | 65,704 |  |
|     Commercial informationtechnologies |   |                         | 11,510  |                       |        | 53,431 |   |
|     Other                              |   |                         | — |                       |        | — |   |
|                                                            |        |                         |         |                            |        |
|                                                            |        | $                       | 75,010  |                            | $      | 119,135 |  |
|                                                       |   |                         |         |                            |   |
| Current liabilities ofdiscontinued operations              |   |                         |         |                       |        |  |   |
|     SureBeam                           |   | $                  | 16,176  |                            | $      | 30,977 |  |
|     Commercial informationtechnologies |   |                         | 10,343  |                       |        | 13,069 |   |
|     Other                              |        |                         | 2,336   |                            |        | 2,493 |  |
|                                                            |        |                         |         |                            |        |
|                                                            |        | $                       | 28,855  |                            | $      | 46,539 |  |
|                                                       |   |                         |         |                            |   |
| Non-current liabilities ofdiscontinued operations          |   |                    |         |                            |   |  |  |
|     SureBeam                           |   | $                       | — |                            | $      | 7,608 |  |
|     Commercial informationtechnologies |   |                         | 1,403   |                       |        | 2,324 |   |
|     Other                              |   |                         | — |                       |        | — |   |
|                                                            |        |                         |         |                            |        |
|                                                            |        | $                       | 1,403   |                            | $      | 9,932 |  |
|                                                       |   |                         |         |                            |   |

**Note (6)Debt**

    AtMarch 31, 2002, total borrowings outstanding under the Company'sprimary credit facility with a syndicate of commercial banks were$312.5 million at a weighted average interest rate of 5.04%.Commitments under letters of credit were $8.8 million at March 31,2002, $6.0 million of which reduce availability of the workingcapital line. Of the total borrowings, $13.8 million wasshort-term. At March 31, 2002, the Company was in compliance withall financial covenants under its various debtagreements.

    AtMarch 31, 2002, the Company had $1.1 million in restricted cash tosecure certain letter of credit obligations.

**Note (7) OtherFinancial Information**

     The Company hashistorically reported SureBeam as a separate operating segment. OnOctober 16, 2001, the Company adopted a definitive plan to spin offSureBean in the form of a tax-free dividend to Titan stockholders.In accordance with Accounting Principles Board Opinion No. 30,"Reporting the Results of Operations—Reporting the Effects ofDisposal of a Segment of a Business, and Extraordinary, Unusual andInfrequently Occurring Events and Transactions," all current andprior year data have been restated to reflect SureBeam as adiscontinued business, and it is no longer reported as a separatesegment.

    OnMarch 1, 2002, the Company adopted a plan to eliminate and hold forsale certain of its commercial information technology operationswithin Cayenta and Titan Technologies in order to allow managementto focus on operations with the most near term growthopportunities. As a result, Cayenta’s federal governmentoperations are now reported as a part of Titan Systems, andCayenta’s remaining operations are being reported in TitanTechnologies, which was formerly named Emerging Technologies andBusinesses.  In accordance with Statement of FinancialAccounting Standards No. 144, all current and prior year data havebeen restated to reflect the operations of Cayenta which have beeneliminated and held for sale as discontinued operations, and thesegment of Cayenta (Software Systems) is no longer reported as aseparate segment. Further, all prior period data has been restatedto reflect the change in Titan’s segment reporting for thecomponents previously reported as Cayenta that will be continued inTitan Systems and Titan Technologies.

    The following tablessummarize revenues and operating profit (loss) by operating segmentfor the three month period ended March 31, 2002 and 2001. Allsegment operating profit and loss data reported on an historicalbasis and for the current year have been reported before Corporateoverhead costs.

|                                      |   | **Threemonths ended March 31,** |    |
|-------------------------------------------|--------|---------------------------------|---------|
|                                           |        |                                 |         |
|                                           |        | **2002**                        |         | **2001** |  |
|                                           |        |                                 |         |  |  |
| Revenues:                                 |   |                            |    |   |   |   |   |
|     Titan Systems     |   | $                               | 304,852 |   | $ | 211,543 |   |
|     Titan Wireless    |   |                            | 20,822  |   |   | 21,014 |   |
|     TitanTechnologies |   |                            | 14,871  |   |   | 6,559 |   |
|                                           |        |                                 |         |  |  |
|                                      |   | $                               | 340,545 |   | $ | 239,116 |   |
|                                      |   |                                 |    |  |   |
| Operating Profit(Loss):                   |        |                                 |         |  |  |  |  |
|     Titan Systems     |   | $                               | 24,068  |   | $ | 4,691 |   |
|     Titan Wireless    |   |                            | (897    | ) |   | (74 | ) |
|     TitanTechnologies |   |                            | 2,629   |   |   | (561 | ) |
|                                           |        |                                 |         |  |  |
| Segment operating profitbefore Corporate  |   |                            | 25,800  |   |   | 4,056 |  |
| Corporate                                 |   |                            | (4,665  | ) |   | (4,505 | ) |
|                                           |        |                                 |         |  |  |
|                                      |   | $                               | 21,135  |   | $ | (449 | ) |
|                                      |   |                                 |    |  |   |

    The operating income ofthe Titan Systems segment for the three month period ended March31, 2001 includes a planned $12.9 million restructuring chargerelated primarily to the integration of ACS and AverStar, acquiredin 2000, and a realignment of business around its major categoriesof customers, which together resulted in personnel reductions andthe closing of certain facilities (see Note 3). Also in theTitan Systems segment, deferred profit of $1.0 million and $0.7million related to acquisitions in 2001, 2000 and 1999 wasrecognized in the three months ended March 31, 2002 and 2001,respectively.

    Operating income in theTitan Wireless segment in the three month period ended March 31,2001, includes restructuring charges of $0.5 million, as discussedin Note 3.

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

    The following datasummarize information relating to the per share computations forincome (loss) before extraordinary item:

|                                                                                                                                                                                                                                                                                                                                                                                            |   | **Threemonths ended March 31, 2002** |    | **Threemonths ended March 31, 2001** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|--------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                 |        |                                      |         |                                      |        |
|                                                                                                                                                                                                                                                                                                                                                                                            |   | **Loss (Numerator)**                 |    | **Shares (000's) (Denominator)**     |   | **PerShare Amounts** |   | **Loss (Numerator)** |   | **Shares (000's) (Denominator)** |   | **PerShare Amounts** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                 |        |                                      |         |                                      |        |  |  |  |  |  |  |  |  |
| Loss from continuing     operations before     cumulative effect of     change in accounting     principle                                                                                                                                                                                                      |   | $                                    | 7,425   |                                      |   |   |   |   |   | $ | (7,813 | ) |   |   |   |   |   |
| Less preferred stock     dividends                                                                                                                                                                                                                                                                                                                                          |   |                                 | (172    | )                                    |   |   |   |   |   |   | (172 | ) |   |   |   |   |   |
| Effect of minorityinterests                                                                                                                                                                                                                                                                                                                                                                     |   |                                 | (466    | )                                    |   |   |   |   |   |   | (587 | ) |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                 |        |                                      |         |                                      |        |  |  |  |  |  |  |  |  |
| Basic EPS:                                                                                                                                                                                                                                                                                                                                                                                      |   |                                 |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Income fromcontinuing         operationsbefore         cumulative effectof         change inaccounting         principleavailable to         commonstockholders |   |                                 | 6,787   |                                      | 70,771 |   | $ | 0.10 |  |   | (8,572 | ) | 53,377 |   | $ | (0.16 | ) |
| Effect of dilutivesecurities:                                                                                                                                                                                                                                                                                                                                                                   |   |                                 |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Stock options and         warrants                                                                                                                                                                                                                                                                                              |   |                                 | — |                                      | 1,614  |   |   | (1.01 | ) |   | — |   | — |   |   | — |   |
|                                                                                                                                                                                                                                                                                                                                                                                                 |        |                                      |         |                                      |        |  |  |  |  |  |  |  |  |
| Diluted EPS:                                                                                                                                                                                                                                                                                                                                                                                    |   |                                 |    |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Income fromcontinuing         operationsbefore         cumulative effectof         change inaccounting         principleavailable to         commonstockholders |   | $                                    | 6,787   |                                      | 72,385 |   | $ | 0.09 |  | $ | (8,572 | ) | 53,377 |   | $ | (0.16 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                      |    |                                 |   |    |   |  |   |   |   |   |   |

    Inthe three months ended March 31, 2002, options and warrants topurchase approximately 1,218,400 shares of common stock at pricesranging from $20.70 to $47.50 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 2,303,800 and 1,204,900 shares of common stock atprices ranging from $1.12 to $20.04 per share and $20.70 to $47.50per share, respectively, were not included in the computation ofdiluted EPS for the three month period ended March 31, 2001, due tothe loss from continuing operations and/or the exerciseprice.

    Approximately 5,038,000shares in the three month periods ended March 31, 2002 and March31, 2001 from the potential conversion of remarketable term incomedeferrable equity securities were not included in the computationsas their effect was anti-dilutive. Approximately 460,000 shares ofcommon stock in 2002 and 2001 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.

    Following are detailsconcerning certain balance sheet data:

|                                    |   | **March31, 2002** |   | **December 31, 2001** |
|-----------------------------------------|--------|-------------------|--------|----------------------------|
|                                         |        |                   |        |                            |
| Inventories:                            |   |              |   |                       |   |   |
|     Materials       |   | $                 | 15,977 |                       | $ | 15,720 |
|     Work-in-process |   |              | 8,767  |                       |   | 9,466 |
|     Finished goods  |   |              | 4,839  |                       |   | 3,926 |
|                                         |        |                   |        |                            |
|                                    |   | $                 | 29,583 |                       | $ | 29,112 |
|                                         |        |                   |        |                            |

    Supplemental disclosureof cash flow information:

| ** **                                                             | ** ** | **Threemonths ended March 31,** |
|------------------------------------------------------------------------|------------|---------------------------------|
|                                                                        |            |                                 |
| ** **                                                             | ** ** | **2002**                        | ** ** | **2001** |
|                                                                        |            |                                 |  |  |
| Noncash investing andfinancing activities:                             |       |                            |   |   |   |   |
|     Issuance of stock foracquisitions              |       | $                               | 149,984 |   | $ | — |
|     Gain related to issuanceof stock in subsidiary |       |                                 | — |   |  | 52,025 |
|     Shares contributed toemployee benefit plans    |       |                            | 3,604 |   |   | — |
|     Increase in non-recoursedebt                   |       |                            | 3,925 |   |   | 18,363 |
|                                                                        |            |                                 |  |  |
| Cash paid forinterest                                                  |       | $                               | 9,859 |   | $ | 6,926 |
| Cash paid for (providedby) income tax                                  |       |                            | (309 | ) |   | 910 |

**Note (8)Commitments and Contingencies**

    OnJanuary 6, 2000, Ion Beam Applications s.a., a Belgian corporation,and some of its U.S. subsidiaries ("IBA") filed an action fordeclaratory judgment in a federal court in Virginia against Titanand the SureBeam Corporation ("SureBeam") relating to SureBeam'spatents for SureBeam systems. The action attacked the validity ofSureBeam's core patent, sought a declaration that IBA and itscustomers had not infringed any of the 62 claims in SureBeam'spatent, and alleged that Titan and SureBeam engaged in unfaircompetition and that Titan and SureBeam's conduct constitutedpatent misuse. The case was moved to the federal court in SanDiego. On November 22, 2000, IBA filed an amended complaintalleging, in addition to the original claims, that Titan andSureBeam engaged in false advertising, monopolization, restraint ontrade and unfair business practices.

    OnJanuary 25, 2002, Titan and SureBeam announced that they settledthe litigation with IBA. Under the settlement, IBA dropped all theclaims it made against Titan and SureBeam in the litigation,including IBA's challenge to the validity and enforceability ofSureBeam's core patent. Titan and SureBeam agreed that IBA and itscustomers may continue to operate or use IBA's electronicirradiation facility in Bridgeport, New Jersey. The settlementterms include, among other things, that IBA will purchase itsrequirements in the United States for e-beam and x-ray systems foruse for processing food and sanitizing mail from Titan and SureBeamduring the next four years, provided Titan and SureBeam offercompetitive terms. Titan and SureBeam also agreed to purchase theirrequirements of accelerators with above 150 kilowatts of power fromIBA during the same four-year period, provided IBA offerscompetitive terms. Other terms of the settlement agreement areimmaterial and were not discloseable.

    Weare involved 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 andour subsidiaries are named as defendants in legal proceedings fromtime to time and we or our subsidiaries may assert claims from timeto time. In addition, we acquire companies from time to time thathave legal actions pending against them at the time of acquisition.Based upon current information and review, we believe the ultimateliability or recovery with respect to pending actions would notmaterially affect the Company's consolidated financial position orresults of operations.  However, our evaluation of the likelyimpact of these actions could change in the future and anunfavorable outcome, depending upon the amount and timing, couldhave a material adverse effect on the Company’s results ofoperations or cash flows in a future period.

**Note (9) Related PartyTransactions**

    Inconnection with our SureBeam business, we have entered into anumber of agreements with SureBeam, including a Corporate servicesagreement pursuant to which we provide general corporateadministrative support, facility space and related maintenance andoccupancy services through a facilities allocation and a taxallocation agreement whereby in the event Titan offsets its taxablegains with SureBeam losses, Titan will compensate SureBeam in cashfor the benefit it receives for use of SureBeam losses, whenSureBeam demonstrates that it is able to utilize those losses orthe losses would have otherwise expired.

    InSeptember 2001, Titan purchased a world-wide perpetual andexclusive, non-royalty bearing license to use SureBeam'sintellectual property for all applications and fields other thanthe food, animal hide and flower markets, for the followingconsideration: 1) Titan provides to SureBeam a $50 million seniorsecured line of credit, with customary financial, affirmative andnegative covenants, 2) the exchange of the $75 million debt owed bySureBeam to Titan for additional shares of Class B and Class Acommon stock of SureBeam, and 3) a cash payment of $8 million, with$4 million paid at September 30, 2001 and four installments of $1million each payable on March 31, 2002, June 30, 2002, September30, 2002 and December 31, 2002. The Company has obtained approvalfrom its senior lenders to extend $25 million of this creditfacility, and expects to obtain the consent of its lenders for theremaining $25 million prior to the spin-off of SureBeam.

    OnMarch 29, 2002 as part of our commitment to extend a $50.0 millionline of credit to SureBeam, Titan executed a $25.0 millionirrevocable funding commitment to SureBeam. The $25 million creditfacility is at an interest rate equal to Titan's effective weightedaverage debt rate plus 300 basis points; is secured by all assetsof SureBeam; and matures on the earlier of (i) December 31, 2005,(ii) the date on which Titan's lenders accelerate the date forpayment by Titan of amounts outstanding under Titan's senior creditagreement, (iii) the date of termination of Titan's senior creditagreement with its lenders, or (iv) the date SureBeam enters into a$50 million credit facility with Titan.

    Related to the exchangeof the $75 million debt owed by SureBeam to us, we exchanged $2million of the balance on December 31, 2001 for 190,385 Class Bcommon shares of SureBeam, and exchanged the remaining $73 millionof the balance on February 13, 2002 for 4,441,496 Class A and3,225,765 Class B common shares of SureBeam.

    Wehave entered into subcontract agreements with SureBeam for them tobuild, design and integrate linear accelerators we are providingfor our customers in our Scan Technologies business to providemedical sterilization electron beam accelerators as well as mailsanitization systems for the United States Postal Service ("USPS").All appropriate intercompany eliminations have been made in ourconsolidated financial statements.

    Titan has also committedto utilize SureBeam as its exclusive supplier, provided SureBeamoffers competitive terms, for all e-beam and x-ray acceleratorsystems owned and operated by Titan or sold to a third partythrough at least December 31, 2003. In addition, Titan has alsocommitted to utilize SureBeam exclusively for all integrationservices related to accelerator systems until at least December 31,2002.

    Inrelation to SureBeam's strategic alliance with Hawaii Pride, Titanhas guaranteed up to the greater of SureBeam's equity interest inHawaii Pride or 19.9% of Hawaii Pride's $6.8 million, 15-year loanfrom its lender, Web Bank. As of March 31, 2002, Titan hasguaranteed approximately $1.3 million, or 19.9% of the loanbalance.

    InMarch 2002, our Board of Directors adopted a stock optionrelinquishment program, the primary purpose of which is 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.               |

    The program also assistsour directors and executive officers with their individualfinancial planning. Under the program, a participant can relinquisheligible, in-the-money stock options in exchange for a loan, theprincipal amount of which is 150% of the difference between theaggregate exercise price of the options and the product of(i) the number of shares issuable upon exercise of the optionsand (ii) a 20 day trailing average of the daily high andlow sales price of our common stock prior to relinquishment. Theloans will bear interest at a rate equal to the applicable federalrate as published by the Internal Revenue Service for the month inwhich the loan is made. The loans are contingent upon theparticipant's, within 90 days, utilizing a portion of the loanproceeds to purchase a life insurance policy with a death benefitsufficient to repay the loan and accrued interest thereon uponmaturity. The deadline for notice from directors and executiveofficers of their intent to participate in the current program wasMarch 29, 2002.

    If, subsequent to theindividual's notice to participate and within 90 days afterreceiving the loan proceeds, the individual elects not toparticipate in the program or no life insurance policy is obtained,the loans are repaid with accrued interest thereon and the optionsare returned to the individual. The loans mature on the death ofthe second to die of the participant and his/her spouse. Under theprogram, to date the following conditional transactions haveoccurred, each still within the 90 day contingencyperiod:
| • |   | Dr. Ray, Chairman ofthe Board, President and Chief Executive Officer: 222,380 optionsconditionally relinquished, $3,985,725 principal amount of loan,5.48% interest per annum; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                           |
| • |   | Mr. Costanza, SeniorVice President, General Counsel and Secretary: 40,000 optionsconditionally relinquished, $614,400 principal amount of loans,5.48% interest per annum;      |
|   |   |                                                                                                                                                                           |
| • |   | Mr. Fink, director:15,000 options conditionally relinquished, $336,337.50 principalamount of loan, 5.48% interest per annum;                                                   |
|   |   |                                                                                                                                                                           |
| • |   | Mr. Hanisee,director: 10,000 options conditionally relinquished, $220,184principal amount of loan, 5.48% interest per annum; and                                               |
|   |   |                                                                                                                                                                           |
| • |   | Mr. Alexander,director: 19,972 options conditionally relinquished, $499,999principal amount of loan, 5.48% interest per annum.                                                 |

    AtMarch 31, 2002, the Company had other loans receivable from threeofficers of two of the Company's subsidiaries totaling $0.3million.

**Note (10)Subsequent Event**

    OnApril 8, 2002, the Company entered into an agreement with WachoviaBank, National Association and Wachovia Securities for $450 millionof committed financing. The financing is from a syndicate ofcommercial banks including Wachovia Securities acting as Sole LeadArranger and Wachovia Bank, National Association, as AdministrativeAgent, The Bank of Nova Scotia and Comerica Bank as Co-SyndicationAgents and Branch Banking Trust Company and Toronto Dominion Bankas Co-Documentation Agents and other financial institutions. Subsequent to April 8, 2002, the facility was increased to $485million, which reflects additional capacity of $35 million on therevolving credit facility, up to $135 million.  This financingis expected to close in mid-May, 2002, subject to negotiation ofterms and conditions.  The proceeds of the loan will be usedin part to refinance outstanding indebtedness on theCompany’s $425 million credit facility arranged by CreditSuisse First Boston in February 2000 (See Note 6). SureBeam is not a guarantor under the new credit agreement, and itsassets no longer will be used as collateral for the banksyndicate.

**THE TITAN CORPORATION**

**Item 2.   Management’s Discussion and Analysis ofFinancial Condition and Results of Operations**

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

## **Results ofOperations**

    During the first quarterof 2002, the Company made the decision to sell certain of itscommercial information technology operations within Cayenta andTitan Technologies in order to allow management to focus on thoseoperations with the most near term growth opportunities.  As aresult, Cayenta’s federal government operations have become apart of Titan Systems, and Cayenta’s remaining operations arebeing reported in Titan Technologies, formerly Titan’sEmerging Technologies and Businesses segment.  All commercialoperations that are held for sale have been reflected asdiscontinued operations for all periods presented in Titan’sconsolidated financial statements.  All prior period financialinformation has been restated to reflect the newsegments.

### ***Three Months EndedMarch 31, 2002:***

    *Consolidated*.  Ourconsolidated revenues increased from $239.1 million in the firstquarter of 2001 to $340.5 million in the first quarter of2002.  Increased revenues were reported in our Titan Systemssegment, primarily attributable to the acquisitions of BTG, Inc. inthe fourth quarter of 2001 and Datron in the third quarter of 2001,and in our Titan Technologies segment, primarily as a result ofrevenues generated on Titan’s contract with the United StatesPostal Service (USPS) to provide mail sanitizationsystems. 

    *TitanSystems*.  Titan Systems’ revenues increasedfrom $211.5 million in the first quarter of 2001 to $304.9 millionin the first quarter of 2002.  The acquisitions of BTG andDatron contributed approximately $69.6 million and $9.0 million ofthe revenues in the first quarter of 2002, respectively, with theremaining increase in revenues driven by internal revenue growthgenerated by strong demand from the Army for acquisition andlogistics management and systems engineering services, from theNavy for satellite navigation system support, and aviationengineering and integration services in support of C4ISR andnetwork centric warfare activities, and for information solutions,including both software and modem products, designed to increasethe efficiency of satellite communications systems.  There waslittle impact from the acquisition of Jaycor, as the acquisitionclosed on March 24, 2002.  Comparable revenues for the firstquarter of 2001 for BTG and Datron (which were not acquired untilthe fourth and third quarters of 2001, respectively), wereapproximately $58.8 million and $21.2 million,respectively. 

    *TitanWireless*.  Titan Wireless’ revenues decreasedslightly from $21.0 million in the first quarter of 2001 to $20.8million in the first quarter of 2002.  Increased servicerevenues of approximately $4.4 million from Titan’s wholesalelong distance business generated by Titan’s consolidatedjoint venture, Sakon LLC, were offset by a $4.6 million decrease inrevenues generated by the systems integration business, primarily aresult of decreased revenues recorded on Titan Wireless’project in Benin to build a telecommunications system for itscustomer, The Office of Post and Telecommunication of Benin(“OPT”).

    *TitanTechnologies*.  Titan Technologies revenues increasedfrom $6.6 million in the first quarter of 2001 to $14.9 million inthe first quarter of 2002.   The increase in 2002 isrelated to revenues of approximately $5.9 million generated onTitan’s contract with the U.S. Postal Service to provide mailsanitization systems, and due to increased revenues ofapproximately $1.7 million generated by certain components ofCayenta, which provide software and integration services forutilities and municipalities.

**

*Selling, General andAdministrative*

    Our SG&A expensesdecreased from $43.8 million in the first quarter of 2001 to $42.8million in the first quarter of 2002.  SG&A, as apercentage of revenues, decreased from 18.3% in the first quarterof 2001 to 12.6% in the first quarter of 2002.   Thedecrease in 2002 was due in part to reduced amortization ofgoodwill and purchased intangibles from $3.7 million in the firstquarter of 2001 to $1.4 million in the first quarter of 2002. Excluding the amortization of goodwill and purchased intangiblesand deferred compensation of $1.0 million in both years, SG&Adecreased from 16.3% in 2001 to 11.9% in 2002.  The decreasein 2002 is in part attributable to certain cost reductions thatwere made during 2001, as well as to a difference in themethodology of the classification of operating costs reported ascosts of sales versus sales, general & administrative costs, asdefined by the recently acquired company BTG’s stateddisclosure statement with its appropriate governmentcustomers.  We expect to conform BTG’s disclosurestatement and classification of operating costs to thoseclassifications used by Titan by the end of 2002.

*Research andDevelopment*

    Our R&D expensesincreased from $3.4 million in the first quarter of  2001 to$4.9 million in the first quarter of 2002.  The increase in2002 is attributable to increased development expenses incurred inLinCom Wireless.  As a percentage of revenues, R&Dexpenses remained flat at 1.4% in the first quarter of 2001 and2002.

*Acquisition andIntegration Related Charges and Other*

### ***Fiscal 2001Charges***

     Acquisition andintegration related charges and other of $13.4 million in the firstquarter of 2001 were comprised of costs of $12.2 million related tothe integration of ACS and AverStar, and a realignment of businessaround the major categories of customers of Titan Systems, whichtogether resulted in personnel reductions and the closing ofseveral facilities.  Included in these costs is approximately$3.1 million of employee termination and retention costs, $3.5million of costs to eliminate duplicate and excess facilities andassets, $1.1 million of duplicate personnel costs to transitionprocesses and functions, and $1.5 million of asset impairment costsof certain asset balances for which the recoverability of suchbalances was impaired due to the exit of a satellite servicesbusiness within the Titan Systems segment.  Approximately $3.0million of the charge was related to another subsidiary acquired ina prior year for contingencies arising from matters pre-existing toTitan’s acquisition of the business.  That acquisitionwas accounted for as a purchase, and those matters were resolved in2001.  In addition, approximately $0.7 million of costsrelated to capitalized software costs previously designed for B2Bexchanges incurred in Cayenta operations now a part ofTitan’s government business.

    Also included in the acquisition and integration related chargesand other is a charge of $0.5 million of employee termination costsin the Titan Wireless segment related to certain organizationalchanges within that business unit and the elimination of theinternal product development group. 

*Operating Profit(Loss)*

    *Consolidated*.  Ouroperating profit improved from an operating loss of $0.5 million inthe first quarter of 2001 to operating profit of $21.1 million inthe first quarter of 2002.   Our operating loss in 2001included acquisition and integration related charges and other of$13.4 million, as well as $3.7 million of amortization of goodwilland $1.0 million of deferred compensation.  Included in ouroperating profit in 2002 is $1.4 million of amortization ofpurchased intangibles as well as $1.0 million of deferredcompensation.  Excluding the acquisition and integrationrelated charges and amortization of goodwill and purchasedintangibles and deferred compensation, operating profit increasedfrom $17.6 million in the first quarter of 2001 to $23.5 million inthe first quarter of 2002.  Increased operating profit wasprimarily attributed to the increase in revenues discussedpreviously, offset by lower margins in our government business andin Titan Wireless, both attributable to a higher mix of lowermargin service business in 2002.

    *Segment OperatingProfit*.  Operating profit reported by businesssegment includes substantially all of the segment’s costs ofoperations and administration.  The segment performance isbased upon profit or loss before interest expense, income taxes,and before allocated costs of corporate overhead.  Corporateoverhead may include, among other things, costs for financialaccounting, marketing, administrative and legal activities incurredby Titan.  Consequently, the results of operations of thesegments may not be indicative of the actual results that would beshown in the financial statements of those segments if prepared ona stand-alone basis.  The discussion of segment operatingprofit below includes only the operating profits for each of ourbusiness segments and does not include separate discussion of ourcorporate overhead. 

    *TitanSystems*.  Titan Systems' operating profit increasedfrom $4.7 million in the first quarter of 2001 to $24.1 million inthe first quarter of 2002.  Included in the 2001 operatingresults is an integration and acquisition related charge of $12.9million and amortization of goodwill of $2.4 million. Included in the 2002 operating results is amortization of purchasedintangibles of $1.4 million.  Excluding the charges and theamortization of goodwill and purchased intangibles, operatingprofit increased from $19.9 million in the first quarter of 2001 to$25.4 million in the first quarter of 2002.   Theincrease in operating profit was primarily a result of theincreased revenues discussed previously, offset by lower margins asa result of the BTG and Datron acquisitions, which increased theservice business mix in Titan Systems.

    *TitanWireless*.  Titan Wireless’ operatingperformance decreased from an operating loss of $0.1 million in thefirst quarter of 2001 to an operating loss of $0.9 million in thefirst quarter of 2002.  Included in the 2001 operating losswas a charge of $0.5 million for employee termination benefits aswell as $0.4 million for amortization of goodwill.  Excludingthe charge and amortization of goodwill, operating profit in thefirst quarter of 2001 was $0.9 million compared to an operatingloss of $0.9 million in the first quarter of 2002.  Decreasedmargins were primarily the result of the shift to a higherproportion of service revenue in wholesale long distance businessfrom the more profitable systems integration business.  Inaddition, continued investment in the development of TitanWireless’ corporate retail business impacted the firstquarter of 2002 operating results.

    *TitanTechnologies*.  Titan Technologies operating resultsimproved from an operating loss of $0.6 million in the firstquarter of 2001 to operating income of $2.6 million in the firstquarter of 2002.  The operating profits in 2002 were impactedby the increase in revenues discussed previously, offset partiallyby increased research and development expenses in LinCom Wireless.The first quarter of 2001 operating results include approximately$0.9 million of amortization of goodwill. Excluding the impact ofthe amortization of goodwill in 2001, operating profit increasedfrom $0.4 million in the first quarter of 2001 to $2.6 million inthe first quarter of 2002.

*Interest Expense,Net*

    Our net interest expensedecreased slightly from $8.6 million in the first quarter of 2001to $8.3 million in the first quarter of 2002.  Net interestexpense decreased primarily as a result of reduced effectiveinterest rates.  Borrowings from our primary bank lines ofcredit, excluding working capital lines from acquired companies,averaged  $310.9 million at a weighted average rate of 8.5%during the first quarter of 2001, compared to $357.9 million at aweighted average rate of 5.08% during the first quarter of2002.

*IncomeTaxes*

    Consolidated income taxesreflect effective rates of a benefit rate of 6.7% in the firstquarter of 2001 compared to a provision rate of 42% in the firstquarter of 2002.  The reduced rate for the tax benefit in 2001is primarily due to significant non-deductible expenses which wererecorded for financial reporting purposes, which resulted in areduced benefit rate for the net loss reported. 

*Net Income(Loss)*

    Inthe first quarter of 2001, we reported a net loss of $59.9 millioncompared to a net loss of $33.6 million in the first quarter of2002.  Included in the net loss for the first quarter of 2002is a charge of $40.1 million, net of related tax benefits of $10.0million, for the cumulative effect of change in accountingprinciple, reflecting the adoption of SFAS No. 142.  Loss fromdiscontinued operations was $52.1 million in the first quarter of2001 compared to a loss of $0.9 million in the first quarter of2002.  Included in the loss from discontinued operations in2001 was approximately $34.5 million of a net loss from theCompany’s SureBeam operations, which included approximately$38.9 million of deferred compensation related to the initialpublic offering of SureBeam in March 2001.  There are nolosses included in the loss from discontinued operations for thefirst quarter of 2002 related to SureBeam as all operating losseswere offset against the accrual for estimated operating losseswhich the Company accrued in the third quarter of 2001.

## **Liquidity and CapitalResources**

    Wegenerated approximately $30.0 million cash from our continuingoperations during the quarter ended March 31, 2002, resulting fromincome from continuing operations coupled with a net sourceresulting from changes in working capital.  Our investingactivities generated net cash of approximately $15.0 million,resulting from net cash acquired of approximately $26.8 million,primarily from the Jaycor acquisition which closed in late March2002, offset by investments and capital expenditures.

    Our financing activitiesused cash of $20.1 million, primarily reflecting reductions ofdebt  of $20.4 million, including $17.5 million on our creditfacility and reductions of the debt of acquired companies. Proceeds of $2.6 million were received from the exercise of stockoptions.

At March 31, 2002, totalborrowings under our credit facility were $312.5 million at aweighted average interest rate of 5.04%.  Commitments underletters of credit were $8.8 million at March 31, 2002, $6.0 millionof which reduce availability of our working capital line, resultingin $94.0 million of availability on our working capital line atMarch 31, 2002.  Of the total borrowings, $13.8 million wasshort-term.

    OnFebruary 23, 2000, we entered into a credit agreement for $275million of financing from a syndicate of commercial banks. Thecredit facility also allowed us to increase total availability byan additional $100 million, if needed, for an aggregate of $375million. The credit facility was subsequently amended on June 1,2000 to provide for an increase in total availability for anadditional $50 million, for an aggregate total of $425 million. Theproceeds of the loan were used in part to refinance outstandingindebtedness on our $190 million credit facility arranged by Bankof Nova Soctia in June 1999. The credit facility is secured bysubstantially all of our and our subsidiaries' assets andguaranteed by substantially all of our subsidiaries, other than, ineach case, SureBeam and our foreign operations. SureBeam ceasedbeing a guarantor and having its assets pledged as collateral forthe credit facility following the completion of its initial publicoffering on March 16, 2001. The $425 million credit facility iscomprised of a six-year senior secured multi-draw term loanfacility in an aggregate principal amount of up to $75 million, twoseven-year senior secured term loan facilities in an aggregateprincipal amount of $250 million, and a five-year senior securedrevolving credit facility in a aggregate principal amount of up to$100 million. Loans made under the multi-draw term loan facilitymature on the sixth anniversary of the closing date of the creditfacility, and amortize beginning in the credit facility's secondyear, which began with the quarter ended June 30, 2001 and endswith the quarter ending March 31, 2002, as follows:  2.5%quarterly in the third and fourth quarters of year two of thecredit facility, 3.75% quarterly in year three of the creditfacility, 5% quarterly in year four of the credit facility, 6.25%quarterly in year five of the credit facility, 7.5% quarterly inthe first and second quarters of year six of the credit facilityand 10% in the third quarter of year six of the credit facility andon the sixth anniversary of the closing date of the creditfacility. Loans made under the term loan facilities mature on theseventh anniversary of the closing date of the credit facility, andbegan amortizing in the credit facility's first year, which beganwith the quarter ended June 30, 2000 and ended with the quarterended March 31, 2001, with the following amortizationschedule:  0.25% quarterly for years one through six ofthe credit facility and 23.5% quarterly for the first threequarters of year seven of the credit facility and on the seventhanniversary of the closing date of the credit facility. Under eachof the term loan facilities and the revolving facility, we have theoption to borrow at the bank's base rate or at adjusted LIBOR plus,in each case, an applicable ratio based on the ratio of our totaldebt to EBITDA, or earnings before interest and taxes anddepreciation and amortization. The agreement contains financialcovenants that set maximum debt to EBITDA limits of 3.25 to 1 andrequire us to maintain minimum interest coverage of at least 4.0 to1, minimum fixed charge coverage of at least 1.0 to 1 and minimumlevels of net worth of $260.6 million.  The Company was incompliance with all financial covenants as of March 31,2002.

    OnDecember 10, 1999, our wholly owned subsidiary, Titan Africa, Inc.("Titan Africa"), in connection with its contract to build asatellite-based telephone system for its customer, the nationaltelephone company of Benin, Africa, entered into a Loan Facilityagreement for up to 30.0 billion Francs CFA (the currency of theAfrican Financial Community), equivalent to approximately $45.0million U.S. dollars, with a syndicate of five banks, with AfricaMerchant Bank as the arranger. During the first quarter of 2002,the loan facility was increased an additional 6.0 billion FrancsCFA, bringing the total to approximately $51 million U.S. dollars.This medium term financing is a non-recourse loan to Titan Africawhich is guaranteed by the national telephone company of Benin,Africa and secured by the national telephone company's equipmentand revenues related to the project. The facility has a fixedinterest rate of 9.5% and will be repaid in seven equal semi-annualpayments from the net receipts of this project, or by the OPT inthe event that such receipts are not adequate to make thesepayments, which commenced on December 31, 2000 and were scheduledto end on December 31, 2003. The borrowings on this facility havebeen utilized to fund the subcontractor costs incurred by Alcatelof France, a major subcontractor to this project. The non-Alcatelequipment provided by Titan Africa was financed through arrangementwith the OPT whereby Titan Africa would be paid in seven equalsemi-annual installments, which commenced on December 31,2000.  Due to the approximate six to nine month delay in thedelivery of the system, which was impacted by the expansion of theoriginal project to include increased GSM lines, increased capacityand capability of the VSAT sites and an overall increase in linesin Benin, the Africa Merchant Bank and Titan Africa havecollectively agreed to extend the due date of the semi-annualprincipal payments until such time as the service revenues haveachieved certain levels, which is anticipated to occur in mid tolate 2002. The terms of Titan Africa's agreement with the customerinclude, among other things, a revenue sharing of total netreceipts earned on this project for up to a period of 9 yearsdepending upon when the equipment has been paid for. As of March31, 2002, approximately $46.4 million was drawn on this facility,which has been reflected as Non-recourse debt in the accompanyingconsolidated balance sheet and approximately $99.6 million has beenreflected as Long-term contract receivables, related to the grossamount due from the OPT on the contract.  The $46.4 milliondrawn on the facility reflects the amount that has been funded bythe Africa Merchant Bank to cover subcontract costs.  InOctober 2000, we collected an $18 million receivable from anAfrican group related to the sale of a portion of our economicinterest, net of all fixed equipment payments, in the revenuesharing of this project. As of March 31, 2002, the outstandingreceivable balance, net of the non-recourse debt, due on thiscontract was approximately $53 million. Management believes thatthe appropriate insurance policies are in place to cover riskrelated to loss in Benin and certain other foreigncountries.

    Inrelation to our investment in Ivoire Telecom, we provided equipmentwith an approximate aggregate value of $4.5 million and wecommitted to provide up to a maximum of $35 million for capitalexpenditures and other expenditures necessary to build out theIvoire Telecom network. At March 31, 2002, this maximum commitmenthas been substantially funded, resulting in an investment balanceof approximately $50.0 million, which includes our initial equityinvestment of approximately $10.5 million and equipment weprovided. Our investment is reflected in Other Assets in theaccompanying consolidated balance sheet. In addition, in connectionwith our agreement to acquire an additional 30.0% equity interestin Sakon, an additional $12.5 million of consideration was due andpayable upon certain revenue targets being attained. These targetswere met in January 2001, and a $5.0 million installment was madein the second quarter of 2001, a $3.75 million installment was madein the first quarter of 2002, and the remaining $3.75 million isexpected to be satisfied by issuance of Titan common stock later in2002.

    There are no Titanguarantees of debt, either directly or indirectly, associated withIvoire Telecom or Sakon or any other unconsolidated subsidiariesother than approximately $2.0 million of equipmentfinancing.

    Aspart of our strategy of seeking external financing to grow ourcommercial businesses, our discontinued SureBeam subsidiarycompleted its initial public offering of its common stock on March16, 2001 and raised gross proceeds of $67 million. We extended acredit facility for up to a maximum of $75.0 million under whichSureBeam owed us approximately $73.0 million as of December 31,2001. On December 31, 2001, $2.0 million of the note was exchangedfor common stock of SureBeam, at $10.505, the fifteen day tradingaverage of SureBeam stock as of December 30, 2001, which resultedin the exchange for 190,385 Class B common shares of SureBeam. Asof December 31, 2001, SureBeam had approximately $73.0 million inprincipal outstanding under the note. On February 13, 2002, theremaining outstanding balance on the note of $73.0 million wasexchanged for equity of SureBeam, at $9.521 per share, the twentyday trading average of SureBeam stock as of February 12, 2002,which resulted in the exchange for 4,441,496 Class A and 3,225,765Class B common shares of SureBeam.

    OnOctober 16, 2001, Titan adopted a definitive plan to spin offSureBeam in the form of a tax-free dividend to Titan stockholderswithin 12 months from that date. The plan involves filing a letterruling request with the Internal Revenue Service seeking approvalof the tax-free distribution. Titan has filed the letter rulingrequest, and intends to execute the spin off as soon as practicalfollowing the receipt of a favorable ruling and all required thirdparty consents. Titan has purchased a world-wide perpetual andexclusive, non-royalty bearing license to use SureBeam'sintellectual property for all applications and fields other thanthe food, animal hide and flower markets for the followingconsideration: 1) Titan provides to SureBeam a $50 million seniorsecured line of credit, with customary financial, affirmative andnegative covenants, 2) the exchange of the $75 million debt owed bySureBeam to Titan for additional shares of Class B and Class Acommon stock of SureBeam, and 3) a cash payment of $8 million, with$4 million paid at September 30, 2001 and four installments of $1.0million payable on each of March 31, 2002, June 30, 2002, September30, 2002 and December 31, 2002. The Company has obtained approvalfrom its senior lenders to extend $25 million of this creditfacility, and expects to obtain the consent of its lenders for theremaining $25 million prior to the spin-off of SureBeam. Inaddition, Titan and SureBeam are negotiating other customaryagreements in connection with the planned spin off ofSureBeam.

    Funding for theadvancement of our strategic goals, including acquisitions andcontinued investment in targeted commercial businesses and start-upventures and capital expenditures, is expected to continue. We planto finance these requirements from a combination of sources, whichinclude cash generation from our core businesses, our creditfacility and other available cash sources. Management believes thatthe combination of our existing cash, amounts available under ourcredit 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 twelve months.However, we could elect, or we could be required, to raiseadditional funds during that period and we may need to raiseadditional capital in the future. Additional capital may not beavailable at all, or may not be available on terms favorable to us.Any additional issuance of equity or equity-linked securities mayresult in substantial dilution to our stockholders. Management iscontinually monitoring and reevaluating its level of investment inall of its operations, specifically the investment required infiscal 2002 to further grow its commercial businesses, and thefinancing sources available to achieve our goals in each businessarea.

****

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

    Statements contained inthis Management's Discussion and Analysis of Financial Conditionand Results of Operations which are not historical facts areforward looking statements within the meaning of Section 27Aof the Securities Act of 1933 and Section 21E of theSecurities Exchange Act of 1934. Examples of such forward lookingstatements include our expectations regarding our continuinginvestments in commercial businesses and start-up ventures, ourplanned financing of these ventures and the sufficiency of ouravailable liquidity to fund investments and working capital, theCompany's belief that its technology-based businesses will continueto grow or result in profitability, that it has built a financiallysound company, that it is uniquely positioned to grow its coreoperations or take advantage of new opportunities, that it willcontinue to focus on strengthening and growing its businesses,building its patent portfolio and commercializing new innovativetechnologies, and that it expects a greater percentage of revenuesin Titan Wireless to be derived from the provision of services.Actual results may differ materially from those stated or impliedin the forward looking statements. Further, certain forward lookingstatements are based upon assumptions of future events which maynot prove to be accurate and are subject to risks and uncertaintiesthat could cause actual results to differ materially from those setforth or implied 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, 2001, including the Company's entry into newcommercial businesses that require the Company to develop demanedfor its product, its ability to execute its spin off strategy, itsability to access the capital markets, dependence on continuedfunding of U.S. Department of Defense and federal civilian agencyprograms, contract termination risks, risks associated withacquiring other companies, including integration risks, the risksof doing business in developing countries and internationalmarkets, including foreign currency risks, and other risksdescribed in the Company's Securities and Exchange Commissionfilings.

**PART II—OTHER INFORMATIONTHE TITAN CORPORATION**

**Item 1. Legal Proceedings**

    OnJanuary 6, 2000, Ion Beam Applications s.a., a Belgian corporation,and some of its U.S. subsidiaries ("IBA") filed an action fordeclaratory judgment in a federal court in Virginia against Titanand the SureBeam Corporation ("SureBeam") relating to SureBeam'spatents for SureBeam systems. The action attacked the validity ofSureBeam's core patent, sought a declaration that IBA and itscustomers had not infringed any of the 62 claims in SureBeam'spatent, and alleged that Titan and SureBeam engaged in unfaircompetition and that Titan and SureBeam's conduct constitutedpatent misuse. The case was moved to the federal court in SanDiego. On November 22, 2000, IBA filed an amended complaintalleging, in addition to the original claims, that Titan andSureBeam engaged in false advertising, monopolization, restraint ontrade and unfair business practices.

    OnJanuary 25, 2002, Titan and SureBeam announced that they settledthe litigation with IBA. Under the settlement, IBA dropped all theclaims it made against Titan and SureBeam in the litigation,including IBA's challenge to the validity and enforceability ofSureBeam's core patent. Titan and SureBeam agreed that IBA and itscustomers may continue to operate or use IBA's electronicirradiation facility in Bridgeport, New Jersey. The settlementterms include, among other things, that IBA will purchase itsrequirements in the United States for e-beam and x-ray systems foruse for processing food and sanitizing mail from Titan and SureBeamduring the next four years, provided Titan and SureBeam offercompetitive terms. Titan and SureBeam also agreed to purchase theirrequirements of accelerators with above 150 kilowatts of power fromIBA during the same four-year period, provided IBA offerscompetitive terms. Other terms of the settlement agreement areimmaterial and were not discloseable.

    Inthe ordinary course of business, defense contractors are subject tomany levels of audit and investigation by various governmentagencies. Further, we are subject to claims and from time to timeare named as defendants in legal proceedings. We may also assertclaims from time to time. In the opinion of management, the amountof ultimate liability or recovery with respect to these actionswill not materially affect our financial position or results ofoperations taken as a whole.  However, our evaluation of thelikely impact of these actions could change in the future and anunfavorable outcome, depending upon the amount and timing, couldhave a material adverse effect on our results of operations or ourcash flows in a future period.

**Item 6. Exhibits and Reports on Form8-K.**

| a.     |   | List ofexhibits:                                                              |
|--------|--------|-------------------------------------------------------------------------------|
|   |
|   | 13     |                                                                          | The Titan Corporation 2001Annual Report to Shareholders. |
|   |
| b.     |   | During the three monthsended March 31, 2002, the Company filed the following: |
|   |
|   | (1)    |                                                                          | Current report on Form 8-Kdated January 6, 2002, to report that on January 6, 2002, The TitanCorporation, T T III Acquisition Corp., a wholly-owned subsidiaryof Titan, and GolbalNet entered into a merger agreement, pursuantto which T T III Acquisition Corp. will be merged with and intoGlobalNet.  GlobalNet will be the surviving corporation in themerger and will become a wholly-owned subsidiary of Titan, whichincluded a copy of the Agreement and Plan of Merger, dated January6, 2002, among The Titan Corporation, T T III Acquisition Corp.,and GlobalNet, Inc., the Press Release, dated January 7, 2002, andthe Voting Agreement, dated as of January 6, 2002, among the TitanCorporation, T T III Acquisition Corp., and certain stockholdersparty thereto. |
|   |
|   | (2)    |                                                                          | Current report on Form 8-Kdated January 21, 2002, to report that on January 21, 2002, TheTitan Corporation, a Delaware corporation (“Titan”),Thunderbird Acquisition Corp., a California corporation and Jaycor,Inc., a California corporation (“Jaycor”) entered intoa merger agreement, pursuant to which Thunderbird Acquisition Corp.will be merged with and into Jaycor (the “Merger”) withJaycor as the surviving entity, which included the Agreement andPlan of Merger and Reorganization, dated as of January 21, 2002, byand among The Titan Corporation, Thunderbird Acquisition Corp. andJaycor, Inc., the Press Release, dated January 21, 2002, and theForm of Voting Agreement. |
|   |   |                                                                          |
|   | (3)    |                                                                          | Current report on Form8-K/A dated January 6, 2002, filed for the purpose of providingGolbalNet’s historical financial statements. |
|   |   |                                                                          |
|   | (4)    |                                                                          | Current report on Form8-K/A dated January 6, 2002, filed for the purpose of providingJaycor’s historical financial statements. |
|   |   |                                                                          |
|   | (5)    |                                                                          | Current report on Form 8-Kdated February 11, 2002, to report the issuance of a press releaseregarding the Company’s earning for the fourth quarter andthe year ended December 31, 2001, including a copy of such pressrelease. |
|   |   |                                                                          |
|   | (6)    |                                                                          | Current report on Form 8-Kdated February 23, 2002, to report that on February 23, 2002, TheTitan Corporation, a Delaware corporation (“Titan”),Thunderbird Acquisition Inc., a New Mexico corporation and Science& Engineering Associates, Inc., a New Mexico corporation(“SEA”) entered in to a merger agreement, pursuant towhich Thunderbird Acquisition Inc. will be merged with and into SEA(the “Merger”) with SEA as the surviving entity, whichincluded the Agreement and Plan of Merger and Reorganization, datedas of February 23, 2002, by and among The Titan Corporation,Thunderbird Acquisition Inc. and Science and EngineeringAssociates, Inc., Form of Voting Agreement, and the Press Release,dated February 25, 2002. |
|   |   |                                                                          |
|   | (7)    |                                                                          | Current report on Form 8-Kdated March 22, 2002, to file financial information with theSecurities and Exchange Commission for purposes of updating theCompany’s publicly available disclosure. |
|   |   |                                                                          |
|   | (8)    |                                                                          | Current report on Form 8-Kdated March 21, 2002, to report the completion on March 21, 2002,of the Company’s acquisitions by merger of GlobalNet, Inc.,and Jaycor, Inc., which included the followingexhibits:   |
|   |   |                                                                          |   |
|   |   | •                                                                        |   | Agreement and Plan ofMerger, dated as of January 6, 2002, by and among The TitanCorporation, T T III Acquisition Corp. and GlobalNet, Inc., asamended (incorporated by reference to Exhibit 2.1 to Titan’sRegistration Statement on Form S-4 (Registration No.333-81694)), |
|   |   |                                                                          |   |
|   |   | •                                                                        |   | Agreement and Plan ofMerger and Reorganization, dated as of January 21, 2002, by andamong The Titan Corporation, Thunderbird Acquisition Corp. andJaycor, Inc., (incorporated by reference to Exhibit 2.1 toTitan’s Registration Statement on Form S-4 (Registration No.333-81782)), |
|   |   |                                                                          |   |
|   |   | •                                                                        |   | Consent of KGMP LLP,independent auditors, regarding the financial statements ofGlobalNet, Inc., |
|   |   |                                                                          |   |
|   |   | •                                                                        |   | Consent of Ernst &Young LLP, independent auditors, regarding the financial statementsof Jaycor, Inc., |
|   |   |                                                                          |   |
|   |   | •                                                                        |   | Consent ofPricewaterhouseCoopers LLP, independent accountants, regarding thefinancial statements of Jaycor, Inc., |
|   |   |                                                                          |   |
|   |   | •                                                                        |   | Audited consolidatedbalance sheets of GolbalNet as of December 31, 2001 and 2000, andthe related consolidated statements of operations,stockholders’ deficit and cash flows for each of the threeyears in the period ended December 31, 2001, and the notes relatedthereto and the related independent auditors’ report,and |
|   |   |                                                                          |   |
|   |   | •                                                                        |   | Audited consolidatedbalance sheets of Jaycor as of January 31, 2001 and 2002, and therelated consolidated statements of operations, stockholders’equity and cash flows of Jaycor for each of the three years in theperiod ended January 31, 2002, and the notes related thereto andthe related auditors’ reports. |

**THE TITAN CORPORATIONSIGNATURES**

    Pursuant to therequirements of the Securities Exchange Act of 1934, the Registranthas duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

| Dated: May 15,2002 |   | THE TITANCORPORATION |
|--------------------|--------|----------------------|
|               |   | By:                  | /s/ MARK W. SOPP |
|                    |        |                      |  |
|                    |        |                      | Mark W.Sopp*Senior Vice President Chief Financial Officer* |
|               |   | By:                  | /s/ DEANNA HOM |
|                    |        |                      |  |
|                    |        |                      | DeannaHom*Vice President, Corporate Controller (Principal Accounting Officer)* |