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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-Q/AAmendment No. 1

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2001

or

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from
 to

Commission file number 1-6035

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THE TITAN 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.)


3033 Science Park Road
San Diego, California 92121-1199(Address of principal executive offices, zip code)

(Registrant's
telephone number, including area code)(858) 552-9500

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

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days.  Yes /x/  No / /.

The
number of shares of registrant's common stock outstanding at August 8, 2001, was 63,918,982.

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Part IFINANCIAL INFORMATION

Item 1. Financial Statements

THE TITAN CORPORATION  CONSOLIDATED STATEMENTS OF OPERATIONS  (Unaudited)  (in thousands,
except per share data)

|                                                                                               |                                                                     | Three months ended
June 30, |         | Six months ended
June 30, |        
|---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | --------------------------- | ------- | ------------------------- | -------
|
|Revenues                                                                                       |                                                                     | $                           | 279,967 |                           | $      
|                                                                                               |                                                                     |                             |         |                           |        
|Costs and expenses:                                                                            |                                                                     |                             |         |                           |        
|                                                                                               | Cost of revenues                                                    |                             |         | 209,558                   |        
|                                                                                               | Selling, general and administrative expense                         |                             |         | 62,913                    |        
|                                                                                               | Research and development expense                                    |                             |         | 4,792                     |        
|                                                                                               | Acquisition and integration related charges and other               |                             |         | 2,644                     |        
|                                                                                               |                                                                     |                             |         |                           |        
|                                                                                               |                                                                     | Total costs and expenses    |         |                           | 279,907
|                                                                                               |                                                                     |                             |         |                           |        
|Operating profit (loss)                                                                        |                                                                     |                             | 60      |                           |        
|Interest expense                                                                               |                                                                     |                             | (11,861 | )                         |        
|Interest income                                                                                |                                                                     |                             | 902     |                           |        
|                                                                                               |                                                                     |                             |         |                           |        
|Loss from continuing operations before income taxes, minority interests and extraordinary loss |                                                                     |                             | (10,899 | )                         |        
|Income tax benefit                                                                             |                                                                     |                             | (937    | )                         |        
|                                                                                               |                                                                     |                             |         |                           |        
|Loss from continuing operations before minority interests and extraordinary loss               |                                                                     |                             | (9,962  | )                         |        
|Minority interests                                                                             |                                                                     |                             | 2,157   |                           |        
|                                                                                               |                                                                     |                             |         |                           |        
|Loss from continuing operations before extraordinary loss                                      |                                                                     |                             | (7,805  | )                         |        
|Loss from discontinued operations, net of taxes                                                |                                                                     |                             |        |                           |        
|                                                                                               |                                                                     |                             |         |                           |        
|Loss before extraordinary loss                                                                 |                                                                     |                             | (7,805  | )                         |        
|Extraordinary loss from early extinguishments of debt, net of taxes                            |                                                                     |                             |        |                           |        
|                                                                                               |                                                                     |                             |         |                           |        
|Net loss                                                                                       |                                                                     |                             | (7,805  | )                         |        
|Dividend requirements on preferred stock                                                       |                                                                     |                             | (173    | )                         |        
|                                                                                               |                                                                     |                             |         |                           |        
|Net loss applicable to common stock                                                            |                                                                     | $                           | (7,978  | )                         | $      
|                                                                                               |                                                                     |                             |         |                           |        
|Basic earnings (loss) per share:                                                               |                                                                     |                             |         |                           |        
|                                                                                               | Loss from continuing operations                                     |                             | $       | (0.16                     | )      
|                                                                                               | Loss from discontinued operations                                   |                             |         |                          |        
|                                                                                               | Extraordinary loss from early extinguishments of debt, net of taxes |                             |         |                          |        
|                                                                                               |                                                                     |                             |         |                           |        
|                                                                                               | Net loss                                                            |                             | $       | (0.16                     | )      
|                                                                                               |                                                                     |                             |         |                           |        
|                                                                                               | Weighted average shares                                             |                             |         | 53,663                    |        
|                                                                                               |                                                                     |                             |         |                           |        
|Diluted earnings (loss) per share:                                                             |                                                                     |                             |         |                           |        
|                                                                                               | Loss from continuing operations                                     |                             | $       | (0.16                     | )      
|                                                                                               | Loss from discontinued operations                                   |                             |         |                          |        
|                                                                                               | Extraordinary loss from early extinguishments of debt, net of taxes |                             |         |                          |        
|                                                                                               |                                                                     |                             |         |                           |        
|                                                                                               | Net loss                                                            |                             | $       | (0.16                     | )      
|                                                                                               |                                                                     |                             |         |                           |        
|Weighted average shares                                                                        |                                                                     |                             | 53,663  |                           |        
|                                                                                               |                                                                     |                             |         |                           |        

The accompanying notes are an integral part of these consolidated financial statements.

2

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THE TITAN CORPORATION  CONSOLIDATED BALANCE SHEETS  (in thousands, except share and per share
data)

|                                                                                                                                                            |                                                                                                                | June 30,
2001                                                                                                              |         | December 31,
2000 |          
|----------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | ------- | ----------------- | ---------
|
|Assets                                                                                                                                                      |                                                                                                                |                                                                                                                            |         |                   |          
|Current Assets:                                                                                                                                             |                                                                                                                |                                                                                                                            |         |                   |          
|                                                                                                                                                            | Cash and cash equivalents                                                                                      |                                                                                                                            | $       | 29,775            |          
|                                                                                                                                                            | Investments                                                                                                    |                                                                                                                            |         | 24,522            |          
|                                                                                                                                                            | Accounts receivablenet                                                                                        |                                                                                                                            |         | 352,857           |          
|                                                                                                                                                            | Inventories                                                                                                    |                                                                                                                            |         | 33,814            |          
|                                                                                                                                                            | Prepaid expenses and other                                                                                     |                                                                                                                            |         | 37,432            |          
|                                                                                                                                                            | Deferred income taxes                                                                                          |                                                                                                                            |         | 28,888            |          
|                                                                                                                                                            | Net assets of discontinued operations                                                                          |                                                                                                                            |         |                  |          
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|                                                                                                                                                            |                                                                                                                | Total current assets                                                                                                       |         |                   | 507,288  
|Property and equipmentnet                                                                                                                                  |                                                                                                                |                                                                                                                            | 101,257 |                   |          
|Goodwillnet                                                                                                                                                |                                                                                                                |                                                                                                                            | 350,493 |                   |          
|Other assets                                                                                                                                                |                                                                                                                |                                                                                                                            | 71,118  |                   |          
|Net assets of discontinued operations                                                                                                                       |                                                                                                                |                                                                                                                            | 13      |                   |          
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|                                                                                                                                                            |                                                                                                                | Total assets                                                                                                               |         | $                 | 1,030,169
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|Liabilities and Stockholders' Equity                                                                                                                        |                                                                                                                |                                                                                                                            |         |                   |          
|Current Liabilities:                                                                                                                                        |                                                                                                                |                                                                                                                            |         |                   |          
|                                                                                                                                                            | Amounts outstanding under line of credit                                                                       |                                                                                                                            | $       | 10,937            |          
|                                                                                                                                                            | Accounts payable                                                                                               |                                                                                                                            |         | 73,163            |          
|                                                                                                                                                            | Acquisition debt                                                                                               |                                                                                                                            |         | 2,200             |          
|                                                                                                                                                            | Current portion of long-term debt                                                                              |                                                                                                                            |         | 697               |          
|                                                                                                                                                            | Accrued compensation and benefits                                                                              |                                                                                                                            |         | 55,242            |          
|                                                                                                                                                            | Other accrued liabilities                                                                                      |                                                                                                                            |         | 68,321            |          
|                                                                                                                                                            | Income taxes payable                                                                                           |                                                                                                                            |         |                  |          
|                                                                                                                                                            | Net liabilities of discontinued operations                                                                     |                                                                                                                            |         | 100               |          
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|                                                                                                                                                            |                                                                                                                | Total current liabilities                                                                                                  |         |                   | 210,660  
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|Amounts outstanding under line of credit                                                                                                                    |                                                                                                                |                                                                                                                            | 329,063 |                   |          
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|Other long-term debt                                                                                                                                        |                                                                                                                |                                                                                                                            | 1,201   |                   |          
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|Other non-current liabilities                                                                                                                               |                                                                                                                |                                                                                                                            | 38,190  |                   |          
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|Company obligated mandatory redeemable convertible preferred securities of a subsidiary trust whose sole
assets are senior subordinated debentures of Titan |                                                                                                                |                                                                                                                            | 250,000 |                   |          
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|Minority interests                                                                                                                                          |                                                                                                                |                                                                                                                            | 2,144   |                   |          
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|Stockholders' Equity:                                                                                                                                       |                                                                                                                |                                                                                                                            |         |                   |          
|                                                                                                                                                            | Preferred stock: $1 par value, authorized 5,000,000 shares:                                                    |                                                                                                                            |         |                   |          
|                                                                                                                                                            |                                                                                                                | Cumulative convertible, $13,800 liquidation preference, designated 1,068,102 shares: 689,978 shares
issued and outstanding |         |                   | 690      
|                                                                                                                                                            |                                                                                                                | Series A junior participating: designated 1,000,000 authorized shares: None issued                                         |         |                   |         
|                                                                                                                                                            | Common stock: $.01 par value, authorized 200,000,000 shares, issued and outstanding: 54,362,653 and
54,068,167 |                                                                                                                            |         | 544               |          
|                                                                                                                                                            | Capital in excess of par value                                                                                 |                                                                                                                            |         | 271,565           |          
|                                                                                                                                                            | Deferred compensation                                                                                          |                                                                                                                            |         | (46,320           | )        
|                                                                                                                                                            | Retained earnings (deficit)                                                                                    |                                                                                                                            |         | (25,956           | )        
|                                                                                                                                                            | Accumulated other comprehensive income                                                                         |                                                                                                                            |         | (397              | )        
|                                                                                                                                                            | Treasury stock (614,861 and 787,885 shares), at cost                                                           |                                                                                                                            |         | (1,215            | )        
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|                                                                                                                                                            |                                                                                                                | Total stockholders' equity                                                                                                 |         |                   | 198,911  
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          
|                                                                                                                                                            |                                                                                                                | Total liabilities and stockholders' equity                                                                                 |         | $                 | 1,030,169
|                                                                                                                                                            |                                                                                                                |                                                                                                                            |         |                   |          

The accompanying notes are an integral part of these consolidated financial statements.

3

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THE TITAN CORPORATION  CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)  (in thousands of
dollars)

|                                                                                                                    |                                                                                         | Six months ended
June 30,         |         
|------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | --------------------------------- | --------
|
|Cash Flows from Operating Activities:                                                                               |                                                                                         |                                   |         
|Net loss from continuing operations                                                                                 |                                                                                         | $                                 | (67,676 
|Adjustments to reconcile net loss to net cash used for operating activities, net of effects of businesses
acquired: |                                                                                         |                                   |         
|                                                                                                                    | Depreciation and amortization                                                           |                                   |         
|                                                                                                                    | Write-offs due to asset impairments                                                     |                                   |         
|                                                                                                                    | Deferred income taxes and other                                                         |                                   |         
|                                                                                                                    | Non-monetary research consideration                                                     |                                   |         
|                                                                                                                    | Pooling of interests                                                                    |                                   |         
|                                                                                                                    | Minority interests                                                                      |                                   |         
|                                                                                                                    | Deferred compensation                                                                   |                                   |         
|                                                                                                                    | Changes in operating assets and liabilities, net of the effects of businesses acquired: |                                   |         
|                                                                                                                    |                                                                                         | Accounts receivable               |         
|                                                                                                                    |                                                                                         | Inventories                       |         
|                                                                                                                    |                                                                                         | Prepaid expenses and other assets |         
|                                                                                                                    |                                                                                         | Accounts payable                  |         
|                                                                                                                    |                                                                                         | Accrued compensation and benefits |         
|                                                                                                                    |                                                                                         | Income taxes payable              |         
|                                                                                                                    |                                                                                         | Other liabilities                 |         
|                                                                                                                    |                                                                                         |                                   |         
|Net cash used for continuing operations                                                                             |                                                                                         |                                   | (23,437 
|                                                                                                                    |                                                                                         |                                   |         
|Loss from discontinued operations                                                                                   |                                                                                         |                                   |        
|Changes in net assets and liabilities of discontinued operations                                                    |                                                                                         |                                   | 1,189   
|                                                                                                                    |                                                                                         |                                   |         
|Net cash provided by (used for) discontinued operations                                                             |                                                                                         |                                   | 1,189   
|                                                                                                                    |                                                                                         |                                   |         
|Net cash used for operating activities                                                                              |                                                                                         |                                   | (22,248 
|                                                                                                                    |                                                                                         |                                   |         
|Cash Flows from Investing Activities:                                                                               |                                                                                         |                                   |         
|Capital expenditures                                                                                                |                                                                                         |                                   | (27,469 
|Acquisition of businesses and other equity interests, net of cash acquired                                          |                                                                                         |                                   | (55,479 
|Capitalized software development costs                                                                              |                                                                                         |                                   | (4,412  
|Proceeds from sale of investments                                                                                   |                                                                                         |                                   | 3,217   
|Purchase of available-for-sale investments                                                                          |                                                                                         |                                   | (25,077 
|Other investments                                                                                                   |                                                                                         |                                   | (3,376  
|Other                                                                                                               |                                                                                         |                                   | 312     
|                                                                                                                    |                                                                                         |                                   |         
|Net cash used for investing activities                                                                              |                                                                                         |                                   | (112,284
|                                                                                                                    |                                                                                         |                                   |         
|Cash Flows from Financing Activities:                                                                               |                                                                                         |                                   |         
|Issuance of redeemable convertible preferred securities                                                             |                                                                                         |                                   |        
|Additions to debt                                                                                                   |                                                                                         |                                   | 76,875  
|Retirements of debt                                                                                                 |                                                                                         |                                   | (678    
|Issuance of stock by subsidiaries                                                                                   |                                                                                         |                                   | 60,878  
|Deferred financing costs                                                                                            |                                                                                         |                                   | (1,199  
|Extraordinary loss on retirements of debt                                                                           |                                                                                         |                                   |        
|Dividends paid                                                                                                      |                                                                                         |                                   | (345    
|Proceeds from stock issuances                                                                                       |                                                                                         |                                   | 1,506   
|Other                                                                                                               |                                                                                         |                                   | (71     
|                                                                                                                    |                                                                                         |                                   |         
|Net cash provided by financing activities                                                                           |                                                                                         |                                   | 136,966 
|Effect of exchange rate changes on cash                                                                             |                                                                                         |                                   | 50      
|                                                                                                                    |                                                                                         |                                   |         
|Net increase in cash and cash equivalents                                                                           |                                                                                         |                                   | 2,484   
|Cash and cash equivalents at beginning of period                                                                    |                                                                                         |                                   | 27,291  
|                                                                                                                    |                                                                                         |                                   |         
|Cash and cash equivalents at end of period                                                                          |                                                                                         | $                                 | 29,775  
|                                                                                                                    |                                                                                         |                                   |         

The accompanying notes are an integral part of these consolidated financial statements.

4

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THE TITAN CORPORATION  CONSOLIDATED 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
Compensation |         | Retained
Earnings
(Deficit) |   | Accumulated
Other
Comprehensive
Income |         | Treasury
Stock |         | Total   |  
|------------------------------- | ------------------------------------------------------------------- | -------------------------------------- | --- | ------------ | - | ------------------------------ | -- | --------------------- | ------- | --------------------------- | - | -------------------------------------- | ------- | -------------- | ------- | ------- | -
|Six Months Ended June 30, 2001: |                                                                     |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         |         |  
|Balances at December 31, 2000   |                                                                     | $                                      | 690 |              | $ | 541                            |    | $                     | 191,358 |                             | $ | (13,882                                | )       | $              | (9,960  | )       | $
|                                | Exercise of stock options and other                                 |                                        |     |              |   |                                | 3  |                       |         | 1,603                       |   |                                        |         |                |         |         |  
|                                | Deferred compensation, related to the issuance of stock options     |                                        |     |              |   |                                |    |                       |         | 78,604                      |   |                                        | (78,604 | )              |         |         |  
|                                | Amortization of deferred compensation                               |                                        |     |              |   |                                |    |                       |         |                             |   |                                        | 46,166  |                |         |         |  
|                                | Foreign currency translation adjustment                             |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         |         |  
|                                | Unrealized loss on investments                                      |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         |         |  
|                                | Gain related to issuance of stock in subsidiary                     |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         | 52,025  |  
|                                | Shares contributed to employee benefit plan                         |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         |         |  
|                                | Dividends on preferred stock-Cumulative convertible, $.50 per share |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         | (345    | )
|                                | Net loss                                                            |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         | (67,676 | )
|                                |                                                                     |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         |         |  
|Balances at June 30, 2001       |                                                                     | $                                      | 690 |              | $ | 544                            |    | $                     | 271,565 |                             | $ | (46,320                                | )       | $              | (25,956 | )       | $
|                                |                                                                     |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         |         |  
|Six Months Ended June 30, 2000: |                                                                     |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         |         |  
|Balances at December 31, 1999   |                                                                     | $                                      | 695 |              | $ | 525                            |    | $                     | 163,252 |                             | $ | (738                                   | )       | $              | 5,283   |         | $
|                                | Pooling adjustment                                                  |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         | 1,352   |  
|                                | Exercise of stock options and other                                 |                                        |     |              |   |                                | 12 |                       |         | 2,066                       |   |                                        |         |                |         |         |  
|                                | Proceeds from stock issuances                                       |                                        |     |              |   |                                |    |                       |         | 1,820                       |   |                                        |         |                |         |         |  
|                                | Issuance of stock for equity interest                               |                                        |     |              |   |                                |    |                       |         | 900                         |   |                                        |         |                |         |         |  
|                                | Deferred compensation, related to the issuance of stock options     |                                        |     |              |   |                                |    |                       |         | 1,833                       |   |                                        | (1,886  | )              |         |         |  
|                                | Amortization of deferred compensation                               |                                        |     |              |   |                                |    |                       |         |                             |   |                                        | 524     |                |         |         |  
|                                | Shares contributed to employee benefit plans                        |                                        |     |              |   |                                |    |                       |         | (78                         | ) |                                        |         |                |         |         |  
|                                | Foreign currency translation adjustment                             |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         |         |  
|                                | Conversion of preferred stock                                       |                                        |     | (5           | ) |                                |    |                       |         | 5                           |   |                                        |         |                |         |         |  
|                                | Income tax benefit from employee stock transactions                 |                                        |     |              |   |                                |    |                       |         | 432                         |   |                                        |         |                |         |         |  
|                                | Purchase of treasury stock                                          |                                        |     |              |   |                                |    |                       |         | (173                        | ) |                                        |         |                |         |         |  
|                                | Dividends on preferred stock-Cumulative convertible, $.50 per share |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         | (347    | )
|                                | Net loss                                                            |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         | (27,722 | )
|                                |                                                                     |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         |         |  
|Balances at June 30, 2000       |                                                                     | $                                      | 690 |              | $ | 537                            |    | $                     | 170,057 |                             | $ | (2,100                                 | )       | $              | (21,434 | )       | $
|                                |                                                                     |                                        |     |              |   |                                |    |                       |         |                             |   |                                        |         |                |         |         |  

The accompanying notes are an integral part of these consolidated financial statements.

5

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THE TITAN CORPORATION        NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS        JUNE 30, 2001        (in thousands, except share and per share data, or as
otherwise noted)

Note (1) Basis of Financial Statement Preparation

The accompanying consolidated financial information of The Titan Corporation and its
subsidiaries ("Titan" or the "Company") should be read in conjunction with
the Notes to Consolidated Financial Statements contained in the Company's Annual Report on Form 10-K/A to the Securities and
Exchange Commission for the year ended
December 31, 2000. The accompanying financial information includes all subsidiaries on a consolidated basis and all normal
recurring adjustments which are considered necessary by the Company's
management for a fair presentation of the financial position, results of
operations and cash flows for the periods presented. However, these results are not necessarily indicative of results for a full
fiscal year.

The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

In
June 2001, the Financial Accounting Standards Board ("FASB") issued two new pronouncements: Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that the purchase method of
accounting be used for all business combinations initiated
after June 30, 2001 and that the use of the pooling-of-interests method is no longer permitted. SFAS No. 142 requires that
upon adoption, amortization of goodwill
will cease and instead, the carrying value of goodwill will be evaluated for impairment at least annually using a fair value test.
Identifiable intangible assets will continue to be amortized over
their useful lives and reviewed at least annually for impairment using a method appropriate to the nature of the intangible asset.
The Company is required to implement SFAS No.141 on July 1,
2001 and SFAS No. 142 at the beginning of its next fiscal year, January 1, 2002. The Company is evaluating the impact of
the adoption of these standards and has not yet determined the
effect, if any, that their adoption will have on its consolidated financial position or results of operations.

Note (2) Acquisitions and Investment

On March 23, 2001, the Company's subsidiary, Titan Systems Corporation, consummated an
agreement to purchase certain assets from Maxwell Technologies
Systems Division, Inc., a subsidiary of Maxwell Technologies, Inc., which specializes in research, development and
technical services primarily for military applications. The purchase
price was approximately $11.5 million in cash, subject to post-closing
adjustments and indemnification obligations, less a $1.7 million holdback, due 180 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 in July 2001 from Maxwell Technologies, Inc.
resulting from the resolution of post-closing
adjustments. Under the agreement, the Company has full recourse to the seller for all accounts receivable not collected within
180 days of the closing date. The transaction was accounted for as
a purchase, and the excess of the purchase price over the estimated fair market value of the net assets acquired, to be amortized on
a straight line basis over 30 years, was approximately
$7.6 million at June 30, 2001.

In
January 1999, the Company invested approximately $0.5 million for a 19.9% ownership interest in a joint venture with Sakon.
In July 2000, Titan loaned Sakon
$15 million pursuant to a loan agreement with Sakon. In October 2000, Titan exercised its option pursuant to the agreement
to

6

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convert amounts owed under the loan into additional equity interest of 30.0% of Sakon, bringing the total equity interest in Sakon to
49.9%. At such time, the amount outstanding of $15 million
under the loan was converted to purchase consideration as the initial payment due under the terms of the agreement and recorded as
goodwill. Under the terms of the agreement, an additional
$12.5 million of consideration is due and payable upon certain revenue targets being attained. These targets were met in
January 2001 and the liability for the $12.5 million
payment, on which an initial installment of $5 million was made in the second quarter, with the remaining to be paid in the
third quarter of 2001, was included in other accrued liabilities at
June 30, 2001 and additional goodwill was recorded in the quarter ended March 31, 2001. The goodwill will be amortized over
an estimated useful life of 20 years. Titan has
consolidated the operating results of Sakon beginning in 1999 in accordance with the joint venture agreement which assigns 100% of
the joint venture revenues and operating results to Titan. Titan will
continue to consolidate the operating results of Sakon until a liquidity event, defined as an initial public offering or the sale of
Sakon.

On
June 28, 2000, the Company's subsidiary Titan Wireless Africa, a wholly owned subsidiary of Titan Wireless, completed the
acquisition of a majority interest (80%) of Ivoire
Telecom S.A. Holding (Ivoire Telecom), and through such interest acquired a 50.1% equity interest in each of the principal
subsidiaries owned by Ivoire Telecom. As of June 30, 2001, Titan
Wireless' total investment of $23.7 million has been recorded at cost, in accordance with APB Opinion No. 18, "The Equity
Method of Accounting for Investments in Common Stock." The
investment includes our initial investment as well as capital expenditures to build out the Ivoire Telecom network. There are no
intercompany sales recorded between Ivoire Telecom and Titan Wireless
or any other Titan subsidiary.

During
the six months ended June 30, 2001, approximately $13.4 million was paid in satisfaction of purchase price holdbacks, earn
out and/or employee related obligations
related to acquisitions made in fiscal 2000 or 1999. The following amounts were paid to the previous stockholders or employees of the
acquired companies; $2.0 million for LinCom Corporation,
$3.8 million for MJR Associates, Inc., $2.1 million for Pulse Engineering, $1.2 million for Atlantic Aerospace
Electronics Corporation, $1.3 million for SenCom
Corporation and $3 million for J.B. Systems, dba Mainsaver. All amounts had been accrued previously.

Note (3) Acquisition and Integration Related Charges and Other

Acquisition and integration related charges and other were $34.8 million in the six
months ended June 30, 2001, of which $2.6 million was
recorded in the quarter ended June 30, 2001, and $32.2 million recorded in the quarter ended March 31, 2001.

The
$2.6 million charge in the second quarter of 2001 included $1.9 million for employee termination costs associated with
further reductions in employee workforce and
lease obligation costs related to the restructure of Cayenta. The restructure was a result of economic conditions and weakness in the
market for commercial information technology services and
e-business software applications. In addition, employee termination costs of $0.8 million were recorded in the Emerging
Technologies and Businesses
Segment related to a reduction in workforce in the Company's Avercom business resulting from the same economic conditions as Cayenta.

7

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The $32.2 million charge in the first quarter of 2001 includes costs of $12.2 million primarily
related to the integration of ACS and AverStar, and a realignment of the
business around the major categories of customers of Titan Systems, which together resulted in over 50 personnel reductions and the
closing of several facilities. Included in these costs is
approximately $3.1 million of employee termination and retention costs, $3.5 million of costs to eliminate duplicate and
excess facilities and assets, $1.1 million of duplicate
personnel costs to transition processes and functions, and $1.5 million of asset impairment costs of certain asset balances. The
recoverability of such balances was impaired due to our exit
from a satellite services business within the Titan Systems segment. Approximately $3 million of the charge was related to
another subsidiary acquired in a prior year for contingencies arising
from matters pre-existing to Titan's acquisition of the business. That acquisition was accounted for as a purchase, and those matters
are expected to be resolved in 2001.

Included
in the acquisition and integration related charges and other in the first quarter of 2001 is $19.4 million related to the
restructuring of Cayenta (which is included
in our Software Systems segment). As a result of reduced corporate spending on commercial information technology services and
e-business software applications, the Company developed and
approved a plan to restructure the Cayenta business, which included a reduction in workforce of over 40 personnel, resulting in a
charge of approximately $1.0 million and the elimination of
duplicate and excess facilities, resulting in a charge of approximately $1.1 million. As a result of management's evaluation of
the recoverability of all the assets of Cayenta, in accordance
with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", management
concluded from this evaluation that a significant impairment of intangible as well as long-lived assets had occurred. An impairment
charge was required because the estimated fair value was
less than the carrying value of the assets. The impairment charge of $17.3 million was comprised of the
following: $5.9 million for fixed assets associated with Cayenta's network operations center, $1.9 million for capitalized
software developed for B2B exchanges, $2.0 million for
prepaid advertising costs, $2.0 million for accounts receivable, $5.3 million for Cayenta's investment in Soliance, LLC, a
joint venture that markets and delivers information technology
systems and solutions to the utility industry, and $0.2 million for certain other assets.

Also
included in the acquisition and integration related charges and other in the six months ended June 30, 2001 is a charge of
$0.5 million of employee termination
costs incurred in the Titan Wireless segment related to certain organizational changes within that business unit.

Acquisition
and integration related charges and other of $19.1 million and $37.1 million in the second quarter and first six months of
2000 were costs primarily
associated with the Company's acquisition of ACS and Averstar. Costs of $1.9 million related to a previously filed and withdrawn
registration statement for the proposed initial public offering
of Cayenta are also included in the operating results for the quarter and six months ended June 30, 2000.

Note (4) Discontinued Operations

In November 2000, the Company's Board of Directors adopted a plan to dispose of the
Company's commercial information assurance and network monitoring
businesses. In 1998 and 1997, the Company's Board of Directors adopted a plan to wind down the Company's access control systems
business and broadband communications business, respectively.
Accordingly, the results of these

8

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businesses have been accounted for as discontinued operations. In addition, the accompanying consolidated financial statements
reflect operations discontinued by Titan in 2000 and by certain of the
companies acquired by Titan during 1998. All periods presented reflect these specific operations as discontinued operations. Net
liabilities of discontinued operations of approximately
$0.1 million at June 30, 2001 consist primarily of accrued liabilities of approximately $4.5 million, net of current
assets of approximately $4.4 million (primarily
accounts receivable and capitalized software). The net liabilities reflect $1.2 million received in the first quarter of 2001
for the licensing of the technology of one of the businesses. In
accordance with EITF 85-36, "Discontinued Operations With Expected Gain and Interim Operating Losses", all operating losses incurred
in the commercial information assurance and network
monitoring businesses from the measurement date are being deferred until the date of disposal. The liabilities consist of accruals
for contract losses, estimated wind-down costs and costs
related to the closure and elimination of certain leased facilities. Charges of approximately $0.9 million were made against the
accrued liabilities in the first six months of 2001.
Long-term net assets of discontinued operations are primarily fixed assets. Management continues to assess the estimated wind-down
and/or disposal costs associated with the
businesses, and may from time to time adjust the allowance for such costs accordingly.

Note (5) Debt

At June 30, 2001, total borrowings outstanding under the Company's primary credit
facility with a syndicate of commercial banks were $340 million
at a weighted average interest rate of 7.7%. Commitments under letters of credit were $6.7 million at June 30, 2001, which
reduces availability of the working capital line. Of the total
borrowings, $10.9 million was short-term. At June 30, 2001, the Company was in compliance with all financial covenants
under its various debt agreements.

Note (6) Other Financial Information

In the fourth quarter of 2000, the Company formed a new business unit, Titan Scan
Technologies within its Emerging Technologies and Businesses segment. The new
business unit encompasses all of Titan's medical product sterilization operations, which were previously a part of SureBeam. As a
result, all prior period data have been restated to reflect this
change in Titan's segment reporting.

The
following tables summarize revenues and operating profit (loss) by operating segment for the three month and six month periods ended
June 30, 2001 and 2000. All segment
operating profit and

9

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loss data reported on an historical basis and for the current year have been reported before Corporate overhead costs, with the
exception of SureBeam beginning in the first and second quarters of
2001.

|                                                 |                                            | Three months ended
June 30, |         | Six months ended
June 30, |  
|------------------------------------------------ | ------------------------------------------ | --------------------------- | ------- | ------------------------- | -
|
|Revenues:                                        |                                            |                             |         |                           |  
|                                                 | Titan Systems                              |                             | $       | 219,661                   |  
|                                                 | SureBeam                                   |                             |         | 8,616                     |  
|                                                 | Titan Wireless                             |                             |         | 23,002                    |  
|                                                 | Titan Software Systems (including Cayenta) |                             |         | 15,570                    |  
|                                                 | Emerging Technologies and Businesses       |                             |         | 13,118                    |  
|                                                 |                                            |                             |         |                           |  
|                                                 |                                            | $                           | 279,967 |                           | $
|                                                 |                                            |                             |         |                           |  
|Operating Profit (Loss):                         |                                            |                             |         |                           |  
|                                                 | Titan Systems                              |                             | $       | 17,729                    |  
|                                                 | SureBeam                                   |                             |         | (9,410                    | )
|                                                 | Titan Wireless                             |                             |         | 1,402                     |  
|                                                 | Titan Software Systems (including Cayenta) |                             |         | (5,445                    | )
|                                                 | Emerging Technologies and Businesses       |                             |         | 287                       |  
|                                                 |                                            |                             |         |                           |  
|Segment operating profit (loss) before Corporate |                                            |                             | 4,563   |                           |  
|Corporate                                        |                                            |                             | (4,503  | )                         |  
|                                                 |                                            |                             |         |                           |  
|                                                 |                                            | $                           | 60      |                           | $
|                                                 |                                            |                             |         |                           |  

The
operating loss of the Titan Systems segment for the six month period ended June 30, 2001 includes a planned $12.2 million
restructuring charge related primarily to
the integration of ACS and AverStar, acquired in 2000, and a realignment of business around its major categories of customers, which
together resulted in personnel reductions and the closing of
certain facilities (see Note 3). Acquisition related charges of $19.1 and $37.1 million related to the ACS and Averstar
acquisitions are included in Titan System's operating losses for
the three months and six months ended June 30, 2000, respectively. Also in the Titan Systems segment, deferred profit of $1,107
and $543 related to acquisitions in 2000 and 1999 was recognized
in the three months ended June 30, 2001 and 2000, respectively, and $1,809 and $946 was recognized in the six months ended
June 30, 2001 and 2000, respectively.

On
March 16, 2001, SureBeam completed its initial public offering of 6,700,000 shares of its Class A common stock at a price
of $10 per share. SureBeam received proceeds
of approximately $59.8 million, net of underwriting discounts, fees and other initial public offering costs. Concurrent with the
closing of the offering, warrants aggregating 2,236,023 shares
of SureBeam's Class A common stock were exercised for proceeds of approximately $1.1 million. SureBeam anticipates using
the proceeds to build new systems and service centers, expand
manufacturing capacity, increase marketing activities, and pursue strategic relationships and acquisition opportunities, as well as
for general working capital purposes. Also in connection with the
offering, stock options granted under SureBeam's Nonstatutory

10

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Stock Option Plan were converted from variable plan options to fixed plan options. Accordingly, deferred compensation of
$78.6 million was recorded, representing the extent to which the $10 per
share
offering price exceeded the exercise price of the options. Additionally, since a substantial portion of these options were vested at
the time of completion of the offering, approximately
$43.6 million was recognized as compensation expense and included in selling, general and administrative expense in the
accompanying statement of operations for the six months ended
June 30, 2001, of which $38.7 million was recorded in the quarter ended March 31, 2001, immediately following the
offering. The remaining deferred compensation balance related to
these options will be recognized as compensation expense over the remaining four-year vesting period of the options. Also included in
selling, general and administrative expense for the
six months ended June 30, 2001 is $0.4 million of compensation expense related to options granted prior to completion of
the initial public offering under SureBeam's 2000 Stock Option
and Incentive Plan for which the fair market value on the date of grant exceeded the exercise price. As a result of the SureBeam
initial public offering and in accordance with SEC Staff Accounting
Bulletin No. 51, Titan has recorded a gain of $52.0 million related to its equity interest in SureBeam reflected in the
accompanying Consolidated Statement of Stockholders' Equity as
"Gain related to issuance of stock in subsidiary".

The
operating loss in the Software Systems segment includes a $1.9 million and $21.3 million restructuring charge (see
Note 3) in the three month and six month
periods ended June 30, 2001, respectively. Operating income in the Emerging Technologies and Businesses segment includes a
$0.8 million restructuring charge (see Note 3) for the
three and six month periods ended June 30, 2001.

The
Company's only elements of other comprehensive income resulted from foreign currency translation adjustments in all periods reported
and unrealized losses on investments in
available-for-sale securities in the three and six month periods of 2001, which are reflected in the Consolidated Statements of
Stockholders' Equity.

11

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The following data summarize information relating to the per share computations for loss before extraordinary
item:

|                                                          |                                                                                            | Three months ended
June 30, 2001 |        | Three months ended
June 30, 2000 |  
|--------------------------------------------------------- | ------------------------------------------------------------------------------------------ | -------------------------------- | ------ | -------------------------------- | -
|
|Loss from continuing operations before extraordinary item |                                                                                            | $                                | (7,805 | )                                |  
|Less preferred stock dividends                            |                                                                                            |                                  | (173   | )                                |  
|Effect of minority interests                              |                                                                                            |                                  | (518   | )                                |  
|                                                          |                                                                                            |                                  |        |                                  |  
|Basic EPS:                                                |                                                                                            |                                  |        |                                  |  
|                                                          | Loss from continuing operations before extraordinary item available to common stockholders |                                  |        | (8,496                           | )
|Effect of dilutive securities:                            |                                                                                            |                                  |       |                                  | 
|                                                          |                                                                                            |                                  |        |                                  |  
|Diluted EPS:                                              |                                                                                            |                                  |        |                                  |  
|                                                          | Loss from continuing operations before extraordinary item available to common stockholders |                                  | $      | (8,496                           | )
|                                                          |                                                                                            |                                  |        |                                  |  

12

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|                                                                                           |                                                                                            | Six months ended
June 30, 2001 |         | Six months ended
June 30, 2000 |       
|------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------ | ------------------------------ | ------- | ------------------------------ | ------
|
|Loss from continuing operations before extraordinary item                                  |                                                                                            | $                              | (67,676 | )                              |       
|Less preferred stock dividends                                                             |                                                                                            |                                | (345    | )                              |       
|Effect of minority interests                                                               |                                                                                            |                                | (7,270  | )                              |       
|                                                                                           |                                                                                            |                                |         |                                |       
|Basic EPS:                                                                                 |                                                                                            |                                |         |                                |       
|Loss from continuing operations before extraordinary item available to common stockholders |                                                                                            |                                | (75,291 | )                              | 53,521
|Effect of dilutive securities:                                                             |                                                                                            |                                |        |                                |      
|                                                                                           |                                                                                            |                                |         |                                |       
|Diluted EPS:                                                                               |                                                                                            |                                |         |                                |       
|                                                                                           | Loss from continuing operations before extraordinary item available to common stockholders |                                | $       | (75,291                        | )     
|                                                                                           |                                                                                            |                                |         |                                |       

In
the three months and six months ended June 30, 2001, respectively, options to purchase approximately 3,528,700 and 3,595,000
shares of common stock at prices
ranging from $1.39 to $47.50 and $1.12 to $47.50 per share were not included in the computation of diluted EPS, as the effect would
have been anti-dilutive due to the loss before
extraordinary item and/or exercise price. Similarly, options to purchase approximately 3,652,400 and 3,605,400 shares of common stock
at prices ranging from $0.40 to $47.50 per share were not included
in the computation of diluted EPS for the three and six month periods of June 30, 2000, respectively.

Approximately
5,038,000 shares in 2001 and 2,771,000 shares in 2000 from the potential conversion of remarketable term income deferrable equity
securities were not included in the
computation as their effect was anti-dilutive. Approximately 460,000 shares of common stock in 2001 and 463,000 shares in 2000 that
could result from the conversion of cumulative
convertible preferred stock were not included in the computations of diluted EPS, as the effect would have been anti-dilutive.

Following
are details concerning certain balance sheet data:

|             |                 | June 30,
2001 |        | December 31,
2000
|------------ | --------------- | ------------- | ------ | -----------------
|Inventories: |                 |               |        |                  
|             | Materials       |               | $      | 18,292           
|             | Work-in-process |               |        | 10,106           
|             | Finished goods  |               |        | 5,416            
|             |                 |               |        |                  
|             |                 | $             | 33,814 |                  
|             |                 |               |        |                  

13

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Supplemental
disclosure of cash flow information:

|                                            |                                                          | Six months ended June 30,
|------------------------------------------- | -------------------------------------------------------- | -------------------------
|
|Noncash investing and financing activities: |                                                          |                          
|                                            | Gain related to issuance of stock in subsidiary          |                          
|                                            | Non-monetary research consideration                      |                          
|                                            | Decrease in fair value of investments available for sale |                          
|                                            | Extraordinary loss on early extinguishments of debt      |                          
|                                            | Equity issued in exchange for services                   |                          
|                                            | Shares contributed to employee benefit plans             |                          
|Cash paid for interest                      |                                                          |                          
|Cash paid for income taxes                  |                                                          |                          

Note (7) Commitments and Contingencies

On
January 6, 2000, Ion Beam Applications s.a. or IBA, a Belgian corporation, and its related U.S. subsidiaries filed an action for
declaratory judgment in a federal court in
Virginia against us relating to our patent for our SureBeam systems. On our motion, the Virginia court transferred the case to the
Federal District Court in San Diego. The action attacks the validity
of our core Irradiation System Utilizing Conveyor Transported Article Carriers patent, and seeks a declaration that Ion Beam
Applications and its customers have not infringed any of the claims in our
patent. The action also contained allegations, later dismissed, that we engaged in unfair competition and that our conduct
constituted patent misuse. On November 29, 2000, IBA filed an amended
complaint alleging, in addition to the original claims, that we have engaged in false advertising, monopolization, restraint of
trade, unfair business practices and unfair competition, and alleging
unenforceability due to patent misuse. We have filed a counterclaim against the plaintiffs alleging infringement of our patent for
our SureBeam systems. We are seeking damages and an injunction
preventing further infringement of our patent. On April 17, 2001 the Court granted our motion to try our patent infringement
claim and Ion Beam Applications' claims against our patent
separately and before any trial of Ion Beam Applications' claims alleging false advertising, monopolization, restraint of trade and
unfair business practices. We intend to vigorously enforce our
patents and prosecute our patent infringement claims against the plaintiffs. We also intend to vigorously defend against all
allegations made by the plaintiffs. However, a finding in favor of Ion Beam
Applications in this action could materially adversely affect our business, financial condition and results of operations by allowing
Ion Beam Applications and other potential competitors to develop
and commercialize electron beam food irradiation systems that would compete against our SureBeam systems and services, thereby
potentially reducing the growth of our SureBeam business segment and
preventing us from generating the revenues that we expect from food irradiation. Discovery is continuing and it is not possible to
predict the outcome of this case.

Note (8) Subsequent Events

On June 24, 2001, the Company entered into an Agreement and Plan of Merger with Datron
Systems Incorporated ("Datron"), a provider of
radio-and satellite-based communication systems and

14

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broadband communication products for government and commercial markets, in a stock for stock transaction. The exchange ratio,
computed as .81919 per Datron share, was based on the average closing
sales price for Titan Common Stock during the 10-day trading period ending on July 27, 2001. Based upon the number of shares of
Datron common stock outstanding and issuable upon
exercise of options and other purchase rights totaling 3,339,287 as of August 3, 2001, the Company expects to issue
approximately 2,735,510 Titan shares. Approximately 70% of the outstanding
Datron shares were tendered to Titan on August 3, 2001, and Titan purchased all such shares not validly withdrawn. The Company
will acquire the remaining shares of Datron common stock in a
subsequent merger. The Company expects the merger to close by the end of the third quarter of 2001, and it will be accounted for as a
purchase.

On
July 26, 2001, the Company sold 8,048,685 shares of its common stock in a public offering, which included an over-allotment of
1,125,000 shares, at a price of
$18.00 per share. The Company received approximate aggregate proceeds from the offering of $137.6 million in July 2001. The
Company estimates that transaction expenses related to this
offering will be approximately $0.9 million, and will be paid in the third quarter of 2001. In addition, certain Titan
stockholders sold 576,315 shares, including 489,972 shares from the
exercise of options, from which Titan received proceeds of $3.0 million.

15

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THE TITAN CORPORATION

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

(Dollar amounts in thousands, except share and per share data, or as otherwise noted)

Results of Operations

Revenues

Consolidated.Our consolidated revenues increased from
$253.7 million in the second quarter of 2000 to
$280.0 million in the second quarter of 2001 and from $473.9 million for the six months ended June 30, 2000 to
$540.1 million for the six months ended June 30, 2001.
Increased revenues were reported in Titan Systems, SureBeam, and Titan Wireless in the second quarter as well as the six months ended
June 30, 2001. Revenue growth in the second quarter of 2001
was primarily attributable to the acquisition of SenCom in June 2000, internal revenue growth in Titan Systems and the impact of
increased long distance service revenues in our Titan Wireless
segment and increased revenues in our SureBeam segment resulting from SureBeam's sales of electronic food irradiation systems to a
Saudi Arabian conglomerate.

Three Months Ended June 30, 2001:

Titan Systems.Titan Systems' revenues increased from
$196.8 million in the second quarter of 2000 to
$219.7 million in the second quarter of 2001, in part due to the impact of the acquisition of SenCom in June 2000, which
was accounted for as a purchase, and in part due to internal
growth from intelligence community customers for engineering services, systems integration services and signal intelligence, as well
as from the Navy for engineering and systems integration services.

SureBeam.SureBeam's revenues increased from
$5.2 million in the second quarter of 2000 to $8.6 million
in the second quarter of 2001, resulting primarily from revenues recognized from sales of SureBeam's electronic food irradiation
systems, using the percentage-of-completion
method of accounting, principally to RESAL Saudi Corporation, a subsidiary of a private Saudi Arabian conglomerate, and to a lesser
degree, due to the sale of systems to Tech Ion Industrial Brasil,
S.A., a Brazilian food irradiation company. Revenues generated from these two customers comprised 79% and 10% of SureBeam's revenues
respectively, for the second quarter of 2001.

Titan Wireless.Titan Wireless' revenues increased from
$19.0 million in the second quarter of 2000 to
$23.0 million in the second quarter of 2001, primarily due to increased service revenues of $6.8 million generated by
Titan's consolidated joint venture, Sakon LLC, in Latin America,
Africa, and the Middle East, offset by reduced revenues from equipment sales of $1.1 million on Titan Wireless' project in Benin
to build a telecommunications system for its customer, The
Office of Post and Telecommunications of Benin.

Software Systems (including Cayenta).Software Systems'
revenues decreased from $19.1 million in the second
quarter of 2000 to $15.6 million in the second quarter of 2001, primarily driven by economic conditions and weakness in the
market for commercial information technology services and
e-business software applications.

Emerging Technologies and Businesses.Emerging
Technologies' revenues decreased slightly from $13.7 million in
the second quarter of 2000 to $13.1 million in the second quarter of 2001, primarily related to reduced revenues in our
digitized fingerprint scanner business offset partially by increased
revenues generated by Scan Technologies, reflecting the revenues recorded on the percentage-of-completion method on a medical
sterilization system currently being constructed.

16

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Six Months Ended June 30, 2001:

Titan Systems.Titan Systems' revenues increased from
$371.3 million in the six months ended June 30,
2000 to $426.0 million in the six months ended June 30, 2001, in part due to the impact of the acquisitions of Pulse
Engineering, LinCom, and SenCom, which were all accounted for as
purchases, and in part due to internal growth from intelligence community customers for engineering services, systems integration
services and signal intelligence, as well as from the Navy for
engineering and systems integration services.

SureBeam.SureBeam's revenues increased from
$9.3 million in the six months ended June 30, 2000 to
$14.1 million in the six months ended June 30, 2001, resulting primarily from revenues recognized from sales of SureBeam's
electronic food irradiation systems, using the
percentage-of-completion method of accounting, to RESAL Saudi Corporation and Tech Ion Industrial Brasil, S.A., and to a lesser
extent, revenues recorded on SureBeam's contract
with Texas A&M University. Revenues generated from these customers comprised 48%, 39% and 9% of SureBeam's revenues,
respectively, for the six months ended June 30, 2001.

Titan Wireless.Titan Wireless' revenues increased from
$35.6 million in the six months ended June 30,
2000 to $44.0 million in the six months ended June 30, 2001, primarily due to increased service revenues of
$13.3 million generated by Titan's consolidated joint venture, Sakon
LLC, in Latin America, Africa, and the Middle East, offset by reduced revenues from equipment sales of approximately
$3.3 million on Titan Wireless' project in Benin to build a
telecommunications system for its customer, The Office of Post and Telecommunications of Benin.

Software Systems (including Cayenta).Software Systems'
revenues decreased from $35.0 million in the six months
ended June 30, 2000 to $30.6 million in the six months ended June 30, 2001, primarily driven by economic conditions
and weakness in the market for commercial information
technology services and e-business software applications, which resulted in reduced demand for Cayenta's services and products.

Emerging Technologies and Businesses.Emerging
Technologies' revenues increased from $22.8 million in the six
months ended June 30, 2000 to $25.4 million in the six months ended June 30, 2001, primarily related to the
acquisitions of LinCom Wireless and AverCom in March 2000, both
accounted for as purchases, as well as increased revenues generated by Scan Technologies, reflecting the revenues recorded on the
percentage-of-completion method on a medical
sterilization system currently being constructed.

Selling, General and Administrative

Our consolidated SG&A expenses increased from $46.9 million and $91.4 million,
or 18.5% and 19.3% of revenues, in the quarter and six months
ended June 30, 2000, respectively, to $62.9 million and $164.9 million, or 22.5% and 30.5% in the quarter and six
months ended June 30, 2001, respectively. The increase was
due primarily to an increase in deferred compensation from $0.3 million and $0.5 million in the quarter and six months
ended June 30, 2000, respectively, to $6.2 million
and $46.2 million in the quarter and six months ended June 30, 2001, respectively. Approximately $38.9 million of the
deferred compensation was a result of the SureBeam initial
public offering on March 16, 2001. Excluding the impact of deferred compensation of $0.3 million and $6.2 million
amortization of goodwill in the quarter ended June 30,
2000, compared to deferred compensation of $6.2 million and amortization of goodwill of $7.4 million in the quarter ended
June 30, 2001, SG&A as a percentage of revenues increased
from 15.9% in the second quarter of 2000 to 17.6% in the quarter ended June 30, 2001. Excluding the impact of deferred
compensation of $0.5 million and amortization of goodwill of
$14.9 million in the six months ended June 30, 2000, and $46.2 million of deferred compensation and $14.7 million
amortization of goodwill in the six months ended
June 30, 2001, SG&A

17

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as a percentage of revenues increased from 16.0% to 19.3%, respectively. The primary cause of the increase in 2001 is related to
increased sales, marketing, and administrative costs incurred by
SureBeam associated with planned increases for its sales, advertising and branding campaign following the successful completion of
the SureBeam initial public offering, as well as increased SG&A costs
incurred in our Titan Wireless segment reflecting its investment in the development of corporate retail business.

Research and Development

Our consolidated R&D expenses increased from $3.1 million and $5.3 million in
the quarter and six months ended June 30, 2000 to
$4.8 million and $9.1 million in the quarter and six months ended June 30, 2001. As a percentage of revenues, R&D
expenditures increased from 1.2% and 1.1% in the quarter and six
months ended June 30, 2000, respectively, to 1.7% in the quarter and six months ended June 30, 2001. Increased R&D
expenditures were primarily related to costs incurred in our Titan
Systems segment to develop certain control channel modems and wide band receivers as well as in our Titan Wireless segment related to
the next generation Xpress connection product and very small
aperture terminal ("VSAT") development. We anticipate that R&D efforts will increase throughout the remainder of fiscal 2001.

Acquisition and Integration Related Charges and Other

Consolidated acquisition and integration related charges and other were $34.8 million in
the six months ended June 30, 2001, of which
$2.6 million was recorded in the quarter ended June 30, 2001, and $32.2 million was recorded in the quarter ended
March 31, 2001.

The
$2.6 million in the second quarter of 2001 included $1.9 million for employee termination costs associated with further
reductions in employee workforce and lease
obligation costs related to the restructure of Cayenta. The restructure was a result of economic conditions and weakness in the
market for commercial information technology services and
e-business software applications. In addition, employee termination costs of $0.8 million were recorded in the Emerging
Technologies and Businesses Segment related to a reduction in
workforce in the Company's AverCom business, resulting from the same economic conditions as Cayenta.

The
$32.2 million recorded in the first quarter of 2001 includes costs of $12.2 million related to the integration of ACS and
AverStar, and a realignment of business
around the major categories of customers of Titan Systems, which together resulted in personnel reductions and the closing of several
facilities. Included in these costs is approximately
$3.1 million of employee termination and retention costs, $3.5 million of costs to eliminate duplicate and excess
facilities and assets, $1.1 million of duplicate personnel costs
to transition processes and functions, and $1.5 million of asset impairment costs of certain asset balances for which the
recoverability of such balances was impaired due to our exit from a
satellite services business within the Titan Systems segment. Approximately $3 million of the charge was related to another
subsidiary acquired in a prior year for contingencies arising from
matters pre-existing to Titan's acquisition of the business. That acquisition was accounted for as a purchase, and those matters are
expected to be resolved in the third quarter of 2001.

Included
in the acquisition and integration related charges and other in the first quarter of 2001 is $19.4 million related to the
restructuring of Cayenta (which is included
in our Software Systems segment). As a result of reduced corporate spending on commercial information technology services and
e-business software applications, the Company developed and
approved a plan to restructure the Cayenta business, which included a reduction in workforce, resulting in a charge of approximately
$1.0 million and the elimination of duplicate and excess
facilities, resulting in a charge of approximately $1.1 million. As a result of management's evaluation of the recoverability of
all the assets of Cayenta, in accordance with Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of", management

18

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concluded from this evaluation that a significant impairment of intangible as well as long-lived assets had occurred. An impairment
charge was required because the estimated fair value was
less than the carrying value of the assets. The impairment charge of $17.3 million was comprised of the following:
$5.9 million for fixed assets associated with Cayenta's network
operations center, $1.9 million for capitalized software designed for B2B exchanges, $2.0 million for prepaid advertising
costs, $2.0 million
for accounts receivable, $5.3 million for Cayenta's investment in Soliance, LLC, a joint venture that markets and delivers
information technology systems and solutions to the utility industry,
and $0.2 million for certain other assets.

Also
included in the acquisition and integration related charges and other in the six months ended June 30, 2001 is a charge of
$0.5 million of employee termination
costs incurred in the Titan Wireless segment related to certain organizational changes within that business unit.

Acquisition
and integration related charges of $19.1 million and $37.1 million in the second quarter and first six months of 2000 were
costs associated with the
Company's acquisitions of ACS and AverStar. Costs of $1.9 million related to a previously filed and withdrawn registration
statement for the proposed initial public offering of Cayenta are also
included in the operating results for the quarter and six months ended June 30, 2000.

Operating Profit (Loss)

Consolidated.Our operating performance improved from
an operating loss of $6.9 million in the quarter ended
June 30, 2000 to operating income of $0.1 million in the quarter ended June 30, 2001. For the six months ended
June 30, 2001, operating results decreased from an operating
loss of $17.9 million in 2000 to $68.5 million in 2001. The operating results in 2000 and 2001 were impacted by a charge
for acquisition and integration related costs and other of
$20.9 million and $39.0 million in the quarter and six months ended June 30, 2000, respectively, and $2.6 million
and $34.8 million in the quarter and six months
ended June 30, 2001, respectively. Amortization of goodwill of $6.2 million and $14.9 million for the quarter and six
months ended June 30, 2000, respectively, and
$7.4 million and $14.7 million for the quarter and six months ended June 30, 2001, respectively, are included in the
operating results for the periods indicated. In addition,
deferred compensation of $0.3 million and $6.2 million in the second quarter of 2000 and 2001, respectively, and
$0.5 million and $46.2 million for the six months ended
June 30, 2000 and 2001, respectively, are also included in the operating losses for those periods. Excluding the impact of the
charge for acquisition and integration related costs and other,
the amortization of goodwill, and the deferred compensation charges, operating profit decreased from $20.5 million and
$36.5 million in the quarter and six months ended June 30,
2000, respectively, to $16.3 million and $27.1 million in the quarter and six months ended June 30, 2001,
respectively. The reduction in operating profit was primarily a result of
the increased SG&A expenditures incurred by SureBeam as well as the operating losses incurred by Software Systems (including
Cayenta) as a result of the reduced revenues due to reduced demand
discussed previously.

Segment Operating Profit.Operating profit reported by
business segment includes substantially all of the segment's
costs of operations and administration. The segment performance is based upon profit or loss before interest expense, income taxes
and before allocated costs of corporate overhead, exclusive of any
gains or losses on disposition of investments, or other assets, with the exception of SureBeam, which beginning January 1, 2001
is reported after the allocation of corporate overhead costs.
Corporate
overhead may include, among other things, costs for financial, accounting, marketing, administrative and legal activities incurred by
Titan. Consequently, the results of operations of the segments may
not be indicative of the actual results that would be shown in the financial statements of these segments if prepared on a
stand-alone basis. The discussion of segment operating profit below includes
only the operating profits for each of our business segments, and does not include separate discussion of our corporate overhead.

19

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Three Months Ended June 30, 2001:

Operating Profit (Loss)

Titan Systems.Titan Systems' operating performance
improved from an operating loss of $3.7 million in the
second quarter of 2000 to an operating profit of $17.7 million in the second quarter of 2001. Included in the operating results
for the second quarter of 2000 and 2001 is a charge for
amortization of goodwill of approximately $2.6 million and $2.5 million, respectively. In addition, a charge for
acquisition and integration related charges and other of
$19.1 million is included in the operating results for the second quarter of 2000. Excluding the impact of the amortization and
these charges, operating profit increased from
$18.0 million in the second quarter of 2000 to $20.2 million in the second quarter of 2001. The increase in operating
profit was primarily driven by the increase in revenues discussed
above.

SureBeam.SureBeam's operating results decreased from
an operating profit of $0.8 million in the second quarter
of 2000 to an operating loss of $9.4 million in the second quarter of 2001. Included in the second quarter of 2001 operating
results is a deferred compensation charge of $5.1 million, as
well as amortization of intangibles and other purchased assets of $0.7 million. Included in the operating results for the second
quarter of 2000 is amortization of intangibles and other
purchased assets of approximately $0.5 million. Excluding the impact of these charges, operating income decreased from
$1.3 million in the second quarter of 2000 to an operating loss of
$3.6 million in the second quarter of 2001. Increased costs incurred relating to SureBeam's planned advertising and branding
campaign following the completion of its initial public offering
resulted in the operating losses in the second quarter of 2001.

Titan Wireless.Titan Wireless' operating results
decreased from operating income of $3.1 million in the second
quarter of 2000 to $1.4 million in the second quarter of 2001. Reduced operating margins were a result of increased development
of Titan Wireless' corporate fixed wireless business and new very
small aperture ("VSAT") development costs. Included in the operating results for the second quarter of 2001 is amortization of
goodwill of approximately $0.4 million. Excluding the impact of
the goodwill amortization, operating income declined from $3.1 million in the second quarter of 2000 to $1.8 million in the
second quarter of 2001.

Software Systems (including Cayenta).Software Systems'
(including Cayenta) operating results declined from an
operating loss of $5.1 million in the second quarter of 2000 to an operating loss of $5.4 million in the second quarter of
2001. Included in the second quarter of 2001 operating results
is a charge of $1.9 million for restructuring costs. Included in the second quarter of 2000 operating results is a charge of
$1.9 million related to a previously filed and withdrawn
registration statement for the proposed initial public offering of Cayenta. In addition, amortization of goodwill of
$3.2 million and $3.5 million and deferred compensation of
$0.3 million and $0.1 million are included in the operating results for the second quarter ended June 30, 2000 and
2001, respectively. Excluding these charges, operating results
declined from an operating profit of $0.3 million in the second quarter of 2000 to an operating profit of $0.1 million in
the second quarter of 2001. This decline is primarily a result
of the decreased revenues discussed previously.

Emerging Technologies and Businesses.Emerging
Technologies' operating results decreased from operating income of
$0.9 million in the second quarter of 2000 to $0.3 million in the second quarter of 2001. This decrease was due in part to
increased expenses in several of our new emerging technologies,
as well as decreased demand at AverCom, our internet portal and integration service business for the financial services industry,
which has also been affected by economic conditions and weakness in
the market for commercial information technology services. Restructuring charges of $0.8 million, primarily comprised of
termination benefits, are included in the operating results for the
quarter ended June 30, 2001. Included in operating results for the second quarter of 2000 and 2001 is amortization of goodwill

20

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of approximately $0.1 and $0.3 million, respectively. Excluding these charges, operating profit increased from $1.0 million
in the second quarter of 2000 to $1.4 million in the
second quarter of 2001.

Six Months Ended June 30, 2001:

Operating Profit (Loss)

Titan Systems.Titan Systems' operating results
improved from an operating loss of $9.9 million in the six
months ended June 30, 2000 to an operating profit of $22.3 million in the six months ended June 30, 2001. Included in
the operating results for the six months ended
June 30, 2000 and 2001 is a charge for amortization of goodwill of approximately $4.7 million and $4.8 million,
respectively. In addition, a charge for acquisition and integration
related charges and other of $37.1 million and $12.2 million is included in the operating results for the six months ended
June 30, 2000 and 2001, respectively. Excluding the
impact of the amortization and these charges, operating profit increased from $31.9 million in the six months ended
June 30, 2000 to $39.3 million in the six months ended
June 30, 2001. The increase in operating profit was primarily driven by the increase in revenues discussed above.

SureBeam.SureBeam's operating results decreased from
an operating profit of $1.5 million in the six months
ended June 30, 2000 to an operating loss of $52.8 million in the six months ended June 30, 2001. Included in the six
months ended June 30, 2001 operating results is a
deferred compensation charge of $44.0 million, as well as amortization of intangibles and other purchased assets of
$1.4 million, and included in the six months ended June 30,
2000 is amortization of intangibles and other purchased assets of $0.5 million. Excluding the impact of these charges, operating
income decreased from $1.9 million in the six months
ended June 30, 2000 to an operating loss of $7.4 million in the six months ended June 30, 2001. Increased costs
incurred relating to SureBeam's planned advertising and branding
campaign following the completion of its initial public offering resulted in the operating losses in the first six months of 2001.

Titan Wireless.Titan Wireless' operating performance
decreased from operating income of $5.6 million in the
first six months of 2000 to $1.3 million in the first six months of 2001. Reduced operating margins were a result of increased
development of Titan Wireless' corporate fixed wireless business
and new very small aperture ("VSAT") development costs. Included in the operating results for the first six months of 2001 is
amortization of goodwill of approximately $0.9 million, as well as
a charge of $0.5 million for employee termination costs. Excluding the impact of the goodwill amortization and employee
termination costs, operating income declined from $5.6 million in
the first six months of 2000 to $2.7 million in the first six months of 2001.

Software Systems (including Cayenta).Software Systems'
(including Cayenta) operating performance declined from an
operating loss of $11.4 million in the first six months of 2000 to an operating loss of $30.7 million in the first six
months of 2001. Included in the six months period ended
June 30, 2001 operating results is a charge of $21.3 million for restructuring costs. Included in the six month period
ended June 30, 2000 operating results is a charge of
$1.9 million related to the previously filed and withdrawn registration statement for the proposed initial public offering of
Cayenta. In addition, amortization of goodwill of
$9.7 million and $7.1 million and deferred compensation of $0.6 million and $0.2 million are included in the
operating results for the six month period ended
June 30, 2000 and 2001, respectively. Excluding these charges, operating performance declined from operating income of
$0.8 million in the six month period ended June 30, 2000 to
an operating loss of $2.2 million in the six
months period ended June 30, 2001. This decline is a result of the decrease in revenues discussed previously.

Emerging Technologies and Businesses.Emerging
Technologies' operating results decreased from operating income of
$2.0 million in the six months ended June 30, 2000 to $0.4 million in the six

21

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months ended June 30, 2001. This decrease was due in part to increased expenses in several of our new emerging technologies, as
well as decreased demand at AverCom, which has also been affected
by economic conditions and weakness in the market for commercial information technology services. Restructuring charges of
$0.8 million, primarily comprised of termination benefits, are
included in the operating results for the six months ended June 30, 2001. Included in operating results for the six months ended
June 30, 2000 and 2001 is amortization of goodwill of
approximately $0.1 and $0.6 million, respectively. Excluding these charges, operating profit decreased from $2.1 million in
the six months ended June 30, 2000 to
$1.8 million in the six months ended June 30, 2001.

Interest Expense, Net

Our net interest expense increased from $8.5 million and $15.0 million in the
second quarter and six months ended June 30, 2000 to
$11.0 million and $21.3 million in the second quarter and six months ended June 30, 2001. Net interest expense
increased primarily as a direct result of the increased level of our
borrowings, to fund the growth in the various segments. Borrowings from our primary bank lines of credit, excluding working capital
lines from acquired companies, averaged $348.7 million and
$334.9 million in the second quarter and first six months of 2001, respectively, at weighted average interest rates of 8.3% and
8.6%, respectively.

Income Taxes

Income taxes reflect an effective benefit rate of 25% in the second quarter and six month
period ended June 30, 2000 and 8.6% in the second quarter and
first six months ended June 30, 2001. The reduced benefit rate in the second quarter and first six months of 2001 is due
primarily to the fact that the Company provided a significant valuation
allowance for the SureBeam losses that may not be a benefit to the Company in the future. Accordingly, the Company has recorded a
reduced benefit rate of 8.6% in the second quarter and first six
months of 2001 to reflect this uncertainty.

Net Income (Loss)

We reported a net loss of $12.5 million and $27.7 million in the quarter and six
months ended June 30, 2000, respectively, compared to a
net loss of $7.8 million and $67.7 million in the quarter and six months ended June 30, 2001. Included in the net loss
for the quarter and six months ended June 30, 2001 is
amortization of goodwill of $7.4 million and $14.7 million, respectively, a deferred compensation charge of
$6.2 million and $46.2 million, and a charge for acquisition and
integration related charges and other of $2.6 million and $34.8 million, respectively. Included in the net loss for the
quarter and six months ended June 30, 2000 is amortization
of goodwill of $6.2 million and $14.9 million, respectively, deferred compensation of $0.3 million and
$0.5 million, respectively, and acquisition and integration related
charges and other of $20.9 million and $39.0 million, respectively.

Liquidity and Capital Resources

We have used our cash principally to fund our capital expenditures, acquisitions and working
capital needs. We fund our cash requirements principally from cash
flows from our operations, borrowings under our senior credit facility and proceeds from the sale of our securities. Our operating
activities used $22.2 million in the six months ended
June 30, 2001, primarily resulting from an increase in accounts receivable balances of $41.5 million, with increases in
Titan Wireless and SureBeam, principally resulting from increased
revenues, as well as, to a lesser degree, an increase in receivable balances in Titan Systems, due to delayed billing activities
resulting from a conversion to a new software system in the first
quarter of 2001. A significant portion of these delayed receipts were collected in the second quarter, with the remaining expected to
be collected in the third quarter of 2001.

22

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Our investing activities used cash of $112.3 million in the six months ended June 30, 2001,
primarily to finance acquisitions and equity investments of $55.5 and fund
capital expenditures of $27.5 million, with the most significant capital expenditures in Titan Wireless to develop its corporate
fixed wireless business and new VSAT development costs, and in
SureBeam related to the construction on service centers. Our financing activities provided cash of $137.0 million, which amount
primarily reflected borrowings of $76.9 million on our
credit facilities as well as the net proceeds of $60.8 million from the SureBeam initial public offering.

At
June 30, 2001, total borrowings outstanding on our credit facilities were $340 million at a weighted average interest rate
of 7.7%. Commitments under letters of
credit were $6.7 million at June 30, 2001, which reduces availability of the working capital line. Of the total borrowings,
$10.9 million was short-term.

On
December 10, 1999, the Company's wholly owned subsidiary, Titan Africa, Inc. ("Titan Africa"), in connection with its
contract to build a satellite-based telephone
system for its customer, the national telephone company of Benin, Africa, entered into a Loan Facility agreement for up to
30.0 billion Francs CFA (the currency of the African Financial
Community), equivalent to approximately $45.0 million U.S. dollars, with a syndicate of five banks, with Africa Merchant Bank as
the arranger. This medium term financing is a
non-recourse loan to Titan Africa which is guaranteed by the national telephone company of Benin, Africa (The Office of Post and
Telecommunications or "OPT") and secured by the national
telephone company's equipment and revenues related to the project. The facility has a fixed interest rate of 9.5% and will be repaid
in seven equal semi-annual payments from the net cash
receipts of this project, or by the OPT in the event that such receipts are not adequate to make these payments, which commenced on
December 31, 2000 and ends on December 31, 2003. The
borrowings on this facility will be utilized to fund the subcontractor costs incurred by Alcatel of France, a major subcontractor to
this project. The installment due on June 30, 2001, has been
extended by the Africa Merchant Bank to the end of the third quarter of 2001. The non-Alcatel equipment provided by Titan Africa will
be paid for in seven equal semi-annual
installments, which commenced on December 31, 2000. Due to the approximate six to nine month delay in the delivery of the
system, the installment due on June 30, 2001 was not made by the
OPT, and the payment has been extended by Titan. The terms of Titan Africa's agreement with the customer include, among other things,
a revenue sharing of total net receipts earned on this project for
up to a period of 9 years depending upon when the equipment has been paid for. As of June 30, 2001, approximately
$36.9 million was drawn on this facility, and has been used to
reduce the related receivable balance. In October 2000, the Company collected an $18 million receivable from an African
investor group related to its sale of a portion of its economic
interest, net of all fixed equipment payments, in the revenue sharing of this project.

As
part of our strategy of seeking external financing to grow our commercial businesses, our SureBeam subsidiary has completed its
initial public offering of its common stock on
March 16, 2001 and raised net proceeds of $60.8 million. We have extended a credit facility for up to a maximum of
$75.0 million under which SureBeam owed us approximately
$71.4 million as of June 30, 2001. SureBeam may not use the proceeds of its initial public offering to pay amounts
outstanding under its credit facility with us.

On
July 26, 2001 the Company sold 8,048,685 shares of its common stock in a public offering, which included an over-allotment of
1,125,000 shares, at a price of
$18.00 per share. The Company received approximate aggregate proceeds from the offering of $137.6 million in July 2001,
which it will utilize to reduce the borrowings outstanding under
its credit facility. The Company estimates that transaction expenses related to this offering will be approximately
$0.9 million, and will be paid in the third quarter of 2001. In addition,
certain Titan stockholders sold 576,315 shares, including 489,972 shares from the exercise of options, from which Titan received
proceeds of $3.0 million.

23

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Funding for the advancement of our strategic goals, including acquisitions and continued investment in
targeted commercial businesses and start-up ventures, is expected to
continue. We plan to finance our capital expenditures, working capital and liquidity requirements from a combination of sources,
which include cash generated from our operations, our credit facility
and cash on hand. Management believes that the combination of our existing cash, amounts available under our credit facility and cash
flow
expected to be generated from our operations will be sufficient to fund planned investments and working capital requirements for at
least the next twelve months. However, we could elect, or we could
be required, to raise additional funds during that period and we may need to raise additional capital in the future. Additional
capital may not be available at all, or may not be available on terms
favorable to us. Any additional issuance of equity or equity-linked securities may result in substantial dilution to our
stockholders. Management is continually monitoring and reevaluating its level
of investment in all of its operations, specifically the increased investment required in fiscal 2001 to further grow its commercial
businesses, and the financing sources available to achieve our
goals in each business area.

Forward Looking Information: Certain Cautionary Statements: "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995:

Statements contained in this Management's Discussion and Analysis of Financial Condition and
Results of Operations which are not historical facts are forward
looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Examples of such forward looking statements
include our expectations regarding our continuing investments in commercial businesses and start-up ventures, our planned financing
of these ventures and the sufficiency of our available
liquidity to fund investments and working capital, the Company's belief that its technology-based businesses will continue to grow or
result in profitability, that it has built a financially sound
company, that it is uniquely positioned to grow its core operations or take advantage of new opportunities, that it will continue to
focus on strengthening and growing its businesses, building its
patent portfolio and commercializing new innovative technologies, that it expects a greater percentage of revenues in Titan Wireless
to be derived from the provision of services and that it
anticipates a significant portion of delayed receipts in the Titan Systems segment to be collected in the third quarter of 2001.
Actual results may differ materially from those stated or implied in
the forward looking statements. Further, certain forward looking statements are based upon assumptions of future events which may not
prove to be accurate and are subject to risks and uncertainties
that could cause actual results to differ materially from those set forth or implied by forward looking statements. These risks and
uncertainties include but are not limited to those referred to in
the Company's Annual Report on Form 10-K/A for the year ended December 31, 2000, including the Company's entry into new
commercial businesses and new markets such as the food
pasteurization market that require the Company to develop demand for its product, its ability to execute its spinoff or monetization
of assets strategy, its ability to access the capital markets,
dependence on continued funding of U.S. Department of Defense and federal civilian agency programs, contract termination risks, risks
associated with acquiring other companies, including integration
risks, the risks of doing business in developing countries and international markets, including foreign currency risks, and other
risks described in the Company's Securities and Exchange Commission
filings.

24

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PART IIOTHER INFORMATION    THE TITAN CORPORATION

Item 1. Legal Proceedings

On January 6, 2000, Ion Beam Applications s.a. or IBA,
a Belgian corporation, and its related U.S. subsidiaries filed an action for declaratory judgment
in a federal court in Virginia against us relating to our patent for our SureBeam systems. On our
motion, the Virginia court transferred the case to the Federal District Court in San Diego. The action
attacks the validity of our core Irradiation System Utilizing Conveyor Transported Article Carriers
patent, and seeks a declaration that Ion Beam Applications and its customers have not infringed any
of the claims in our patent. The action also contained allegations, later dismissed, that we engaged
in unfair competition and that our conduct constituted patent misuse. On November 29, 2000,
IBA filed an amended complaint alleging, in addition to the original claims, that we have engaged
in false advertising, monopolization, restraint of trade, unfair business practices and unfair
competition, and alleging unenforceability due to patent misuse. We have filed a counterclaim
against the plaintiffs alleging infringement of our patent for our SureBeam systems. We are seeking
damages and an injunction preventing further infringement of our patent. On April 17, 2001 the
Court granted our motion to try our patent infringement claim and Ion Beam Applications' claims
against our patent separately and before any trial of Ion Beam Applications' claims alleging false
advertising, monopolization, restraint of trade and unfair business practices. We intend to
vigorously enforce our patents and prosecute our patent infringement claims against the plaintiffs.
We also intend to vigorously defend against all allegations made by the plaintiffs. However, a
finding in favor of Ion Beam Applications in this action could materially adversely affect our
business, financial condition and results of operations by allowing Ion Beam Applications and other
potential competitors to develop and commercialize electron beam food irradiation systems
that would compete against our SureBeam systems and services, thereby potentially reducing the
growth of our SureBeam business segment and preventing us from generating the revenues that we
expect from food irradiation. Discovery is continuing and it is not possible to predict the outcome
of this case.

Item 4. Submission of Matters to a Vote of Security Holders.

At the Annual Meeting of Stockhoders held on May 16, 2001, the following matters were submitted and approved by shareholders:

|1. |  | Election of Directors. The holders of proxies solicited by the Board cast the
following votes (no other votes were cost):
|-- |  | -------------------------------------------------------------------------------------------------------------------------

|                     | Affirmative | Negative/Abstaining
|-------------------- | ----------- | -------------------
|Michael B. Alexander | 49,418,169  | 279,806            
|Charles R. Allen     | 49,417,765  | 280,210            
|Joseph F. Caliguiri  | 49,417,797  | 280,177            
|Daniel J. Fink       | 49,417,784  | 280,191            
|Susan Golding        | 49,414,344  | 283,630            
|Robert M. Hanisee    | 49,419,381  | 278,594            
|Robert E. La Blanc   | 49,419,245  | 278,729            
|Thomas G. Pownall    | 49,418,797  | 279,177            
|Gene W. Ray          | 43,458,938  | 6,239,037          
|James Roth           | 48,898,591  | 799,383            
|Joseph R. Wright     | 49,415,865  | 282,110            

|2. |  | Ratification of Selection of Arthur Andersen LLP as the Company's Auditors.
|-- |  | ---------------------------------------------------------------------------

| | Affirmative Votes | 48,385,636 | 
| | ----------------- | ---------- | 
| | Negative Votes    | 1,222,771  | 
| | Abstaining        | 89,568     | 

Item 6. Exhibits and Reports on Form 8-K.

|a. |  | 10.1 |  | Fifth Amendment to Senior Secured Credit Agreement, dated June 11, 2001, by and among The Titan
Corporation, various financial institutions from time to time parties thereto (the "Lenders"), Credit Suisse First Boston, as
the Lead Arranger and as the Administrative Agent for the Lenders, First Union Securities, Inc., as Co-Arranger and as Syndication
Agent and The Bank of Nova Scotia as the Documentation Agent.
|-- |  | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  | 10.2 |  | Sixth Amendment to Senior Secured Credit Agreement, dated July 11, 2001, by and among The Titan Corporation, various financial
institutions from time to time parties thereto (the "Lenders"), Credit Suisse First Boston, as the Lead Arranger and as the
Administrative Agent for the Lenders, First Union Securities, Inc., as Co-Arranger and as Syndication Agent and The Bank of Nova
Scotia as the Documentation Agent.
|b. |  |      |  | None                                                                                                                                                                                                                                                                                                                                                                                                                          

25

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THE TITAN CORPORATION  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|Dated: September 7, 2001 |  | THE TITAN CORPORATION
|------------------------ |  | ---------------------
|                         |  | By:                  
|                         |  | By:                  

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