Titan Corp., a defense technology company, reported a second-quarter loss yesterday despite a 19 percent increase in revenue, for which it blamed a federal bribery investigation and the collapse of its acquisition by Lockheed Martin Corp.
Titan, based in San Diego, reported a loss of $66.6 million in the quarter compared with a profit of $5.8 million in the second quarter last year. Revenue was $514.9 million, up from $433.9 million.
The Justice Department is investigating whether Titan consultants violated the Foreign Corrupt Practices Act by bribing foreign officials, and the Securities and Exchange Commission has indicated that it will pursue civil penalties against the company. Lockheed, based in Bethesda, abandoned its $2.2 billion agreement to acquire Titan, which employs about 2,500 people in the Washington area, because Titan did not meet a June deadline to resolve the investigations.
"We believe that we are very well positioned as we go" into the rest of the year, said Gene W. Ray, chairman and chief executive, noting the company's focus on intelligence and communications contracts.
Titan forecasts that profit from continuing operations will be between $2 million and $11 million this year and between $83 million and $91 million in 2005.
Titan's stock gained 25 cents a share yesterday to close at $12.03.
"Although a messy quarter to say the least, we are satisfied with the company's results," Thomas M. Meagher, industry analyst for BB&T Capital Markets, wrote in a research note.
Titan set aside $25.5 million during the quarter to settle the government investigations on top of $3 million already reserved and has incurred $8.8 million on legal costs because of the inquiries and the failed merger.
The quarter also included a $24 million charge related to the sale of two business units, one of which is targeted by the Justice Department's bribery investigation.
Titan reported a $5 million loss in the quarter on a Saudi Arabian contract to develop a national identification card. A contract to provide translators to the military continued to be the company's largest contract, accounting for 10 percent of revenue during the quarter. The contract has been controversial since a Titan translator was identified in an Army report about abuses of prisoners at an Iraq prison.
The contract was scheduled to expire in September, but probably will be extended for up to a year, Ray said.