Titan Says It Expects to Report Loss

Titan Corp., which supplies translators to the Army in Iraq, warned Thursday that it would report a second-quarter loss of as much as $78 million because of legal costs from a government probe, costs to exit some businesses and its failed $1.66-billion sale to Lockheed Martin Corp.

Titan’s quarterly net loss will be 74 cents to 93 cents a share, contrasted with net income of $5.87 million, or 7 cents a share, a year earlier, according to preliminary results, the company said. Final second-quarter results will be released the first week of August.

The San Diego-based company now expects to have to pay as much as $32 million to resolve a criminal probe by the Justice Department into allegations that Titan consultants made unlawful payments to government officials in Asia, Saudi Arabia and the African nation of Benin in exchange for business.

In March, Titan reserved $3 million to settle the investigation, which came to light after Lockheed proposed the acquisition. The probe prompted Lockheed to reduce its offer from $1.8 billion and twice delay closing the deal before finally walking away.

Failure to resolve the investigation by a June 25 deadline scuttled plans by Titan Chief Executive Gene Ray, 66, to sell the company.

The probe also makes it “much less certain” that Titan will win an extension of the contract to supply translators to the Army, its largest single source of revenue, Wachovia Securities analyst Edward Caso wrote in a note to clients.

Adding to Titan’s problems was the federal government’s decision Tuesday not to renew Titan’s contract to provide as much as $250 million of counseling services for U.S. soldiers and their families.

Titan also announced plans Thursday to sell its Datron World Communications business and its Titan Scan Technologies unit. The company said it expected to record costs of as much as $28 million in the second quarter related to disposal of those businesses.

Shares of Titan rose 28 cents to $12.02 on the New York Stock Exchange.

Bloomberg News was used in compiling this report.