8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 22, 2005

The Titan Corporation

(Exact name of registrant as specified in its charter)

Delaware	1-6035	95-2588754
(State or other	(Commission File	(IRS Employer
jurisdiction of	Number)	Identification No.)
incorporation)

3033 Science Park Drive

San Diego, California  92121-1199

(Address of principal executive offices, including zip code)

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

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (seeGeneral Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

On July 22, 2005, The Titan Corporation (“Titan”), certain subsidiaries of Titan named as guarantors therein (the “Guarantors”) and Deutsche Bank Trust Company Americas, as trustee (the “Trustee”) entered into a First Supplemental Indenture (the “Supplemental Indenture”) to the Indenture (the “Indenture”), dated as of May 15, 2003, by and among Titan, the guarantors named therein and the Trustee relating to Titan’s 8% Senior Subordinated Notes due 2011 (the “Notes”).  The Supplemental Indenture was entered into in connection with the previously disclosed Merger Agreement (as amended on June 28, 2005, the “Merger Agreement”), dated as of June 2, 2005, by and among Titan, L-3 Communications Corporation (“L-3”) and Saturn VI Acquisition Corp. (“Merger Sub”), pursuant to which Merger Sub will be merged, upon the terms and conditions set forth therein, with and into Titan, with Titan continuing as the surviving corporation and a wholly-owned subsidiary of L-3 (the “Merger”).

The Supplemental Indenture will have the effect of releasing the Guarantors from their guarantees of Titan’s obligations under the Notes and eliminating substantially all of the restrictive covenants and events of default and other related provisions from the Indenture governing the Notes.  Although the Supplemental Indenture was executed on July 22, 2005, it will not become operative unless and until (i) all Notes that are validly tendered pursuant to L-3’s offer to purchase any and all outstanding Notes for cash, which tender offer was launched by L-3 on June 30, 2005 pursuant to the terms of the Merger Agreement, are accepted for purchase and paid for, and (ii) the Merger is consummated.

The above summary of the Supplemental Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the Supplemental Indenture, which is attached hereto as Exhibit 4.1 and incorporated herein by reference.

Item 7.01.  Regulation FD Disclosure

Titan is furnishing certain supplemental information (the “Supplemental Information”) concerning Titan and its business.  The Supplemental Information is set forth in Exhibit 99.1 to this Report.

The Supplemental Information is being furnished, not filed, pursuant to this Item 7.01. Accordingly, the Supplemental Information will not be incorporated by reference into any registration statement filed by Titan under the Securities Act unless specifically identified therein as being incorporated therein by reference.

Item 9.01.  Financial Statements and Exhibits

(c)  Exhibits:

4.1           First Supplemental Indenture, dated as of July 22, 2005, by and among The Titan Corporation, the entities named as guarantors therein and Deutsche Bank Trust Company Americas, as trustee.

99.1         Certain supplemental information concerning The Titan Corporation and its business.

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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 hereunto duly authorized.

	THE TITAN CORPORATION
	By		/s/ Mark W. Sopp
		Name:	Mark W. Sopp
		Title:	Chief Financial Officer
Date:  July 25, 2005

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EXHIBIT INDEX

Exhibit:

4.1           First Supplemental Indenture, dated as of July 22, 2005, by and among The Titan Corporation, the entities named as guarantors therein and Deutsche Bank Trust Company Americas, as trustee.

99.1         Certain supplemental information concerning The Titan Corporation and its business.

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EX-4.1

Exhibit 4.1

THE TITAN CORPORATION,
AS ISSUER,

DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS TRUSTEE,

AND

THE GUARANTORS NAMED
ON THE SIGNATURE PAGES HEREOF,

FIRST SUPPLEMENTAL INDENTURE

DATED AS OF JULY 22, 2005

TO

INDENTURE

DATED AS OF MAY 15, 2003

THIS FIRST SUPPLEMENTAL INDENTURE (the “First Supplemental Indenture”), dated as of July 22, 2005, by and among The Titan Corporation, a Delaware corporation (the “Company”), the Guarantors named on the signature pages hereof (collectively, the “Guarantors”) and Deutsche Bank Trust Company Americas, as trustee (the “Trustee”).

WHEREAS, the Company has heretofore executed and delivered an indenture dated as of May 15, 2003 (the “Original Indenture”), by and among the Company, the Guarantors and the Trustee, pursuant to which the Company has issued $200,000,000 aggregate principal amount of 8% Senior Subordinated Notes due 2011 (the “Notes”) and the Guarantors have executed and delivered their guarantees of the Notes (the “Guarantees”);

WHEREAS, the Company has entered into a definitive agreement whereby all of the outstanding shares of common stock of the Company shall be acquired by L-3 Communications Corporation (“L-3”) (the “Acquisition”);

WHEREAS, in connection with the Acquisition, L-3 has offered to purchase for cash any and all outstanding Notes (the “Tender Offer”) pursuant to an Offer to Purchase and Consent Solicitation Statement dated June 30, 2004 (the “Offer to Purchase”);

WHEREAS, in connection with the Tender Offer, L-3 has requested that holders of the Notes deliver their consents with respect to certain amendments to the Original Indenture (the “Consent Solicitation”);

WHEREAS, Section 9.2 of the Original Indenture provides that the Company, the Guarantors and the Trustee may execute and deliver one or more supplemental indentures, with the consent of the holders of a majority in aggregate principal amount of the outstanding Notes to, among other things, amend or supplement certain provisions of the Original Indenture;

WHEREAS, the holders of at least a majority in aggregate principal amount of the Notes outstanding have consented in the Consent Solicitation to the amendments to the Original Indenture hereinafter set forth and the execution of this First Supplemental Indenture;

WHEREAS, the Company, the Guarantors and the Trustee desire to enter into this First Supplemental Indenture for the purpose of changing and eliminating certain provisions of the Original Indenture; and

WHEREAS, all conditions precedent related to the entering of this First Supplemental Indenture have been satisfied.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, the Guarantors and the Trustee for the benefit of each other and for the equal and ratable benefit of the holders of the Notes agree as follows:

ARTICLE I.

DEFINITIONS

Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Original Indenture.

ARTICLE II.

OPERATION OF AMENDMENTS

Upon the execution and delivery of this First Supplemental Indenture by the Company, the Guarantors and the Trustee, this First Supplemental Indenture shall become effective and the Original Indenture and the Notes and Guarantees issued thereunder shall be amended and supplemented in accordance herewith, and this First Supplemental Indenture shall form a part of the Original Indenture for all purposes, and every holder of Notes authenticated and delivered under the Original Indenture shall be bound hereby; provided, however, that the First Supplemental Indenture shall not become operative with respect to the Original Indenture, any Notes or the Guarantees of the Guarantors unless and until (1) L-3 accepts for payment, pursuant to the offer to purchase Notes as set forth in the Offer to Purchase, at least a majority in aggregate principal amount of the outstanding Notes, and pays to the Depositary the aggregate Total Consideration therefor (as such term is defined in the Offer to Purchase) and (2) the Acquisition is consummated, at which time this First Supplemental Indenture shall automatically become operative with respect to the Original Indenture, the Notes and the Guarantees of the Guarantors, and the provisions of the Original Indenture, as so amended, shall bind all holders of Notes without the requirement of any further action by or notice to the Company, the Guarantors, the Trustee or any holder of Notes.

ARTICLE III.

AMENDMENTS TO THE INDENTURE

Section 3.1.            Deletion of Certain Provisions.  Subject to Article II hereof, each of the following provisions of the Original Indenture (and any corresponding provision of any Note) is hereby deleted and eliminated in its entirety, without any redesignation of any other provision of the Original Indenture (or any Note): Section 4.3 (SEC Reports), Section 4.5 (Taxes), Section 4.6 (Stay, Extension and Usury Laws), Section 4.7 (Limitation on Incurrence of Additional Indebtedness and Disqualified Capital Stock), Section 4.8 (Limitation on Liens), Section 4.9 (Limitation on Restricted Payments), Section 4.10 (Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries), Section 4.11 (Limitation on Transactions with Affiliates), Section 4.12 (Limitation on Sale of Assets and Subsidiary Stock), Section 4.14 (Limitation on Layering Indebtedness), Section 4.15 (Subsidiary Guarantors), Section 4.16 (Limitation on Status as an Investment Company), Section 4.17 (Maintenance of Properties and Insurance), Section 6.1(3), Section 6.1(6), Section 6.1(7), Section 6.1(8) and Article X.

Section 3.2.            Release of Guarantors.  Subject to Article II hereof, each of the Guarantors named on the signature pages of the Original Indenture or this First Supplemental Indenture is hereby released from its obligations under its Guarantee.

Section 3.3.            Amendment to Article V of the Original Indenture. Subject to Article II hereof, Section 5.1 of the Original Indenture is hereby amended and restated in its entirety to read as follows:

“SECTION 5.1                MERGER, CONSOLIDATION OR SALE OF ASSETS

The Company shall not consolidate with or merge with or into another Person or, directly or indirectly, sell, lease, convey or transfer all or substantially all of the Company’s assets (such amounts to be computed on a consolidated basis), whether in a single transaction or a series of related transactions, to another Person or group of affiliated Persons, unless:

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(1)  either (a) the Company is the continuing entity or (b) the resulting, surviving or transferee entity is a corporation organized under the laws of the United States, any state thereof or the District of Columbia and expressly assumes by supplemental indenture all of the Company’s obligations in connection with the Notes and this Indenture; and

(2)  no Default or Event of Default shall exist or shall occur immediately after giving effect on a pro forma basis to such transaction.”

Section 3.4.            Amendment to Exhibit to the Original Indenture. Subject to Article II hereof, Exhibit E to the Original Indenture is hereby deleted in its entirety.

Section 3.5.            References to Deleted or Amended Provisions.  Subject to Article II hereof, all references in the Original Indenture and any Note, as amended by this Article III, to any of the provisions deleted and eliminated as provided herein, or to terms defined in such provisions, shall also be deemed deleted and eliminated.  Effective as of the date hereof, none of the Company, the Guarantors, the Trustee or other parties to or beneficiaries of the Original Indenture shall have any rights, obligations or liabilities under such Sections or subsections and such deleted Sections or subsections shall not be considered in determining whether a Default or Event of Default has occurred or whether the Company has observed, performed or complied with the provisions of the Original Indenture or any Note.

Section 3.6.            Amendment of Definitions.  Subject to Article II hereof, the Original Indenture is hereby amended by deleting any definitions from the Original Indenture with respect to which references would be eliminated as a result of amendments to the Original Indenture pursuant to this Article III.

ARTICLE IV.

MISCELLANEOUS

Section 4.1.            Execution as Supplemental Indenture. This First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and, as provided in the Original Indenture, this First Supplemental Indenture forms a part thereof. Except as herein expressly otherwise defined, the use of the terms and expressions herein is in accordance with the definitions, uses and constructions contained in the Original Indenture.

Section 4.2.            No Other Amendments. Except as expressly amended hereby, the Original Indenture shall continue in full force and effect in accordance with the provisions thereof.

Section 4.3.            Provisions Binding on the Company’s Successors. Any covenants and agreements contained in this First Supplemental Indenture made by the Company or the Guarantors shall bind their successors and assigns whether so expressed or not.

Section 4.4.            Governing Law. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE AND THE NOTES.

Section 4.5.            Execution and Counterparts. This First Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.

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Section 4.6.            Headings.  The article and section headings herein are for convenience only and shall not affect the construction hereof.

Section 4.7.            Trust Indenture Act.  Nothing in this First Supplemental Indenture shall cause the Original Indenture to fail to qualify under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), and in the event of any conflict between the terms of this First Supplemental Indenture and the Trust Indenture Act, the terms of this First Supplemental Indenture shall be deemed modified to comply with the Trust Indenture Act.

Section 4.8.            Trustee.  The recitals contained herein are those of the Company and the Guarantors and not the Trustee.  The Trustee makes no representations as to the validity or adequacy of this First Supplemental Indenture.  All rights, protections, privileges, indemnities and benefits granted or afforded to the Trustee under the Original Indenture shall be deemed incorporated herein by this reference and shall be deemed applicable to all actions taken, suffered or omitted by the Trustee under this First Supplemental Indenture.

Section 4.9.            Guarantors.  The Company hereby represents and warrants that this First Supplemental Indenture is being executed by all Guarantors in existence as of the date hereof.

[The remaining portion of this page is intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first written above.

THE TITAN CORPORATION
By:	/s/ Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer and Treasurer
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee
By:	/s/ Yana Kalachikova
	Name:	Yana Kalachikova
	Title:	Associate
GUARANTORS:
CAYENTA OPERATING LLC
By:	/s/ Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer and Treasurer
SHELLCO, INC. (formerly known as DataCentric Automation Corporation)
By:	/s/ Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer and Treasurer
INTERNATIONAL SYSTEMS, LLC
By:	/s/ Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer and Treasurer

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PROCOM SERVICES, INC.
By:	/s/ Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer, Secretary and Treasurer
TITAN AFRICA, INC.
By:	/s/ Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer and Treasurer
TITAN FACILITIES, INC. (formerly known as Delta Construction Management, Inc.)
By:	/s/ Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer and Treasurer
TITAN SCAN TECHNOLOGIES CORPORATION
By:	/s/	Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer and Treasurer
TITAN WIRELESS, INC.
By:	/s/ Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer and Treasurer
TITAN WIRELESS AFRIPA HOLDING, INC.
By:	/s/ Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer and Treasurer

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LINCOM WIRELESS, INC.
By:	/s/ Mark W. Sopp
	Name:	Mark W. Sopp
	Title:    Senior Vice President, Chief Financial Officer and Treasurer

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EX-99.1

Exhibit 99.1

In connection with the previously disclosed merger of The Titan Corporation (“Titan”) into Saturn Acquisition Corp., a wholly owned subsidiary of L-3 Communications Corporation (“L-3”), pursuant to which Titan will become a wholly owned subsidiary of L-3, Titan has been informed that the following description of risks associated with the business of Titan will be included in certain of L-3’s financing documents related to such merger.

CERTAIN RISKS ASSOCIATED WITH THE BUSINESS OF THE TITAN CORPORATION

If Titan does not comply with its plea agreement and consent to entry of judgment with the U.S. Government relating to the Foreign Corrupt Practices Act, it could be exposed to further liability.

During the first quarter of 2004, Titan learned of allegations that improper payments under the Foreign Corrupt Practices Act (‘‘FCPA’’) had been made, or items of value had been provided, involving international consultants for Titan or its subsidiaries to foreign officials. The allegations, which were identified as part of internal reviews conducted by Titan and Lockheed Martin in connection with their failed merger, were reported at that time to the government. Titan’s board of directors established a committee of the board to oversee Titan’s internal review of these matters. In connection with the internal review, the SEC commenced an investigation into whether payments involving Titan’s international consultants were made in violation of applicable law, particularly the FCPA. In addition, the Department of Justice (‘‘DoJ’’) initiated a criminal inquiry into this matter, and also initiated an investigation into whether these same alleged practices violated provisions of the United States Tax Code.

On March 1, 2005, Titan announced that it had entered into a consent to entry of a final judgment with the SEC without admitting or denying the SEC’s allegations, and reached a plea agreement with the DoJ, under which Titan pled guilty to three FCPA counts related to its overseas operations. These counts consist of violations of the anti-bribery and the books and records provisions of the FCPA and aiding and assisting in the preparation of a false tax return.

In connection with the FCPA settlement, Titan made total payments of $28.5 million, including a DoJ-recommended fine of $13 million and payments to the SEC of $15.5 million. A federal judge also imposed a three-year term of supervised probation. As part of these agreements, Titan agreed to: (1) implement a best-practices compliance program designed to detect and deter future violations of the FCPA; and (2) retain an independent consultant to review its policies and procedures with respect to FCPA compliance and to adopt the consultant’s recommendations. If Titan fails to comply with its sentence or the consent to entry of a final judgment, it could be subject to additional criminal and civil fines or penalties and limitations on its ability to enter into or perform under U.S. government contracts, which would have a material adverse effect on our business, financial condition and results of operations.

Further, as a result of Titan’s plea agreement, Titan is currently unable to obtain new export licenses for items regulated by the U.S. Department of State. Titan has been working with the U.S. Department of State to obtain relief from this licensing ineligibility rule, but there is no

assurance that Titan will be able to obtain new export licenses or amendments to existing ones or to utilize licensing exemptions in the foreseeable future. In addition, Titan’s privilege to export products or services under existing export licenses may also be suspended. If Titan were prevented from obtaining new licenses and/or exporting products or services under existing licenses for a significant period of time, this could breach its obligations under certain contracts and could cause Titan to suffer adverse consequences, including termination of contracts and/or claims for damages. Titan does not know when, or if, it will be able to obtain relief from the licensing ineligibility rule, or for any further export license suspensions. Certain of Titan’s revenues are generated by contracts with international customers which require export licenses. For the year ended December 31, 2004, Titan had revenues of approximately $27 million that required it to have export licenses.

On March 2, 2005, the Navy, acting on behalf of the U.S. Department of the Defense, and Titan executed an administrative settlement agreement that would allow Titan to continue to receive U.S. government contracts. The agreement imposes certain duties and limitations on Titan and provides that the Navy will monitor for three years Titan’s compliance with, among other things, the FCPA and federal procurement laws and regulations. Under the agreement, the Navy agreed not to undertake any administrative action to propose Titan for debarment, but reserved the right to undertake appropriate administrative action, in its discretion, in the event of the indictment or conviction of any then-current (as of the date of execution of the agreement) officer or director of Titan or any of its wholly-owned subsidiaries arising out of continuing investigations into the underlying matters that were the subject of the Titan plea agreement or the final judgment entered by the SEC. The Justice Department is continuing its investigation of individuals involved in these matters. The Navy agreement defines ‘‘Titan’’ to include, among other things, Titan’s ‘‘affiliates.’’

Titan and several of its employees are under investigations by the U.S. Government, which could result in severe penalties.

In October 2002, Titan received a grand jury subpoena from the Antitrust Division of the DoJ requesting the production of documents relating to information technology services performed for the Air Force at Hanscom Air Force Base in Massachusetts and at Wright-Patterson Air Force Base in Ohio. Also, a senior Titan employee has provided handwriting exemplars in connection with this matter. Three Titan employees have previously testified before the grand jury in exchange for receiving immunity.

In April 2003, the U.S. General Services Administration (GSA) and NASA separately commenced an investigation of Titan’s possible overcharges to the U.S. Government. In response to the subpoenas issued by GSA and NASA, Titan has produced documents relating to billing for labor services in connection with its government contracts.

These investigations are on-going, and we are unable to predict their outcome at this time. Any penalties imposed by the U.S. Government in these matters could have a material adverse effect on our financial positions, results of operations, or cash flows and prospects.

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Titan is a party to multiple lawsuits which, if decided adversely against us, could have a negative impact on our financial results.

Titan is named as a defendant in a number of lawsuits and may be subject to further litigation in the future.

These lawsuits include the following:

•As a result of the SEC and DoJ investigations of Titan’s violations of the FCPA, various actions, including securities class actions and derivative suits, have been brought against Titan and certain of its officers and directors in federal and state court. All of the parties to these actions have executed stipulations of settlement on or about July 22, 2005 after completion of confirmatory discovery, including the review by plaintiffs’ counsel of certain Titan and L-3 documents and the taking of several depositions. The settlements remain subject to court approval. If the settlements are not approved by the court, Titan, certain of its former officers and directors, and L-3 would have to defend the underlying lawsuits.

•A number of class actions have been filed against Titan and certain of its officers and directors in connection with SureBeam, a former subsidiary of Titan, which was spun-off in an initial public offering and which subsequently filed for bankruptcy. These actions have been consolidated and are currently pending in a federal court in California. The bankruptcy trustee of SureBeam has also brought an action in a California state court against certain directors and officers of Titan who at one time also served as directors or officers of SureBeam. The basis of all of these lawsuits is that Titan and other defendants are liable for the allegedly misleading and inaccurate statements set forth in the prospectus for SureBeam’s initial public offering. Although the parties to these actions have expressed an interest in settlement, the outcome is uncertain.

•Two lawsuits have been filed against Titan and others alleging that certain employees of Titan who were acting as translators for the U.S. military in certain prison facilities in Iraq engaged in torture, assault and other acts of mental and physical abuse in violation of state, federal and international law. We cannot predict the outcome of these actions at this time.

Although Titan maintains insurance policies, we cannot assure you that this insurance will be adequate to protect it from all material expenses related to claims. We are unable to predict the precise nature of the relief that may be sought or granted in any lawsuits involving Titan or the effect that pending or future Titan cases may have on our business, operations, profitability or financial condition.

In addition, Titan may be subject to additional criminal investigations conducted by the U.S. Government. If the U.S. Government were to find that Titan failed to comply with applicable laws and regulations, it may be subject to criminal sanctions or civil remedies,

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including fines, injunctions, prohibitions on exporting, seizures or debarments from government contracts. The cost of compliance or the consequences of non-compliance, including debarments, could have a material adverse effect on our business and results of operations.

Titan depends on government contracts for most of its revenues and the loss of government contracts or a decline in funding of existing or future government contracts could adversely affect our revenues and cash flows and our ability to fund our growth.

Virtually all of Titan’s revenue is from the sale of services and products to the U.S. government. Titan’s U.S. government contracts are only funded on an annual basis, and the U.S. government may cancel these contracts at any time without penalty or may change its requirements, programs or contract budget or decline to exercise option periods, any of which could reduce our revenues and cash flows from U.S. government contracts. Titan’s revenues and cash flow from U.S. government contracts could also be reduced by declines in U.S. defense, homeland security and other federal agency budgets. As noted, related to the FCPA settlement, Titan and the Navy entered into an administrative settlement that will allow Titan to continue to receive U.S. government contracts. The agreement in relevant part provides for Navy monitoring of Titan compliance activities for three years. During the three months ended March 31, 2005, $85.0 million of Titan’s revenues, or approximately 15.2% of its total revenues for this period, was from its linguist contract with the U.S. Army. In the future, the U.S. Army may decide to procure linguist services from multiple sources instead of under a sole source contract, which would increase competition. We cannot be certain that we will be able to win the re-compete for this business, which is expected to occur in April 2006.  Approximately 87% of Titan’s total revenues in the first quarter of 2005 was for products and services under contracts with various agencies and procurement offices of the U.S. Department of Defense or with prime contractors to the U.S. Department of Defense, including the linguist contract with the U.S. Army and its contract with the U.S. Special Operations Command, which represented approximately 3.4% of its total revenue during this period. Although these various parts of the U.S. Department of Defense are subject to common budgetary pressures and other factors, Titan’s various customers exercise independent purchasing decisions. Because of such concentration of Titan’s contracts, we are vulnerable to adverse changes in our revenues and cash flows if a significant number of our Department of Defense contracts and subcontracts are simultaneously delayed or canceled for budgetary performance or other reasons.

At March 31, 2005, Titan’s total funded backlog was approximately $900.0 million. In addition to contract cancellations and declines in agency budgets, L-3’s backlog and future financial results, including as they relate to Titan, may be adversely affected by:

•curtailment of the U.S. government’s use of technology or other services and products providers, including curtailment due to government budget reductions and related fiscal matters;

•developments in Iraq, Afghanistan or other geopolitical developments that affect demand for products and services;

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•our ability to hire and retain personnel to meet increasing demand for our services including our ability to meet demands for linguist services; and

•technological developments that impact purchasing decisions or our competitive position.

These or other factors could cause U.S. defense and other federal agencies to reduce their purchases under contracts, to exercise their right to terminate contracts or not to exercise options to renew contracts or limit our ability to obtain new contract awards. Any of these actions or any of the other actions described above could reduce our revenues and cash flows.

Titan may face significant liability for violations of environmental law.

In December 2001, the current occupants of a property formerly owned by Titan commenced an environmental action against Titan and others in New Jersey state court. Plaintiffs contend that Titan is liable for the damages caused by hazardous waste materials originating from adjacent land to the extent that Titan purportedly provided indemnification to plaintiffs when it sold the property to them in 1986. Discovery is in progress, and we cannot predict the outcome of this litigation at this time.

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