10-Q


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q/A
(Amendment No. 1)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended: June 30, 2015
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12936

TITAN INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
36-3228472
(State of Incorporation)
 
(I.R.S. Employer Identification No.)
2701 Spruce Street, Quincy, IL 62301
(Address of principal executive offices, including Zip Code)

(217) 228-6011
(Registrant’s telephone number, including area code)

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 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  þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ  No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer ¨
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o  No þ

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
 
 
Shares Outstanding at
Class
 
July 20, 2015
 
 
 
Common stock, $0.0001 par value per share
 
53,807,043














EXPLANATORY NOTE
This Amendment No. 1 on Form 10-Q/A amends the Titan International, Inc. (Titan or the Company) quarterly report on Form 10-Q for the period ended June 30, 2015, which was originally filed with the Securities and Exchange Commission (SEC) on July 29, 2015. This Form 10-Q/A is being filed to restate the financial statements to correct the classification of redeemable noncontrolling interest in the Company's investment in Voltre-Prom to mezzanine equity. The Company’s Russian shareholders' agreement contains a settlement put option which may require Titan to purchase the shares of the minority shareholders at a value set by the agreement. As the redeemable noncontrolling interest balance exceeds the carrying value of the investment, this restatement also contains a reclassification of additional paid-in capital to mezzanine equity and a correction in the earnings per share calculation. The corrections to earnings per share did not affect revenues, operating expenses, net income or cash flows. A more detailed description of the restatements made to the financial statements is provided in Note 24 to the consolidated condensed financial statements included in this report. In addition to the restatement of the period ended June 30, 2015, this Form 10-Q/A includes a restatement of the period ended June 30, 2014, and the balance at December 31, 2014.
For the convenience of the reader, this Form 10-Q/A sets forth the Company’s original Form 10-Q as filed with the SEC on July 29, 2015, in its entirety, as amended by, and to reflect, the restatement. No attempt has been made in the Form 10-Q/A to update other disclosures presented in the original Form 10-Q, except as required to reflect the effects of the restatement. Accordingly, this Form 10-Q/A should be read in conjunction with Titan’s filings made with the SEC subsequent to the filing of the original Form 10-Q, including any amendments to those filings. The following items have been amended as a result of this restatement:
Part I, Item 1, Financial Statements
Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part II, Item 1A, Risk Factors




TITAN INTERNATIONAL, INC.

TABLE OF CONTENTS

 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(All amounts in thousands, except per share data)
 
 
Three months ended

Six months ended
 
June 30,

June 30,
 
2015

2014

2015

2014
 
(As restated)
 
(As restated)
 
(As restated)
 
(As restated)
Net sales
$
376,067

 
$
523,731

 
$
778,126

 
$
1,062,671

Cost of sales
325,014

 
468,161

 
684,279

 
955,124

Mining asset impairment and inventory writedown

 
34,797

 

 
34,797

Gross profit
51,053

 
20,773

 
93,847

 
72,750

Selling, general and administrative expenses
37,848

 
42,835

 
73,522

 
86,711

Research and development expenses
2,779

 
3,575

 
5,865

 
7,671

Royalty expense
2,895

 
3,830

 
6,120

 
7,571

Income (loss) from operations
7,531

 
(29,467
)
 
8,340

 
(29,203
)
Interest expense
(8,642
)
 
(8,926
)
 
(17,398
)
 
(18,185
)
Other income
6,906

 
6,335

 
15,189

 
6,851

Income (loss) before income taxes
5,795

 
(32,058
)
 
6,131

 
(40,537
)
Provision (benefit) for income taxes
1,515

 
(7,167
)
 
2,911

 
(10,518
)
Net income (loss)
4,280

 
(24,891
)
 
3,220

 
(30,019
)
Net loss attributable to noncontrolling interests
(2,491
)
 
(4,380
)
 
(3,783
)
 
(11,671
)
Net income (loss) attributable to Titan
$
6,771

 
$
(20,511
)
 
$
7,003

 
$
(18,348
)
 
 
 
 
 
 
 
 
Earnings (loss) per common share:
 

 
 

 
 

 
 

Basic
$
.17

 
$
(.40
)
 
$
.12

 
$
(.37
)
Diluted
$
.17

 
$
(.40
)
 
$
.12

 
$
(.37
)
Average common shares and equivalents outstanding:
 
 
 

 
 
 
 

Basic
53,686

 
53,486

 
53,674

 
53,478

Diluted
59,489

 
53,486

 
53,858

 
53,478

 
 
 
 
 
 
 
 
Dividends declared per common share:
$
.005

 
$
.005

 
$
.010

 
$
.010

 
 









See accompanying Notes to Consolidated Financial Statements.

1



TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(All amounts in thousands)

 
Three months ended
 
June 30,
 
2015
 
2014
Net income (loss)
$
4,280

 
$
(24,891
)
Currency translation adjustment, net
4,436

 
7,826

Pension liability adjustments, net of tax of $(706) and $(123), respectively
1,488

 
28

Comprehensive income (loss)
10,204

 
(17,037
)
Net comprehensive loss attributable to redeemable and noncontrolling interests
(1,904
)
 
(1,062
)
Comprehensive income (loss) attributable to Titan
$
12,108

 
$
(15,975
)


 
 
 
 
 
Six months ended
 
June 30,
 
2015
 
2014
Net income (loss)
$
3,220

 
$
(30,019
)
Currency translation adjustment, net
(40,950
)
 
8,214

Pension liability adjustments, net of tax of $(806) and $(506), respectively
1,497

 
745

Comprehensive loss
(36,233
)
 
(21,060
)
Net comprehensive loss attributable to redeemable and noncontrolling interests
(4,917
)
 
(13,245
)
Comprehensive loss attributable to Titan
$
(31,316
)
 
$
(7,815
)
























See accompanying Notes to Consolidated Financial Statements.

2



TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(All amounts in thousands, except share data)

 
June 30,
 
December 31,
 
2015
 
2014
 
(As restated)
 
(As restated)
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
187,484

 
$
201,451

  Accounts receivable, net
224,689

 
199,378

Inventories
306,087

 
331,432

Deferred income taxes
13,972

 
23,435

Prepaid and other current assets
74,786

 
80,234

Total current assets
807,018

 
835,930

Property, plant and equipment, net
483,407

 
527,414

Deferred income taxes
18,303

 
15,623

Other assets
111,686

 
116,757

Total assets
$
1,420,414

 
$
1,495,724

 
 
 
 
Liabilities
 

 
 

Current liabilities
 

 
 

Short-term debt
$
25,068

 
$
26,233

Accounts payable
135,758

 
146,305

Other current liabilities
121,967

 
129,018

Total current liabilities
282,793

 
301,556

Long-term debt
495,273

 
496,503

Deferred income taxes
3,524

 
18,582

Other long-term liabilities
84,330

 
89,025

Total liabilities
865,920

 
905,666

 
 
 
 
Redeemable noncontrolling interest
70,511

 
71,192

 
 
 
 
Equity
 

 
 

Titan stockholders' equity


 


  Common stock ($0.0001 par value, 120,000,000 shares authorized, 55,253,092 issued, 53,792,342 outstanding)

 

Additional paid-in capital
513,600

 
513,090

Retained earnings
132,472

 
126,007

Treasury stock (at cost, 1,460,750 and 1,504,064 shares, respectively)
(13,508
)
 
(13,897
)
Treasury stock reserved for deferred compensation
(1,075
)
 
(1,075
)
Accumulated other comprehensive loss
(150,923
)
 
(112,630
)
Total Titan stockholders’ equity
480,566

 
511,495

Noncontrolling interests
3,417

 
7,371

Total equity
483,983

 
518,866

Total liabilities and equity
$
1,420,414

 
$
1,495,724

 

See accompanying Notes to Consolidated Financial Statements.

3



TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
(All amounts in thousands, except share data)


 
 Number of
common shares
 
Additional
paid-in
capital
 
Retained earnings
 
Treasury stock
 
Treasury stock
 reserved for
deferred compensation
 
Accumulated other comprehensive income (loss)
 
Total Titan Equity
 
 Noncontrolling interest
 
Total Equity
Balance January 1, 2015 (As restated)
53,749,028

 
$
513,090

 
$
126,007

 
$
(13,897
)
 
$
(1,075
)
 
$
(112,630
)
 
$
511,495

 
$
7,371

 
$
518,866

Net income (loss) *


 


 
7,003

 


 


 


 
7,003

 
(3,820
)
 
3,183

Currency translation adjustment, net of tax *
 
 
 
 
 
 
 
 
 
 
(39,816
)
 
(39,816
)
 
(66
)
 
(39,882
)
Pension liability adjustments, net of tax


 


 


 


 


 
1,497

 
1,497

 
 
 
1,497

Dividends on common stock


 


 
(538
)
 


 


 


 
(538
)
 
 
 
(538
)
Exercise of stock options
12,500

 
32

 


 
112

 


 


 
144

 
 
 
144

Dissolution of subsidiary
 
 
 
 
 
 
 
 
 
 
26

 
26

 
(68
)
 
(42
)
Redemption value adjustment


 
(350
)
 
 
 


 
 
 
 
 
(350
)
 

 
(350
)
Stock-based compensation


 
1,339

 


 


 


 


 
1,339

 
 
 
1,339

Tax benefit related to stock-based compensation


 
(538
)
 


 


 


 


 
(538
)
 
 
 
(538
)
Issuance of treasury stock under 401(k) plan
30,814

 
27

 


 
277

 


 


 
304

 
 
 
304

Balance June 30, 2015 (As restated)
53,792,342

 
$
513,600

 
$
132,472

 
$
(13,508
)
 
$
(1,075
)
 
$
(150,923
)
 
$
480,566

 
$
3,417

 
$
483,983

 
* Net income excludes $37 of net income attributable to redeemable noncontrolling interest. Currency translation adjustment excludes $(1,068) of currency translation related to redeemable noncontrolling interest.















See accompanying Notes to Consolidated Financial Statements.

4



TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(All amounts in thousands)
 
Six months ended
June 30,
Cash flows from operating activities:
2015
 
2014
Net income (loss)
$
3,220

 
$
(30,019
)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
 

 
 

Depreciation and amortization
36,604

 
46,815

Mining asset impairment

 
23,242

Mining inventory writedown

 
11,555

Deferred income tax provision
(5,602
)
 
(18,269
)
Stock-based compensation
1,339

 
2,143

Excess tax benefit from stock-based compensation
538

 
45

Issuance of treasury stock under 401(k) plan
304

 
332

(Increase) decrease in assets:
 

 
 

Accounts receivable
(37,149
)
 
(28,989
)
Inventories
8,721

 
(3,046
)
Prepaid and other current assets
2,868

 
36,061

Other assets
(688
)
 
(4,050
)
Increase (decrease) in liabilities:
 

 
 

Accounts payable
4,423

 
15,017

Other current liabilities
(1,988
)
 
4,937

Other liabilities
(4,748
)
 
(12,719
)
Net cash provided by operating activities
7,842

 
43,055

Cash flows from investing activities:
 

 
 

Capital expenditures
(22,505
)
 
(30,883
)
Acquisition of additional interest

 
(13,395
)
Decrease in restricted cash deposits

 
14,268

Other
2,708

 
3,241

Net cash used for investing activities
(19,797
)
 
(26,769
)
Cash flows from financing activities:
 

 
 

Proceeds from borrowings
13,239

 
6,217

Payment on debt
(8,517
)
 
(53,393
)
Proceeds from exercise of stock options
144

 
141

Excess tax benefit from stock-based compensation
(538
)
 
(45
)
Payment of financing fees

 
(33
)
Dividends paid
(538
)
 
(536
)
Net cash provided by (used for) financing activities
3,790

 
(47,649
)
Effect of exchange rate changes on cash
(5,802
)
 
4,957

Net decrease in cash and cash equivalents
(13,967
)
 
(26,406
)
Cash and cash equivalents, beginning of period
201,451

 
189,360

Cash and cash equivalents, end of period
$
187,484

 
$
162,954

 
 
 
 
Supplemental information:
 
 
 
Interest paid
$
20,063

 
$
20,695

Income taxes paid, net of refunds received
$
(884
)
 
$
6,454











See accompanying Notes to Consolidated Financial Statements.

5



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)


1.
ACCOUNTING POLICIES

In the opinion of Titan International, Inc. (Titan or the Company), the accompanying unaudited consolidated condensed financial statements contain all adjustments, which are normal and recurring in nature and necessary for a fair statement of the Company's financial position as of June 30, 2015, and the results of operations and cash flows for the three and six months ended June 30, 2015 and 2014.

Accounting policies have continued without significant change and are described in the Description of Business and Significant Accounting Policies contained in the Company's 2014 Annual Report on Form 10-K. These interim financial statements have been prepared pursuant to the Securities and Exchange Commission's rules for Form 10-Q's and, therefore, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2014 Annual Report on Form 10-K.

Sales
Sales and revenues are presented net of sales taxes and other related taxes.

Fair value of financial instruments
The Company records all financial instruments, including cash and cash equivalents, accounts receivable, notes receivable, accounts payable, other accruals and notes payable at cost, which approximates fair value due to their short term or stated rates.  Investments in marketable equity securities are recorded at fair value.  The 6.875% senior secured notes due 2020 (senior secured notes due 2020) and 5.625% convertible senior subordinated notes due 2017 (convertible notes) are carried at cost of $400.0 million and $60.2 million at June 30, 2015, respectively. The fair value of the senior secured notes due 2020 at June 30, 2015, as obtained through an independent pricing source, was approximately $367.0 million.

Cash dividends
The Company declared cash dividends of $.005 and $0.010 per share of common stock for each of the three and six months ended June 30, 2015, and 2014. The second quarter 2015 cash dividend of $.005 per share of common stock was paid July 15, 2015, to stockholders of record on June 30, 2015.

Use of estimates
The policies utilized by the Company in the preparation of the financial statements conform to accounting principles generally accepted in the United States of America and require management to make estimates, assumptions and judgments that affect the reported amount 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 amounts could differ from these estimates and assumptions.

Reclassification
Certain amounts from prior years have been reclassified to conform to the current year's presentation. Reclassifications included changes in classification from selling, general and administrative to cost of sales of $1.8 million and $4.4 million for the three and six months ended June 30, 2014, respectively.

Recently Issued Accounting Standards
In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This update amends existing guidance to require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company is currently assessing the impact that adopting this new accounting guidance will have on the Company's consolidated financial statements.


6



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)


2. MINING ASSET IMPAIRMENT AND INVENTORY WRITEDOWN

In the second quarter of 2014, the Company recorded an asset impairment and inventory writedown of $23.2 million and $11.6 million, respectively. The impairment was recorded on machinery, equipment and molds used to produce giant mining tires. Mining products are included in the Company's earthmoving/construction segment. In the second quarter of 2014, several large mining equipment manufacturers significantly decreased their sales forecast for mining equipment. The Company's sales of mining product were deteriorating at an accelerated pace. Therefore, the company tested mining related assets for impairment in the second quarter of 2014. The fair value of the mining equipment was determined using a cost and market approach. The inventory writedown was to adjust the value of mining product inventory to estimated market value.

3. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following (amounts in thousands):
 
June 30,
2015
 
December 31,
2014
Accounts receivable
$
228,672

 
$
205,084

Allowance for doubtful accounts
(3,983
)
 
(5,706
)
Accounts receivable, net
$
224,689

 
$
199,378

 
Accounts receivable are reduced by an allowance for doubtful accounts which is based on historical losses.


4. INVENTORIES

Inventories consisted of the following (amounts in thousands):
 
June 30,
2015
 
December 31,
2014
Raw material
$
93,612

 
$
119,989

Work-in-process
39,904

 
41,073

Finished goods
179,758

 
179,998

 
313,274

 
341,060

Adjustment to LIFO basis
(7,187
)
 
(9,628
)
 
$
306,087

 
$
331,432

 
At June 30, 2015, approximately 9% of the Company's inventories were valued under the last-in, first-out (LIFO) method. At December 31, 2014, approximately 11% of the Company's inventories were valued under the LIFO method. The remaining inventories were valued under the first-in, first-out (FIFO) method or average cost method. All inventories are valued at lower of cost or market.



7



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consisted of the following (amounts in thousands):
 
June 30,
2015
 
December 31, 2014
Land and improvements
$
53,584

 
$
60,012

Buildings and improvements
218,628

 
223,989

Machinery and equipment
582,573

 
585,318

Tools, dies and molds
99,625

 
103,353

Construction-in-process
35,868

 
38,653

 
990,278

 
1,011,325

Less accumulated depreciation
(506,871
)
 
(483,911
)
 
$
483,407

 
$
527,414

 
Depreciation on fixed assets for the six months ended June 30, 2015 and 2014, totaled $34.0 million and $43.8 million, respectively.

Included in the total building and improvements are capital leases of $3.8 million and $4.1 million at June 30, 2015, and December 31, 2014, respectively. Included in the total of machinery and equipment are capital leases of $33.7 million and $37.7 million at June 30, 2015, and December 31, 2014, respectively.


6. GOODWILL AND INTANGIBLE ASSETS

Changes in goodwill consisted of the following (amounts in thousands):
 
2015
 
2014
 
 
 
Earthmoving/
 
 
 
 
 
 
 
Earthmoving/
 
 
 
 
 
Agricultural
 
Construction
 
Consumer
 
 
 
Agricultural
 
Construction
 
Consumer
 
 
 
Segment
 
Segment
 
Segment
 
Total
 
Segment
 
Segment
 
Segment
 
Total
Goodwill, January 1
$

 
$

 
$

 
$

 
$
24,540

 
$
14,898

 
$
2,637

 
$
42,075

Foreign currency translation

 

 

 

 
252

 
642

 
(70
)
 
824

Goodwill, June 30
$

 
$

 
$

 
$

 
$
24,792

 
$
15,540

 
$
2,567

 
$
42,899

 
The Company reviews goodwill for impairment during the fourth quarter of each annual reporting period, and whenever events and circumstances indicate that the carrying values may not be recoverable. In the fourth quarter of 2014, the recoverability of all goodwill was evaluated by estimating future discounted cash flows. The Company recorded a noncash charge for the impairment of goodwill in the amount of $36.6 million on both a pre-tax and after-tax basis. The charge included $11.4 million of earthmoving/construction goodwill related to the acquisition of Titan Australia; $9.6 million of agricultural goodwill related to the acquisition of the Latin America farm tire business; and $15.6 million of goodwill related to the acquisition of Voltyre-Prom. The Voltyre-Prom goodwill included $11.0 million in the agricultural segment, $2.6 million in the earthmoving/construction segment, and $2.0 million in the consumer segment.


8



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

The components of intangible assets consisted of the following (amounts in thousands):
 
Weighted- Average Useful Lives (in Years)
 
June 30,
2015
 
December 31, 2014
Amortizable intangible assets:
 
 
 
 
 
     Customer relationships
12.0
 
14,057

 
14,958

     Patents, trademarks and other
8.5
 
16,047

 
15,907

          Total at cost
 
 
30,104

 
30,865

     Less accumulated amortization
 
 
(8,779
)
 
(7,176
)
 
 
 
21,325

 
23,689

 
Amortization related to intangible assets for the six months ended June 30, 2015 and 2014, totaled $1.8 million and $2.3 million, respectively. Intangible assets are included as a component of other assets in the consolidated condensed balance sheet.

The estimated aggregate amortization expense at June 30, 2015, is as follows (amounts in thousands):
July 1 - December 31, 2015
$
1,468

2016
2,443

2017
2,324

2018
2,324

2019
2,324

Thereafter
10,442

 
$
21,325



7. WARRANTY

Changes in the warranty liability consisted of the following (amounts in thousands):
 
2015
 
2014
Warranty liability, January 1
$
28,144

 
$
33,134

Provision for warranty liabilities
5,558

 
9,422

Warranty payments made
(7,171
)
 
(9,975
)
Warranty liability, June 30
$
26,531

 
$
32,581


The Company provides limited warranties on workmanship of its products in all market segments.  The majority of the Company’s products have a limited warranty that ranges from zero to ten years, with certain products being prorated after the first year.  The Company calculates a provision for warranty expense based on past warranty experience.  Warranty accruals are included as a component of other current liabilities on the Consolidated Condensed Balance Sheets.












9



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

8. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT
 
Long-term debt consisted of the following (amounts in thousands):
 
June 30,
2015
 
December 31,
2014
6.875% senior secured notes due 2020
$
400,000

 
$
400,000

5.625% convertible senior subordinated notes due 2017
60,161

 
60,161

Titan Europe credit facilities
43,140

 
42,291

Other debt
14,563

 
17,013

Capital leases
2,477

 
3,271

 
520,341

 
522,736

Less amounts due within one year
25,068

 
26,233

 
$
495,273

 
$
496,503

 
Aggregate maturities of long-term debt at June 30, 2015, were as follows (amounts in thousands):
July 1 - December 31, 2015
$
17,803

2016
31,271

2017
66,849

2018
1,134

2019
1,066

Thereafter
402,218

 
$
520,341

 
6.875% senior secured notes due 2020
The Company’s 6.875% senior secured notes (senior secured notes due 2020) are due October 2020. These notes are secured by the land and buildings of the following subsidiaries of the Company:  Titan Tire Corporation, Titan Tire Corporation of Bryan, Titan Tire Corporation of Freeport and Titan Wheel Corporation of Illinois. The Company's senior secured notes due 2020 outstanding balance was $400.0 million at June 30, 2015.

5.625% convertible senior subordinated notes due 2017
The Company’s 5.625% convertible senior subordinated notes (convertible notes) are due January 2017.   The initial base conversion rate for the convertible notes is 93.0016 shares of Titan common stock per $1,000 principal amount of convertible notes, equivalent to an initial base conversion price of approximately $10.75 per share of Titan common stock.  If the price of Titan common stock at the time of determination exceeds the base conversion price, the base conversion rate will be increased by an additional number of shares (up to 9.3002 shares of Titan common stock per $1,000 principal amount of convertible notes) as determined pursuant to a formula described in the indenture.  The base conversion rate will be subject to adjustment in certain events.  The Company’s convertible notes balance was $60.2 million at June 30, 2015.

Titan Europe credit facilities
The Titan Europe credit facilities contain borrowings from various institutions totaling $43.1 million at June 30, 2015. Maturity dates on this debt range from less than one year to nine years and interest rates range from 5% to 6.9%. The Titan Europe facilities are secured by the assets of its subsidiaries in Italy, Spain, Germany and Brazil.

Revolving credit facility
The Company’s $150 million revolving credit facility (credit facility) with agent Bank of America, N.A. has a December 2017 termination date and is collateralized by the accounts receivable and inventory of certain Titan domestic subsidiaries.  Titan's availability under this domestic facility may be less than $150 million as a result of eligible accounts receivable and inventory balances at certain of its domestic subsidiaries. At June 30, 2015, the amount available was $97.5 million as a result of the Company's decrease in sales which impacted both accounts receivable and inventory balances. During the first six months of 2015 and at June 30, 2015, there were no borrowings under the credit facility.


10



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

Other Debt
Other debt is comprised of working capital loans for the Sao Paulo, Brazil manufacturing facility totaling $14.6 million at June 30, 2015.

9. DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses financial derivatives to mitigate its exposure to volatility in foreign currency exchange rates. These derivative financial instruments are recognized at fair value. The Company has not designated these financial instruments as hedging instruments. Any gain or loss on the re-measurement of the fair value is recorded as an offset to currency exchange gain/loss. For the three months ended June 30, 2015, the Company recorded currency exchange loss of $1.4 million related to these derivatives. For the six months ended June 30, 2015, the Company recorded currency exchange gain of $3.1 million related to these derivatives.


10. LEASE COMMITMENTS

The Company leases certain buildings and equipment under operating leases.  Certain lease agreements provide for renewal options, fair value purchase options, and payment of property taxes, maintenance and insurance by the Company. 

At June 30, 2015, future minimum rental commitments under noncancellable operating leases with initial terms of at least one year were as follows (amounts in thousands):
July 1 - December 31, 2015
$
3,925

2016
6,035

2017
3,000

2018
2,259

2019
1,666

Thereafter
1,044

Total future minimum lease payments
$
17,929


At June 30, 2015, the Company had assets held as capital leases with a net book value of $9.2 million included in property, plant and equipment. Total future capital lease obligations relating to these leases are as follows (amounts in thousands):
July 1 - December 31, 2015
$
771

2016
942

2017
464

2018
177

2019
107

Thereafter
9

Total future capital lease obligation payments
2,470

Less amount representing interest
(55
)
Present value of future capital lease obligation payments
$
2,415



 
11. EMPLOYEE BENEFIT PLANS
 
The Company has three frozen defined benefit pension plans covering certain employees or former employees of three U.S. subsidiaries. The Company also has pension plans covering certain employees of several foreign subsidiaries. The Company also sponsors four 401(k) retirement savings plans in the U.S. and a number of defined contribution plans at foreign subsidiaries. The Company contributed approximately $2.2 million to the pension plans during the six months ended June 30, 2015 and expects to contribute approximately $2.6 million to the pension plans during the remainder of 2015.

11



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)


The components of net periodic pension cost consisted of the following (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Service cost
$
179

 
$
193

 
$
351

 
$
402

Interest cost
1,306

 
1,426

 
2,530

 
2,847

Expected return on assets
(1,531
)
 
(1,501
)
 
(3,050
)
 
(3,003
)
Amortization of unrecognized prior service cost
34

 
34

 
68

 
68

Amortization of net unrecognized loss
729

 
758

 
1,458

 
1,516

      Net periodic pension cost
$
717

 
$
910

 
$
1,357

 
$
1,830



12. VARIABLE INTEREST ENTITIES

The Company holds a variable interest in three joint ventures for which the Company is the primary beneficiary. Two of the joint ventures operate distribution facilities which primarily distribute mining products. One of these facilities is located in Canada and the other is located in Australia. The Company’s variable interest in these joint ventures relates to sales of Titan product to these entities, consigned inventory and working capital loans. The third joint venture is the consortium which owns Voltyre-Prom, a leading producer of agricultural and industrial tires in Volgograd, Russia. Titan is acting as operating partner with responsibility for Voltyre-Prom’s daily operations. The Company has also provided working capital loans to Voltyre-Prom.

As the primary beneficiary of these variable interest entities (VIEs), the entities’ assets, liabilities and results of operations are included in the Company’s consolidated financial statements. The other equity holders’ interests are reflected in “Net loss attributable to noncontrolling interests” in the consolidated condensed statements of operations and “Noncontrolling interests and redeemable noncontrolling interests” in the consolidated condensed balance sheets.

The following table summarizes the carrying amount of the entities’ assets and liabilities included in the Company’s consolidated condensed balance sheets at June 30, 2015 and December 31, 2014 (amounts in thousands):
 
June 30,
2015
 
December 31, 2014
Cash and cash equivalents
$
11,297

 
$
8,861

Inventory
10,103

 
9,645

Other current assets
17,183

 
18,115

Property, plant and equipment, net
34,229

 
36,353

Other noncurrent assets
7,490

 
8,016

   Total assets
80,302

 
80,990

 
 
 
 
Current liabilities
11,379

 
11,659

Noncurrent liabilities
3,114

 
7,448

  Total liabilities
14,493

 
19,107


All assets in the above table can only be used to settle obligations of the consolidated VIE, to which the respective assets relate. Liabilities are nonrecourse obligations. Amounts presented in the table above are adjusted for intercompany eliminations.



12



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

13. ROYALTY EXPENSE

The Company has a trademark license agreement with Goodyear to manufacture and sell certain tires in North America and Latin America under the Goodyear name.  The North American and Latin American farm tire royalties were prepaid for seven years as part of the 2011 Goodyear Latin American farm tire acquisition. In May 2012, the Company and Goodyear entered into an agreement under which Titan will sell certain non-farm tire products directly to third party customers and pay a royalty to Goodyear. Royalty expenses recorded were $2.9 million and $3.8 million for the quarters ended June 30, 2015 and 2014, respectively. Royalty expenses were $6.1 million and $7.6 million for the six months ended June 30, 2015 and 2014, respectively.


14. OTHER INCOME

Other income consisted of the following (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Currency exchange gain
$
3,647

 
$
3,747

 
$
9,613

 
$
2,050

Interest income
956

 
288

 
1,564

 
640

Wheels India Limited equity income
867

 
532

 
860

 
950

Other income
706

 
787

 
1,571

 
1,250

Discount amortization on prepaid royalty
472

 
756

 
1,083

 
1,530

Building rental income
258

 
225

 
498

 
431

 
$
6,906

 
$
6,335

 
$
15,189

 
$
6,851


During the second quarter of 2015, the Company identified a subsidiary investment which was improperly classified as an intercompany liability. As a result of the correction of this item, the Company reclassified currency translation in other comprehensive income to currency exchange gain in other income. The three and six months ended June 30, 2015, included $5.7 million and $3.1 million, respectively, in currency exchange gain related to this correction. Titan concluded that these amounts are immaterial to the consolidated financial statements for the three and six months ended June 30, 2015.

15. INCOME TAXES

The Company recorded income tax expense of $1.5 million and $2.9 million for the three and six months ended June 30, 2015, respectively, as compared to a benefit from income taxes of $(7.2) million and $(10.5) million for the three and six months ended June 30, 2014. The Company's effective income tax rate was 47% and 26% for the six months ended June 30, 2015 and 2014, respectively.

The Company's 2015 income tax expense and rate differs from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of certain foreign jurisdictions that incurred a full valuation allowance on deferred tax assets created by current year projected losses and foreign income taxed in the U.S. offset by net discrete benefits related to a U.S. check the box election and tax law enactments.

The Company's 2014 income tax benefit and rate differs from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of state income tax expense, unrecognized tax benefits, foreign earnings, and domestic production activities deduction.



13



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

16. EARNINGS PER SHARE

Earnings per share (EPS) were as follows (amounts in thousands, except per share data):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
 
(As restated)
 
(As restated)
 
(As restated)
 
(As restated)
Net income (loss) attributable to Titan
$
6,771

 
$
(20,511
)
 
$
7,003

 
$
(18,348
)
   Redemption value adjustment
2,580

 
(659
)
 
(350
)
 
(1,677
)
Net income (loss) applicable to common shareholders
9,351

 
(21,170
)
 
6,653

 
(20,025
)
   Effect of convertible notes
609

 

 

 

Net income (loss) applicable to common shareholders and assumed conversions
$
9,960

 
$
(21,170
)
 
$
6,653

 
$
(20,025
)
Determination of Shares:
 
 
 
 
 
 
 
   Weighted average shares outstanding (basic)
53,686

 
53,486

 
53,674

 
53,478

   Effect of stock options/trusts
208

 

 
184

 

   Effect of convertible notes
5,595

 

 

 

   Weighted average shares outstanding (diluted)
59,489

 
53,486

 
53,858

 
53,478

Earnings per share:
 
 
 
 
 
 
 
   Basic
$
0.17

 
$
(0.40
)
 
$
0.12

 
$
(0.37
)
   Diluted
$
0.17

 
$
(0.40
)
 
$
0.12

 
$
(0.37
)

The effect of stock options/trusts has been excluded for the three and six months ended June 30, 2014, as the effect would have been antidilutive. The weighted average share amount excluded was 0.3 million shares.

The effect of convertible notes has been excluded for the three months ended June 30, 2014, and the six months ended June 30, 2015 and 2014, as the effect would have been antidilutive. The weighted average share amount excluded for convertible notes totaled 5.8 million shares for the three and six months ended June 30, 2014, and 5.6 million shares for the six months ended June 30, 2015.


17. LITIGATION
 
The Company is a party to routine legal proceedings arising out of the normal course of business.  Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the Company believes at this time that none of these actions, individually or in the aggregate, will have a material adverse effect on the consolidated financial condition, results of operations or cash flows of the Company.  However, due to the difficult nature of predicting unresolved and future legal claims, the Company cannot anticipate or predict the material adverse effect on its consolidated financial condition, results of operations or cash flows as a result of efforts to comply with, or its liabilities pertaining to, legal judgments.


14



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

18. SEGMENT INFORMATION

The table below presents information about certain operating results of segments as reviewed by the chief executive officer of the Company for the three and six months ended June 30, 2015 and 2014 (amounts in thousands):

Three months ended
 
Six months ended

June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Revenues from external customers
 
 
 
 

 

Agricultural
$
194,998

 
$
285,274

 
$
407,999

 
$
602,440

Earthmoving/construction
135,658

 
163,961

 
278,142

 
316,901

Consumer
45,411

 
74,496

 
91,985

 
143,330

 
$
376,067

 
$
523,731

 
$
778,126

 
$
1,062,671

Gross profit
 

 
 

 
 
 
 
Agricultural
$
34,989

 
$
41,338

 
$
63,263

 
$
86,493

Earthmoving/construction
12,853

 
(23,559
)
 
23,498

 
(20,018
)
Consumer
3,748

 
3,810

 
7,896

 
7,686

Unallocated corporate
(537
)
 
(816
)
 
(810
)
 
(1,411
)
 
$
51,053

 
$
20,773

 
$
93,847

 
$
72,750

Income (loss) from operations
 

 
 

 
 
 
 
Agricultural
$
25,652

 
$
28,078

 
$
44,556

 
$
58,619

Earthmoving/construction
124

 
(38,235
)
 
(1,738
)
 
(49,329
)
Consumer
(848
)
 
(1,814
)
 
(1,092
)
 
(3,374
)
Unallocated corporate
(17,397
)
 
(17,496
)
 
(33,386
)
 
(35,119
)
      Income from operations
7,531

 
(29,467
)
 
8,340

 
(29,203
)
 
 
 
 
 
 
 
 
Interest expense
(8,642
)
 
(8,926
)
 
(17,398
)
 
(18,185
)
Other income, net
6,906

 
6,335

 
15,189

 
6,851

      Income (loss) before income taxes
$
5,795

 
$
(32,058
)
 
$
6,131

 
$
(40,537
)

Assets by segment were as follows (amounts in thousands):
 
June 30,
2015
 
December 31,
2014
Total assets
 

 
 

Agricultural
$
500,918

 
$
508,741

Earthmoving/construction
557,037

 
591,553

Consumer
162,922

 
175,475

Unallocated corporate
199,537

 
219,955

 
$
1,420,414

 
$
1,495,724

 

15



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)


19. FAIR VALUE MEASUREMENTS

Accounting standards for fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers are defined as:
 
Level 1 – Quoted prices in active markets for identical instruments.
Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Assets and liabilities measured at fair value on a recurring basis consisted of the following (amounts in thousands):
 
June 30, 2015
 
December 31, 2014
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
Contractual obligation investments
$
10,174


$
10,174


$


$

 
$
9,840

 
$
9,840

 
$

 
$

Derivative financial instruments asset
3,689

 

 
3,689

 

 
1,068

 

 
1,068

 

Preferred stock
250

 

 

 
250

 
250

 

 

 
250

Derivative financial instruments liability
(20
)
 

 
(20
)
 

 
(43
)
 

 
(43
)
 

Total
$
14,093

 
$
10,174

 
$
3,669

 
$
250

 
$
11,115

 
$
9,840

 
$
1,025

 
$
250



The following table presents the changes during the periods presented in Titan's Level 3 investments that are measured at fair value on a recurring basis (amounts in thousands):
 
Preferred stock
Balance at December 31, 2014
$
250

  Total realized and unrealized gains and losses

Balance as of June 30, 2015
$
250



20. RELATED PARTY TRANSACTIONS

The Company sells products and pays commissions to companies controlled by persons related to the chief executive officer of the Company.  The related party is Mr. Fred Taylor, Mr. Maurice Taylor’s brother.  The companies which Mr. Fred Taylor is associated with that do business with Titan include the following:  Blackstone OTR, LLC; FBT Enterprises; Green Carbon, INC; and OTR Wheel Engineering.  Sales of Titan products to these companies were approximately $0.8 million and $1.5 million for the three and six months ended June 30, 2015, respectively, as compared to $0.8 million and $1.4 million for the three and six months ended June 30, 2014. Titan had trade receivables due from these companies of approximately $0.3 million at June 30, 2015, and approximately $0.2 million at December 31, 2014.  On other sales referred to Titan from the above manufacturing representative companies, commissions were approximately $0.5 million and $1.1 million for the three and six months ended June 30, 2015, respectively, as compared to $0.6 million and $1.3 million for the three and six months ended June 30, 2014. Titan had purchases from these companies of approximately $2.1 million for the three and six months ended June 30, 2015.




16



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

In July 2013, the Company entered into a Shareholders’ Agreement between One Equity Partners (OEP) and the Russian Direct Investment Fund (RDIF) to acquire Voltyre-Prom, a leading producer of agricultural and industrial tires located in Volgograd, Russia.  Mr. Richard M. Cashin, a director of the Company, is President of OEP which owns 26.1% of the joint venture.  The Shareholder’s agreement contains a settlement put option which may require the Company to purchase shares from OEP and RDIF at a value set by the agreement.  See note 23 for additional information.

The Company has a 34.2% equity stake in Wheels India Limited, a company incorporated in India and listed on the National Stock Exchange in India. The Company had trade payables due to Wheels India of approximately $0.0 million and $0.1 million at June 30, 2015, and December 31, 2014, respectively.


21. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss consisted of the following (amounts in thousands):

 
Currency
Translation
Adjustments
 
Unrecognized
Losses and
Prior Service
Cost
 
 
 
Total
Balance at April 1, 2015
$
(130,210
)
 
$
(26,050
)
 
$
(156,260
)
Currency translation adjustments
3,849

 

 
3,849

Defined benefit pension plan entries:
 

 
 

 
 

Amortization of unrecognized losses and prior
 
 
 
 
 
  service cost, net of tax of $(706)

 
1,488

 
1,488

Balance at June 30, 2015
$
(126,361
)
 
$
(24,562
)
 
$
(150,923
)
 
 
 
 
 
 
 
Currency
Translation
Adjustments
 
Unrecognized
Losses and
Prior Service
Cost
 
 
 
Total
Balance at January 1, 2015
$
(86,571
)
 
$
(26,059
)
 
$
(112,630
)
 
 
 
 
 
 
Currency translation adjustments
(39,790
)
 

 
(39,790
)
Defined benefit pension plan entries:
 

 
 

 
 

Amortization of unrecognized losses and prior
 
 
 
 
 
  service cost, net of tax of $(806)

 
1,497

 
1,497

Balance at June 30, 2015
$
(126,361
)
 
$
(24,562
)
 
$
(150,923
)


22. SUBSIDIARY GUARANTOR FINANCIAL INFORMATION

The Company's 6.875% senior secured notes due 2020 and 5.625% convertible senior subordinated notes are guaranteed by the following 100% owned subsidiaries of the Company: Titan Tire Corporation, Titan Tire Corporation of Bryan, Titan Tire Corporation of Freeport, and Titan Wheel Corporation of Illinois. The note guarantees are full and unconditional, joint and several obligations of the guarantors. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The following condensed consolidating financial statements are presented using the equity method of accounting. Certain sales and marketing expenses recorded by non-guarantor subsidiaries have not been allocated to the guarantor subsidiaries.


17



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

(Amounts in thousands)
Consolidating Condensed Statements of Operations
For the Three Months Ended June 30, 2015
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
173,334

 
$
202,733

 
$

 
$
376,067

Cost of sales
207

 
141,328

 
183,479

 

 
325,014

Gross profit (loss)
(207
)
 
32,006

 
19,254

 

 
51,053

Selling, general and administrative expenses
2,617

 
16,757

 
18,474

 

 
37,848

Research and development expenses

 
805

 
1,974

 

 
2,779

Royalty expense

 
1,832

 
1,063

 

 
2,895

Income (loss) from operations
(2,824
)
 
12,612

 
(2,257
)
 

 
7,531

Interest expense
(8,094
)
 
(1
)
 
(547
)
 

 
(8,642
)
Intercompany interest income (expense)
248

 

 
(248
)
 

 

Other income (expense)
(393
)
 
3

 
7,296

 

 
6,906

Income (loss) before income taxes
(11,063
)
 
12,614

 
4,244

 

 
5,795

Provision (benefit) for income taxes
(5,787
)
 
4,796

 
2,506

 

 
1,515

Equity in earnings of subsidiaries
9,556

 

 
3,535

 
(13,091
)
 

Net income (loss)
4,280

 
7,818

 
5,273

 
(13,091
)
 
4,280

Net loss noncontrolling interests

 

 
(2,491
)
 

 
(2,491
)
Net income (loss) attributable to Titan
$
4,280

 
$
7,818

 
$
7,764

 
$
(13,091
)
 
$
6,771

 

(Amounts in thousands)
Consolidating Condensed Statements of Operations
For the Three Months Ended June 30, 2014
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
244,664

 
$
279,067

 
$

 
$
523,731

Cost of sales
303

 
241,915

 
260,740

 

 
502,958

Gross profit (loss)
(303
)
 
2,749

 
18,327

 

 
20,773

Selling, general and administrative expenses
2,388

 
17,611

 
22,836

 

 
42,835

Research and development expenses
72

 
1,214

 
2,289

 

 
3,575

Royalty expense

 
1,926

 
1,904

 

 
3,830

Income (loss) from operations
(2,763
)
 
(18,002
)
 
(8,702
)
 

 
(29,467
)
Interest expense
(8,255
)
 

 
(671
)
 

 
(8,926
)
Intercompany interest income (expense)
1,618

 

 
(1,618
)
 

 

Other income (expense)
1,192

 
103

 
5,040

 

 
6,335

Income (loss) before income taxes
(8,208
)
 
(17,899
)
 
(5,951
)
 

 
(32,058
)
Provision (benefit) for income taxes
69

 
(6,437
)
 
(799
)
 

 
(7,167
)
Equity in earnings of subsidiaries
(16,614
)
 

 
(18,004
)
 
34,618

 

Net income (loss)
(24,891
)
 
(11,462
)
 
(23,156
)
 
34,618

 
(24,891
)
Net loss noncontrolling interests

 

 
(4,380
)
 

 
(4,380
)
Net income (loss) attributable to Titan
$
(24,891
)
 
$
(11,462
)
 
$
(18,776
)
 
$
34,618

 
$
(20,511
)

18



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

(Amounts in thousands)
Consolidating Condensed Statements of Operations
For the Six Months Ended June 30, 2015
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
367,307

 
$
410,819

 
$

 
$
778,126

Cost of sales
438

 
309,279

 
374,562

 

 
684,279

Gross profit (loss)
(438
)
 
58,028

 
36,257

 

 
93,847

Selling, general and administrative expenses
5,251

 
32,136

 
36,135

 

 
73,522

Research and development expenses

 
1,805

 
4,060

 

 
5,865

Royalty expense

 
3,756

 
2,364

 

 
6,120

Loss from operations
(5,689
)
 
20,331

 
(6,302
)
 

 
8,340

Interest expense
(16,209
)
 
(1
)
 
(1,188
)
 

 
(17,398
)
Intercompany interest income (expense)
390

 

 
(390
)
 

 

Other income (expense)
5,004

 
(376
)
 
10,561

 

 
15,189

Income (loss) before income taxes
(16,504
)
 
19,954

 
2,681

 

 
6,131

Provision (benefit) for income taxes
(3,398
)
 
7,489

 
(1,180
)
 

 
2,911

Equity in earnings of subsidiaries
16,326

 

 
3,372

 
(19,698
)
 

Net income (loss)
3,220

 
12,465

 
7,233

 
(19,698
)
 
3,220

Net loss noncontrolling interests

 

 
(3,783
)
 

 
(3,783
)
Net income (loss) attributable to Titan
$
3,220

 
$
12,465

 
$
11,016

 
$
(19,698
)
 
$
7,003

 
 
 
 
 
 
 
 
 
 

(Amounts in thousands)
Consolidating Condensed Statements of Operations
For the Six Months Ended June 30, 2014
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
508,622

 
$
554,049

 
$

 
$
1,062,671

Cost of sales
513

 
470,154

 
519,254

 

 
989,921

Gross profit (loss)
(513
)
 
38,468

 
34,795

 

 
72,750

Selling, general and administrative expenses
4,032

 
36,601

 
46,078

 

 
86,711

Research and development expenses
72

 
3,367

 
4,232

 

 
7,671

Royalty expense

 
3,774

 
3,797

 

 
7,571

Income (loss) from operations
(4,617
)
 
(5,274
)
 
(19,312
)
 

 
(29,203
)
Interest expense
(16,517
)
 

 
(1,668
)
 

 
(18,185
)
Intercompany interest income (expense)
3,302

 

 
(3,302
)
 

 

Other income (expense)
1,534

 
48

 
5,269

 

 
6,851

Income (loss) before income taxes
(16,298
)
 
(5,226
)
 
(19,013
)
 

 
(40,537
)
Provision (benefit) for income taxes
(5,971
)
 
(1,627
)
 
(2,920
)
 

 
(10,518
)
Equity in earnings of subsidiaries
(19,692
)
 

 
(18,881
)
 
38,573

 

Net income (loss)
(30,019
)
 
(3,599
)
 
(34,974
)
 
38,573

 
(30,019
)
Net loss noncontrolling interests

 

 
(11,671
)
 

 
(11,671
)
Net income (loss) attributable to Titan
$
(30,019
)
 
$
(3,599
)
 
$
(23,303
)
 
$
38,573

 
$
(18,348
)
 
 
 
 
 
 
 
 
 
 

19



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

(Amounts in thousands)
Consolidating Condensed Statements of Comprehensive Income (Loss)
For the Three Months Ended June 30, 2015
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income (loss)
$
4,280

 
$
7,818

 
$
5,273

 
$
(13,091
)
 
$
4,280

Currency translation adjustment, net
4,436

 

 
4,436

 
(4,436
)
 
4,436

Pension liability adjustments, net of tax
1,488

 
427

 
1,061

 
(1,488
)
 
1,488

Comprehensive income (loss)
10,204

 
8,245

 
10,770

 
(19,015
)
 
10,204

Net comprehensive loss attributable to redeemable and noncontrolling interests

 

 
(1,904
)
 

 
(1,904
)
Comprehensive income (loss) attributable to Titan
$
10,204

 
$
8,245

 
$
12,674

 
$
(19,015
)
 
$
12,108



(Amounts in thousands)
Consolidating Condensed Statements of Comprehensive Income (Loss)
For the Three Months Ended June 30, 2014
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income (loss)
$
(24,891
)
 
$
(11,462
)
 
$
(23,156
)
 
$
34,618

 
$
(24,891
)
Currency translation adjustment, net
7,826

 

 
7,826

 
(7,826
)
 
7,826

Pension liability adjustments, net of tax
28

 
450

 
(422
)
 
(28
)
 
28

Comprehensive income (loss)
(17,037
)
 
(11,012
)
 
(15,752
)
 
26,764

 
(17,037
)
Net comprehensive loss attributable to redeemable and noncontrolling interests

 

 
(1,062
)
 

 
(1,062
)
Comprehensive income (loss) attributable to Titan
$
(17,037
)
 
$
(11,012
)
 
$
(14,690
)
 
$
26,764

 
$
(15,975
)


(Amounts in thousands)
Consolidating Condensed Statements of Comprehensive Income (Loss)
For the Six Months Ended June 30, 2015
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income (loss)
$
3,220

 
$
12,465

 
$
7,233

 
$
(19,698
)
 
$
3,220

Currency translation adjustment, net
(40,950
)
 

 
(40,950
)
 
40,950

 
(40,950
)
Pension liability adjustments, net of tax
1,497

 
854

 
643

 
(1,497
)
 
1,497

Comprehensive income (loss)
(36,233
)
 
13,319

 
(33,074
)
 
19,755

 
(36,233
)
Net comprehensive loss attributable to redeemable and noncontrolling interests

 

 
(4,917
)
 

 
(4,917
)
Comprehensive income (loss) attributable to Titan
$
(36,233
)
 
$
13,319

 
$
(28,157
)
 
$
19,755

 
$
(31,316
)

20



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

(Amounts in thousands)
Consolidating Condensed Statements of Comprehensive Income (Loss)
For the Six Months Ended June 30, 2014
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income (loss)
$
(30,019
)
 
$
(3,599
)
 
$
(34,974
)
 
$
38,573

 
$
(30,019
)
Currency translation adjustment, net
8,214

 

 
8,214

 
(8,214
)
 
8,214

Pension liability adjustments, net of tax
745

 
900

 
(155
)
 
(745
)
 
745

Comprehensive income (loss)
(21,060
)
 
(2,699
)
 
(26,915
)
 
29,614

 
(21,060
)
Net comprehensive loss attributable to redeemable and noncontrolling interests

 

 
(13,245
)
 

 
(13,245
)
Comprehensive income (loss) attributable to Titan
$
(21,060
)
 
$
(2,699
)
 
$
(13,670
)
 
$
29,614

 
$
(7,815
)

(Amounts in thousands)
Consolidating Condensed Balance Sheets
June 30, 2015
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
 
(As restated)
 
 
 
(As restated)
 
 
 
(As restated)
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
128,163

 
$
4

 
$
59,317

 
$

 
$
187,484

Accounts receivable, net

 
77,191

 
147,498

 

 
224,689

Inventories

 
96,405

 
209,682

 

 
306,087

Prepaid and other current assets
21,516

 
16,603

 
50,639

 

 
88,758

Total current assets
149,679

 
190,203

 
467,136

 

 
807,018

Property, plant and equipment, net
7,408

 
148,053

 
327,946

 

 
483,407

Investment in subsidiaries
789,267

 

 
114,165

 
(903,432
)
 

Other assets
48,886

 
1,212

 
79,891

 

 
129,989

Total assets
$
995,240

 
$
339,468

 
$
989,138

 
$
(903,432
)
 
$
1,420,414

Liabilities and Stockholders’ Equity
 

 
 

 
 

 
 

 
 

Short-term debt
$

 
$

 
$
25,068

 
$

 
$
25,068

Accounts payable
1,559

 
12,862

 
121,337

 

 
135,758

Other current liabilities
29,513

 
41,812

 
50,642

 

 
121,967

Total current liabilities
31,072

 
54,674

 
197,047

 

 
282,793

Long-term debt
460,161

 

 
35,112

 

 
495,273

Other long-term liabilities
8,339

 
18,967

 
60,548

 

 
87,854

Intercompany accounts
15,102

 
(247,824
)
 
232,722

 

 

Redeemable noncontrolling interest

 

 
70,511

 

 
70,511

Titan stockholders' equity
480,566

 
513,651

 
389,781

 
(903,432
)
 
480,566

Noncontrolling interests

 

 
3,417

 

 
3,417

Total liabilities and stockholders’ equity
$
995,240

 
$
339,468

 
$
989,138

 
$
(903,432
)
 
$
1,420,414


21



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

(Amounts in thousands)
Consolidating Condensed Balance Sheets
December 31, 2014
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
 
(As restated)
 
 
 
(As restated)
 
 
 
(As restated)
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
129,985

 
$
4

 
$
71,462

 
$

 
$
201,451

Accounts receivable, net
(55
)
 
63,645

 
135,788

 

 
199,378

Inventories

 
103,230

 
228,202

 

 
331,432

Prepaid and other current assets
26,803

 
21,105

 
55,761

 

 
103,669

Total current assets
156,733

 
187,984

 
491,213

 

 
835,930

Property, plant and equipment, net
7,590

 
160,318

 
359,506

 

 
527,414

Investment in subsidiaries
745,084

 

 
109,768

 
(854,852
)
 

Other assets
51,381

 
827

 
80,172

 

 
132,380

Total assets
$
960,788

 
$
349,129

 
$
1,040,659

 
$
(854,852
)
 
$
1,495,724

Liabilities and Stockholders’ Equity
 

 
 

 
 

 
 

 
 

Short-term debt
$


$


$
26,233


$

 
$
26,233

Accounts payable
1,795

 
10,876

 
133,634

 

 
146,305

Other current liabilities
28,519

 
45,291

 
55,208

 

 
129,018

Total current liabilities
30,314

 
56,167

 
215,075

 

 
301,556

Long-term debt
460,161

 

 
36,342

 

 
496,503

Other long-term liabilities
15,244

 
20,867

 
71,496

 

 
107,607

Intercompany accounts
(56,426
)
 
(228,307
)
 
284,733

 

 

Redeemable noncontrolling interest

 

 
71,192

 

 
71,192

Titan stockholders' equity
511,495

 
500,402

 
354,450

 
(854,852
)
 
511,495

Noncontrolling interests

 

 
7,371

 

 
7,371

Total liabilities and stockholders’ equity
$
960,788

 
$
349,129

 
$
1,040,659

 
$
(854,852
)
 
$
1,495,724




22



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

(Amounts in thousands)
Consolidating Condensed Statements of Cash Flows
For the Six Months Ended June 30, 2015
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidated
Net cash provided by (used for) operating activities
$
(478
)
 
$
2,769

 
$
5,551

 
$
7,842

Cash flows from investing activities:
 

 
 

 
 

 
 

Capital expenditures
(412
)
 
(2,799
)
 
(19,294
)
 
(22,505
)
Other, net

 
30

 
2,678

 
2,708

Net cash used for investing activities
(412
)
 
(2,769
)
 
(16,616
)
 
(19,797
)
Cash flows from financing activities:
 

 
 

 
 

 
 

Proceeds from borrowings

 

 
13,239

 
13,239

Payment on debt

 

 
(8,517
)
 
(8,517
)
Proceeds from exercise of stock options
144

 

 

 
144

Excess tax benefit from stock-based compensation
(538
)
 

 

 
(538
)
Dividends paid
(538
)
 

 

 
(538
)
Net cash provided by (used for) financing activities
(932
)
 

 
4,722

 
3,790

Effect of exchange rate change on cash

 

 
(5,802
)
 
(5,802
)
Net decrease in cash and cash equivalents
(1,822
)
 

 
(12,145
)
 
(13,967
)
Cash and cash equivalents, beginning of period
129,985

 
4

 
71,462

 
201,451

Cash and cash equivalents, end of period
$
128,163

 
$
4

 
$
59,317

 
$
187,484

 
(Amounts in thousands)
Consolidating Condensed Statements of Cash Flows
For the Six Months Ended June 30, 2014
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidated
Net cash provided by operating activities
$
11,495

 
$
4,430

 
$
27,130

 
$
43,055

Cash flows from investing activities:
 

 
 

 
 

 
 

Capital expenditures
(667
)
 
(4,770
)
 
(25,446
)
 
(30,883
)
Acquisition of additional interest
(49
)
 

 
(13,346
)
 
(13,395
)
Decrease in restricted cash deposits

 

 
14,268

 
14,268

Other, net

 
341

 
2,900

 
3,241

Net cash used for investing activities
(716
)
 
(4,429
)
 
(21,624
)
 
(26,769
)
Cash flows from financing activities:
 

 
 

 
 

 
 

Proceeds from borrowings

 

 
6,217

 
6,217

Payment on debt

 

 
(53,393
)
 
(53,393
)
Proceeds from exercise of stock options
141

 

 

 
141

Excess tax benefit from stock-based compensation
(45
)
 

 

 
(45
)
Payment of financing fees
(33
)
 

 

 
(33
)
Dividends paid
(536
)
 

 

 
(536
)
Net cash provided by (used for) financing activities
(473
)
 

 
(47,176
)
 
(47,649
)
Effect of exchange rate change on cash

 

 
4,957

 
4,957

Net increase (decrease) in cash and cash equivalents
10,306

 
1

 
(36,713
)
 
(26,406
)
Cash and cash equivalents, beginning of period
81,472

 
4

 
107,884

 
189,360

Cash and cash equivalents, end of period
$
91,778

 
$
5

 
$
71,171

 
$
162,954


23



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

23. REDEEMABLE NONCONTROLLING INTEREST

The Company has a shareholders’ agreement with One Equity Partners (OEP) and the Russian Direct Investment Fund (RDIF) which was used for the acquisition of Voltyre-Prom, a leading producer of agricultural and industrial tires in Volgograd, Russia. The agreement contains a settlement put option which is exercisable beginning in July of 2018 and may require Titan to purchase the shares of OEP and RDIF at a value set by the agreement.
The redemption features of the settlement put option are not solely within the Company’s control and the noncontrolling interest is presented as redeemable noncontrolling interest separately from Total equity in the Consolidated Balance Sheet at the redemption value of the settlement put option. If the redemption value is greater than carrying value of the noncontrolling interest, the increase is adjusted directly to retained earnings, or additional paid-in capital if there are no available retained earnings applicable to the redeemable noncontrolling interest.
The following is a reconciliation of redeemable noncontrolling interest as of June 30, 2015 and 2014 (amounts in thousands):
 
2015
 
2014
Balance at January 1
$
71,192

 
$
89,155

   Purchase of subsidiary shares

 
(12,193
)
   Income (loss) attributable to redeemable noncontrolling interest
37

 
(8,852
)
   Currency translation
(1,068
)
 
(1,420
)
   Redemption value adjustment
350

 
1,677

Balance at June 30
$
70,511

 
$
68,367

This obligation approximates the cost if all remaining shares were purchased by the Company on June 30, 2015, and is presented in the Consolidated Condensed Balance Sheet in redeemable noncontrolling interest, which is treated as mezzanine equity.
 
24. RESTATEMENT

In November 2015, the Company identified errors in the accounting for the shareholders' and related redeemable noncontrolling interest in the Company’s investment in Voltyre-Prom. The Company did not correctly classify redeemable noncontrolling interest on the balance sheet as mezzanine equity, which is presented below liabilities and above equity. As the redeemable noncontrolling interest balance exceeds the carrying value of the investment, there is a reclassification of additional paid-in capital to mezzanine equity and a correction in the earnings per share calculation. Accordingly, the Company is restating its earnings per share for the three and six months ended June 30, 2015 and 2014, and its consolidated balance sheet as of June 30, 2015, and December 31, 2014. The corrections had no other effect on the Consolidated Statement of Operations.
The following table (unaudited) summarizes the restatement adjustments of the Company’s earnings per share for the three months and six months ended June 30, 2015 and 2014:
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Basic income (loss) per common share - as reported
$
0.13

 
$
(0.38
)
 
$
0.13

 
(0.34
)
Basic income (loss) per common share - as restated
$
0.17

 
$
(0.40
)
 
$
0.12

 
$
(0.37
)
Adjustment
$
0.04

 
$
(0.02
)
 
$
(0.01
)
 
$
(0.03
)
 
 
 
 
 
 
 
 
Diluted income (loss) per common share - as reported
$
0.12

 
$
(0.38
)
 
$
0.13

 
(0.34
)
Diluted income (loss) per common share - as restated
$
0.17

 
$
(0.40
)
 
$
0.12

 
$
(0.37
)
Adjustment
$
0.05

 
$
(0.02
)
 
$
(0.01
)
 
$
(0.03
)

24



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

The following table summarizes the restatement adjustments on the Company’s Consolidated Condensed Balance Sheet (unaudited) as of June 30, 2015 (amounts in thousands):
 
Consolidated Balance Sheet
 
June 30, 2015
 
As reported
 
Adjustment
 
As restated
Assets
 
 
 
 
 
Current Assets
 
 
 
 
 
   Cash and cash equivalents
187,484

 

 
187,484

   Accounts receivable
224,689

 

 
224,689

   Inventories
306,087

 

 
306,087

   Deferred income taxes
13,972

 

 
13,972

   Prepaid and other current assets
74,786

 

 
74,786

     Total current assets
807,018

 

 
807,018

   Property, plant and equipment, net
483,407

 

 
483,407

   Deferred income taxes
18,303

 

 
18,303

   Other assets
111,686

 

 
111,686

Total assets
$
1,420,414

 
$

 
$
1,420,414

Liabilities
 
 
 
 
 
Current Liabilities
 
 
 
 
 
   Short-term debt
$
25,068

 
$

 
$
25,068

   Accounts payable
135,758

 

 
135,758

   Other current liabilities
121,967

 

 
121,967

     Total current liabilities
282,793

 

 
282,793

   Long-term debt
495,273

 

 
495,273

   Deferred income taxes
3,524

 

 
3,524

   Other long-term liabilities
84,330

 

 
84,330

Total liabilities
865,920

 

 
865,920

Redeemable noncontrolling interest

 
70,511

 
70,511

Equity
 
 
 
 
 
Titan stockholders' equity
 
 
 
 
 
   Common stock

 

 

   Additional paid-in capital
563,227

 
(49,627
)
 
513,600

   Retained earnings
132,472

 

 
132,472

   Treasury stock
(13,508
)
 

 
(13,508
)
   Treasury stock reserved for deferred comp
(1,075
)
 

 
(1,075
)
   Accumulated other comprehensive loss
(150,923
)
 

 
(150,923
)
Total Titan stockholders' equity
530,193

 
(49,627
)
 
480,566

   Noncontrolling interests
24,301

 
(20,884
)
 
3,417

Total equity
554,494

 
(70,511
)
 
483,983

Total liabilities and equity
$
1,420,414

 
$

 
$
1,420,414



25



TITAN INTERNATIONAL, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

The following table summarizes the restatement adjustments on the Company’s Consolidated Balance Sheet as of December 31, 2014 (amounts in thousands):
 
Consolidated Balance Sheet
 
December 31, 2014
 
As reported
 
Adjustment
 
As restated
Assets
 
 
 
 
 
Current Assets
 
 
 
 
 
   Cash and cash equivalents
$
201,451

 
$

 
$
201,451

   Accounts receivable
199,378

 

 
199,378

   Inventories
331,432

 

 
331,432

   Deferred income taxes
23,435

 

 
23,435

   Prepaid and other current assets
80,234

 

 
80,234

     Total current assets
835,930

 

 
835,930

   Property, plant and equipment, net
527,414

 

 
527,414

   Deferred income taxes
15,623

 

 
15,623

   Other assets
116,757

 

 
116,757

Total assets
$
1,495,724

 
$

 
$
1,495,724

Liabilities
 
 
 
 
 
Current Liabilities
 
 
 
 
 
   Short-term debt
$
26,233

 
$

 
$
26,233

   Accounts payable
146,305

 

 
146,305

   Other current liabilities
129,018

 

 
129,018

     Total current liabilities
301,556

 

 
301,556

   Long-term debt
496,503

 

 
496,503

   Deferred income taxes
18,582

 

 
18,582

   Other long-term liabilities
89,025

 

 
89,025

Total liabilities
905,666

 

 
905,666

Redeemable noncontrolling interest

 
71,192

 
71,192

Equity
 
 
 
 
 
Titan stockholders' equity
 
 
 
 
 
   Common stock

 

 

   Additional paid-in capital
562,367

 
(49,277
)
 
513,090

   Retained earnings
126,007

 

 
126,007

   Treasury stock
(13,897
)
 

 
(13,897
)
   Treasury stock reserved for deferred comp
(1,075
)
 

 
(1,075
)
   Accumulated other comprehensive loss
(112,630
)
 

 
(112,630
)
Total Titan stockholders' equity
560,772

 
(49,277
)
 
511,495

   Noncontrolling interests
29,286

 
(21,915
)
 
7,371

Total equity
590,058

 
(71,192
)
 
518,866

Total liabilities and equity
$
1,495,724

 
$

 
$
1,495,724




26



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and results of operations (MD&A) is designed to provide a reader of these financial statements with a narrative from the perspective of the management of Titan International, Inc. (Titan or the Company) on Titan's financial condition, results of operations, liquidity and other factors which may affect the Company's future results. The MD&A in this quarterly report should be read in conjunction with the MD&A in Titan's 2014 annual report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2015.

FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements, including statements regarding, among other items:
Anticipated trends in the Company’s business
Future expenditures for capital projects
The Company’s ability to continue to control costs and maintain quality
Ability to meet conditions of loan agreements
The Company’s business strategies, including its intention to introduce new products
Expectations concerning the performance and success of the Company’s existing and new products
The Company’s intention to consider and pursue acquisition and divestiture opportunities
Readers of this Form 10-Q should understand that these forward-looking statements are based on the Company’s expectations and are subject to a number of risks and uncertainties (including, but not limited to, the factors discussed in Item 1A, Risk Factors of the Company's most recent annual report on Form 10-K), certain of which are beyond the Company’s control.

Actual results could differ materially from these forward-looking statements as a result of certain factors, including:
The effect of a recession on the Company and its customers and suppliers
Changes in the Company’s end-user markets as a result of world economic or regulatory influences
Changes in the marketplace, including new products and pricing changes by the Company’s competitors
Ability to maintain satisfactory labor relations
Unfavorable outcomes of legal proceedings
Availability and price of raw materials
Levels of operating efficiencies
Unfavorable product liability and warranty claims
Actions of domestic and foreign governments
Geopolitical and economic uncertainties relating to Russia could have a negative impact on the Company's sales and results of operations at the Voltyre-Prom business
Results of investments
Fluctuations in currency translations
Climate change and related laws and regulations
Risks associated with environmental laws and regulations
Any changes in such factors could lead to significantly different results.  The Company cannot provide any assurance that the assumptions referred to in the forward-looking statements or otherwise are accurate or will prove to transpire.  Any assumptions that are inaccurate or do not prove to be correct could have a material adverse effect on the Company’s ability to achieve the results as indicated in forward-looking statements.  The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this document will in fact transpire.

27



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations


OVERVIEW
Titan International, Inc. and its subsidiaries are leading manufacturers of wheels, tires, wheel and tire assemblies, and undercarriage systems and components for off-highway vehicles used in the agricultural, earthmoving/construction and consumer segments.  Titan manufactures both wheels and tires for the majority of these market applications, allowing the Company to provide the value-added service of delivering complete wheel and tire assemblies.  The Company offers a broad range of products that are manufactured in relatively short production runs to meet the specifications of original equipment manufacturers (OEMs) and/or the requirements of aftermarket customers.

Agricultural Segment: Titan's agricultural rims, wheels, tires and undercarriage systems and components are manufactured for use on various agricultural equipment, including tractors, combines, skidders, plows, planters and irrigation equipment, and are sold directly to OEMs and to the aftermarket through independent distributors, equipment dealers and Titan's own distribution centers.

Earthmoving/Construction Segment: The Company manufactures rims, wheels, tires and undercarriage systems and components for various types of off-the-road (OTR) earthmoving, mining, military, construction and forestry equipment, including skid steers, aerial lifts, cranes, graders and levelers, scrapers, self-propelled shovel loaders, articulated dump trucks, load transporters, haul trucks, backhoe loaders, crawler tractors, lattice cranes, shovels and hydraulic excavators.

Consumer Segment: Titan manufactures bias truck tires in Latin America and light truck tires in Russia, provides wheels and tires and assembles brakes, actuators and components for the domestic boat, recreational and utility trailer markets. Titan also offers select products for ATVs, turf, and golf cart applications.

The Company’s major OEM customers include large manufacturers of off-highway equipment such as AGCO Corporation, Caterpillar Inc., CNH Global N.V., Deere & Company, and Kubota Corporation, in addition to many other off-highway equipment manufacturers.  The Company distributes products to OEMs, independent and OEM-affiliated dealers, and through a network of distribution facilities.

The table provides highlights for the quarter ended June 30, 2015, compared to 2014 (amounts in thousands):
 
2015
 
2014
 
% Increase (Decrease)
Net sales
$
376,067

 
$
523,731

 
(28
)%
Gross profit
51,053

 
20,773

 
146
 %
Income (loss) from operations
7,531

 
(29,467
)
 
126
 %
Net income (loss)
4,280

 
(24,891
)
 
117
 %

Quarter: The Company recorded sales of $376.1 million for the second quarter of 2015, which were 28% lower than the second quarter 2014 sales of $523.7 million. Overall sales experienced reductions in volume of 11% and price/mix of 7% as the agricultural market remains in a cyclical downturn. Reduced farm incomes result in lower demand for new equipment, primarily high horsepower agricultural equipment. In addition, competitive pressures and lower raw material prices, particularly in tire manufacturing, negatively impacted sales. Unfavorable currency translation decreased sales by 10%.


28



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

The Company's gross profit was $51.1 million, or 13.6% of net sales, for the second quarter of 2015, compared to $20.8 million, or 4.0% of net sales, in 2014. Income from operations was $7.5 million for the second quarter of 2015, compared to loss from operations of $29.5 million in 2014. Net income was $4.3 million for the second quarter of 2015, compared to net loss of $24.9 million in 2014. Basic earnings per share (as restated) was $.17 in the second quarter of 2015, compared to loss per share (as restated) of $(.40) in 2014. In the second quarter of 2014, the Company recorded an asset impairment of $23.2 million on machinery, equipment and molds used to produce giant mining tires. In addition, the Company recorded an inventory writedown of $11.6 million to adjust the value of mining product inventory to estimated market value. When adjusted to remove these items, the gross profit for the quarter ended June 30, 2014, was $55.6 million and income from operations was $5.3 million. Despite the large overall sales erosion resulting from the agricultural and mining cyclical downturns, gross margin as a percentage of net sales benefited from the Business Improvement Framework instituted in 2014. Initiatives born from the framework helped to drive headcount reductions, expenditure rationalization, increased productivity, lower raw material costs, lower warranty costs, and pricing optimization.

The table provides highlights for the six months ended June 30, 2015, compared to 2014 (amounts in thousands):
 
2015
 
2014
 
% Increase (Decrease)
Net sales
$
778,126

 
$
1,062,671

 
(27
)%
Gross profit
93,847

 
72,750

 
29
 %
Income (loss) from operations
8,340

 
(29,203
)
 
129
 %
Net income (loss)
3,220

 
(30,019
)
 
111
 %

Year-to-date: The Company recorded sales of $778.1 million for the six months ended June 30, 2015, which were 27% lower than the six months ended June 30, 2014 sales of $1,062.7 million. Overall sales experienced reductions in volume of 11% and price/mix of 6% as the agricultural market remains in a cyclical downturn. Reduced farm incomes result in lower demand for new equipment, primarily high horsepower agricultural equipment. These decreases were partially offset by stable demand for products used in the construction industry. In addition, competitive pressures and lower raw material prices, particularly in tire manufacturing, negatively impacted sales. Unfavorable currency translation decreased sales by 10%.

The Company's gross profit was $93.8 million, or 12.1% of net sales, for the six months ended June 30, 2015, compared to $72.8 million, or 6.8% of net sales, in 2014. Income from operations was $8.3 million for the six months ended June 30, 2015, compared to loss from operations of $29.2 million in 2014. Net income was $3.2 million for the six months ended June 30, 2015, compared to net loss of $30.0 million in 2014. Basic earnings per share (as restated) was $.12 for the six months ended June 30, 2015, compared to loss per share (as restated) of $(.37) in 2014. In the second quarter of 2014, the Company recorded an asset impairment of $23.2 million on machinery, equipment and molds used to produce giant mining tires. In addition, the Company recorded an inventory writedown of $11.6 million to adjust the value of mining product inventory to estimated market value. When adjusted to remove these items, the gross profit for the six months ended June 30, 2014, was $107.5 million and income from operations was $5.6 million. Despite the large overall sales erosion resulting from the agricultural and mining cyclical downturns, gross margin as a percentage of net sales benefited from the Business Improvement Framework instituted in 2014. Initiatives born from the framework helped to drive headcount reductions, expenditure rationalization, increased productivity, lower raw material costs, lower warranty costs, and pricing optimization.




29



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations


CRITICAL ACCOUNTING ESTIMATES
Preparation of the financial statements and related disclosures in compliance with accounting principles generally accepted in the United States of America requires the application of appropriate technical accounting rules and guidance, as well as the use of estimates. The Company's application of these policies involves assumptions that require difficult subjective judgments regarding many factors, which, in and of themselves, could materially impact the financial statements and disclosures. A future change in the estimates, assumptions or judgments applied in determining the following matters, among others, could have a material impact on future financial statements and disclosures.

Asset and Business Acquisitions
The allocation of purchase price for asset and business acquisitions requires management estimates and judgment as to expectations for future cash flows of the acquired assets and business and the allocation of those cash flows to identifiable intangible assets in determining the estimated fair value for purchase price allocations. If the actual results differ from the estimates and judgments used in determining the purchase price allocations, impairment losses could occur. To aid in establishing the value of any intangible assets at the time of acquisition, the Company typically engages a professional appraisal firm.

Inventories
Inventories are valued at lower of cost or market. At June 30, 2015, approximately 9% of the Company's inventories were valued under the last-in, first-out (LIFO) method. The majority of steel material inventory in North America is accounted for under the LIFO method. The remaining inventories were valued under the first-in, first-out (FIFO) method or average cost method. Market value is estimated based on current selling prices. Estimated provisions are established for slow-moving and obsolete inventory.

Impairment of Goodwill
The Company reviews goodwill for impairment during the fourth quarter of each annual reporting period, and whenever events and circumstances indicate that the carrying values may not be recoverable. In the fourth quarter of 2014, the recoverability of all goodwill was evaluated by estimating future discounted cash flows. The Company recorded a noncash charge for the impairment of goodwill in the amount of $36.6 million on both a pre-tax and after-tax basis. The charge included $11.4 million of earthmoving/construction goodwill related to the acquisition of Titan Australia; $9.6 million of agricultural goodwill related to the acquisition of the Latin America farm tire business; and $15.6 million of goodwill related to the acquisition of Voltyre-Prom. The Voltyre-Prom goodwill included $11.0 million in the agricultural segment, $2.6 million in the earthmoving/construction segment, and $2.0 million in the consumer segment.

Income Taxes
Deferred income tax provisions are determined using the liability method whereby deferred tax assets and liabilities are recognized based upon temporary differences between the financial statement and income tax basis of assets and liabilities. The Company assesses the realizability of its deferred tax asset positions and recognizes and measures uncertain tax positions in accordance with accounting standards for income taxes.


30



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Retirement Benefit Obligations
Pension benefit obligations are based on various assumptions used by third-party actuaries in calculating these amounts. These assumptions include discount rates, expected return on plan assets, mortality rates and other factors. Revisions in assumptions and actual results that differ from the assumptions affect future expenses, cash funding requirements and obligations. The Company has three frozen defined benefit pension plans in the United States and pension plans in several foreign countries. During the first six months of 2015, the Company contributed cash funds of $2.2 million to its pension plans. Titan expects to contribute approximately $2.6 million to these pension plans during the remainder of 2015. For more information concerning these costs and obligations, see the discussion of the “Pensions” and Note 29 to the Company's financial statements on Form 10-K for the fiscal year ended December 31, 2014.
 
Product Warranties
The Company provides limited warranties on workmanship of its products in all market segments. The majority of the Company's products have a limited warranty that ranges from zero to ten years, with certain products being prorated after the first year. The Company calculates a provision for warranty expense based on past warranty experience. Actual warranty expense may differ from historical experience. The Company's warranty accrual was $26.5 million at June 30, 2015, and $28.1 million at December 31, 2014.
 
RESULTS OF OPERATIONS
 
Highlights for the three and six months ended June 30, 2015, compared to 2014 (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015

2014
 
2015
 
2014
Net sales
$
376,067

 
$
523,731

 
$
778,126

 
$
1,062,671

Cost of sales
325,014

 
468,161

 
684,279

 
955,124

Mining asset impairment and inventory writedown

 
34,797

 

 
34,797

Gross profit
51,053

 
20,773

 
93,847

 
72,750

Gross profit percentage
13.6
%
 
4.0
%
 
12.1
%
 
6.8
%
 
Net Sales
Quarter: Net sales for the quarter ended June 30, 2015, were $376.1 million compared to $523.7 million in 2014, a decrease of 28%. Overall sales experienced reductions in volume of 11% and price/mix of 7% as the agricultural market remains in a cyclical downturn. Reduced farm incomes result in lower demand for new equipment, primarily high horsepower agricultural equipment. The mining industry remains in a cyclical downturn as well. In addition, competitive pressures and lower raw material prices, particularly in tire manufacturing, negatively impacted sales. Unfavorable currency translation decreased sales by 10%.
 
Year-to-date: Net sales for the six months ended June 30, 2015, were $778.1 million compared to $1,062.7 million in 2014, a decrease of 27%. Overall sales experienced reductions in volume of 11% and price/mix of 6% as the agricultural market remains in a cyclical downturn. Reduced farm incomes result in lower demand for new equipment, primarily high horsepower agricultural equipment. The mining industry remains in a cyclical downturn as well. These decreases were partially offset by stable demand for products used in the construction industry. In addition, competitive pressures and lower raw material prices, particularly in tire manufacturing, negatively impacted sales. Unfavorable currency translation decreased sales by 10%.
 


31



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Cost of Sales, Mining Asset Impairment, Mining Inventory Writedown and Gross Profit
Quarter: Cost of sales was $325.0 million for the quarter ended June 30, 2015, compared to $468.2 million in 2014. Gross profit for the second quarter of 2015 was $51.1 million, or 13.6% of net sales, compared to $20.8 million, or 4.0% of net sales for the second quarter of 2014. In the second quarter of 2014, the Company recorded an asset impairment of $23.2 million on machinery, equipment and molds used to produce giant mining tires. In addition, the Company recorded an inventory writedown of $11.6 million to adjust the value of mining product inventory to estimated market value. When adjusted to remove these items, the gross profit for the quarter ended June 30, 2014, was $55.6 million. Despite the large overall sales erosion resulting from the agricultural and mining cyclical downturns, gross margin as a percentage of net sales benefited from the Business Improvement Framework instituted in 2014. Initiatives born from the framework helped to drive headcount reductions, expenditure rationalization, increased productivity, lower raw material costs, lower warranty costs, and pricing optimization.

Year-to-date: Cost of sales was $684.3 million for the six months ended June 30, 2015, compared to $955.1 million in 2014. Gross profit for the six months ended June 30, 2015 was $93.8 million, or 12.1% of net sales, compared to $72.8 million, or 6.8% of net sales for the six months ended June 30, 2014. In the second quarter of 2014, the Company recorded an asset impairment of $23.2 million on machinery, equipment and molds used to produce giant mining tires. In addition, the Company recorded an inventory writedown of $11.6 million to adjust the value of mining product inventory to estimated market value. When adjusted to remove these items, the gross profit for the six months ended June 30, 2014, was $107.5 million. The agricultural equipment market remains in a cyclical downturn, with lower market demand especially for high horsepower agricultural equipment. The mining industry remains in a cyclical downturn as well. Despite the large overall sales erosion resulting from the agricultural and mining cyclical downturns, gross margin as a percentage of net sales benefited from the Business Improvement Framework instituted in 2014. Initiatives born from the framework helped to drive headcount reductions, expenditure rationalization, increased productivity, lower raw material costs, lower warranty costs, and pricing optimization.

Selling, General and Administrative Expenses
Selling, general and administrative expenses were as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Selling, general and administrative
$
37,848

 
$
42,835

 
$
73,522

 
$
86,711

Percentage of net sales
10.1
%
 
8.2
%
 
9.4
%
 
8.2
%

Quarter: Selling, general and administrative (SG&A) expenses for the second quarter of 2015 were $37.8 million, or 10.1% of net sales, compared to $42.8 million, or 8.2% of net sales, for 2014.  SG&A expenses decreased approximately $4 million as the result of currency translation. The remaining decrease was the result of lower selling costs related to the lower sales.

Year-to-date: Selling, general and administrative (SG&A) expenses for the six months ended June 30, 2015 were $73.5 million, or 9.4% of net sales, compared to $86.7 million, or 8.2% of net sales, for 2014.  SG&A expenses decreased approximately $7 million as the result of currency translation. The remaining decrease was the result of lower selling costs and SG&A cost reduction initiatives.


32



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Research and Development Expenses
Research and development expenses were as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Research and development
$
2,779

 
$
3,575

 
$
5,865

 
$
7,671

Percentage of net sales
0.7
%
 
0.7
%
 
0.8
%
 
0.7
%
 
Quarter: Research and development (R&D) expenses for the second quarter of 2015 were $2.8 million, or 0.7% of net sales, compared to $3.6 million, or 0.7% of net sales, for 2014.

Year-to-date: Research and development (R&D) expenses for the six months ended June 30, 2015 were $5.9 million, or 0.8% of net sales, compared to $7.7 million, or 0.7% of net sales, for 2014.


Royalty Expense
Royalty expense was as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Royalty expense
$
2,895

 
$
3,830

 
$
6,120

 
$
7,571


The Company has a trademark license agreement with The Goodyear Tire & Rubber Company to manufacture and sell certain tires in North America and Latin America under the Goodyear name.  The North American and Latin American farm tire royalties were prepaid through March 2018 as a part of the 2011 Goodyear Latin American farm tire acquisition. In May 2012, the Company and Goodyear entered into an agreement under which Titan will sell certain non-farm tire products directly to third party customers and pay a royalty to Goodyear.

Quarter: Royalty expenses were $2.9 million and $3.8 million for the quarters ended June 30, 2015 and 2014, respectively.

Year-to-date: Royalty expenses were $6.1 million and $7.6 million for the six months ended June 30, 2015 and 2014, respectively.

Income from Operations
Income from operations was as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Income from operations
$
7,531

 
$
(29,467
)
 
$
8,340

 
$
(29,203
)
Percentage of net sales
2.0
%
 
(5.6
)%
 
1.1
%
 
(2.7
)%

Quarter: Income from operations for the second quarter of 2015, was $7.5 million, or 2.0% of net sales, compared to loss from operations of $(29.5) million, or (5.6)% of net sales, in 2014.  This increase was the net result of the items previously discussed.

Year-to-date: Income from operations for the six months ended June 30, 2015, was $8.3 million, or 1.1% of net sales, compared to loss from operations of $(29.2) million, or (2.7)% of net sales, in 2014.  This increase was the net result of the items previously discussed.


33



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Interest Expense
Interest expense was as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Interest expense
$
8,642

 
$
8,926

 
$
17,398

 
$
18,185

 
Quarter: Interest expense was $8.6 million and $8.9 million for the quarters ended June 30, 2015, and 2014, respectively. Interest expense for the second quarter of 2015 decreased primarily as a result of decreased interest expense at Titan Europe.

Year-to-date: Interest expense was $17.4 million and $18.2 million for the six months ended June 30, 2015, and 2014, respectively. Interest expense for the first half of 2015 decreased primarily as a result of decreased interest expense at Titan Europe.
 
Other Income
Other income was as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Other income
$
6,906

 
$
6,335

 
$
15,189

 
$
6,851

 
Quarter: Other income was $6.9 million for the quarter ended June 30, 2015, as compared to $6.3 million in 2014.  For the quarter ended June 30, 2015, the Company recorded currency exchange gain of $3.6 million, interest income of $1.0 million, Wheels India Limited equity income of $0.9 million, and discount amortization on prepaid royalty of $0.5 million. For the quarter ended June 30, 2014, the Company recorded currency exchange income of $3.7 million, discount amortization on prepaid royalty of $0.8 million, and Wheels India Limited equity income of $0.5 million,

Year-to-date: Other income was $15.2 million for the six months ended June 30, 2015, as compared to $6.9 million in 2014.  For the six months ended June 30, 2015, the Company recorded currency exchange gain of $9.6 million, interest income of $1.6 million, and discount amortization on prepaid royalty of $1.1 million. For the six months ended June 30, 2014, the Company recorded currency exchange income of $2.1 million, discount amortization on prepaid royalty of $1.5 million, Wheels India Limited equity income of $1.0 million, and interest income of $0.6 million,

Foreign currency gain (losses) in the first six months of 2015 and 2014, primarily reflect the translation of intercompany loans at certain foreign subsidiaries denominated in currencies other than their functional currencies. Since such loans are expected to be settled in cash at some point in the future, these loans are adjusted each reporting period to reflect the current exchange rates. The $9.6 million currency exchange gain at June 30, 2015, included a $3.1 million gain relating to derivative financial instruments on such intercompany loans.

During the second quarter of 2015, the Company identified a subsidiary investment which was improperly classified as an intercompany liability. As a result of the correction of this item, the Company reclassified currency translation in other comprehensive income to currency exchange gain in other income during the current quarter. The three and six months ended June 30, 2015, included $5.7 million and $3.1 million, respectively, in currency exchange gain related to this correction.


34



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Provision (Benefit) for Income Taxes
Provision (benefit) for income taxes was as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Provision (benefit) for income taxes
$
1,515

 
$
(7,167
)
 
$
2,911

 
$
(10,518
)

Quarter: The Company recorded income tax expense of $1.5 million for the quarter ended June 30, 2015, as compared to a benefit from income taxes of $(7.2) million for the quarter ended June 30, 2014.   The Company's effective income tax rate was 26% and 22% for the three months ended June 30, 2015 and 2014, respectively.

Year-to-date: The Company recorded income tax expense of $2.9 million for the six months ended June 30, 2015, as compared to a benefit from income taxes of $(10.5) million for the six months ended June 30, 2014.   The Company's effective income tax rate was 47% and 26% for the six months ended June 30, 2015 and 2014, respectively.

The Company's 2015 income tax expense and rate differs from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of certain foreign jurisdictions that incurred a full valuation allowance on deferred tax assets created by current year projected losses and foreign income taxed in the U.S. offset by net discrete benefits related to a U.S. check the box election and tax law enactments.

The Company's 2014 income tax benefit and rate differs from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of state income tax expense, unrecognized tax benefits, foreign earnings, and domestic production activities deduction.

Net Income (Loss)
Net income (loss) was as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Net income (loss)
$
4,280

 
$
(24,891
)
 
$
3,220

 
$
(30,019
)

Quarter: Net income for the second quarter of June 30, 2015, was $4.3 million, compared to net loss of $24.9 million in 2014. For the quarters ended June 30, 2015 and 2014, basic earnings per share (as restated) were $.17 and $(.40), respectively, and diluted earnings per share (as restated) were $.17 and $(.40), respectively. The Company's net income and earnings per share were higher due to the items previously discussed.

Year-to-date: Net income for the six months ended June 30, 2015, was $3.2 million, compared to net loss of $30.0 million in 2014. For the six months ended June 30, 2015 and 2014, basic earnings per share (as restated) were $.12 and $(.37), respectively, and diluted earnings per share (as restated) were $.12 and $(.37), respectively. The Company's net income and earnings per share were higher due to the items previously discussed.


35



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Agricultural Segment Results
Agricultural segment results were as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Net sales
$
194,998

 
$
285,274

 
$
407,999

 
$
602,440

Gross profit
34,989

 
41,338

 
63,263

 
86,493

Income from operations
25,652

 
28,078

 
44,556

 
58,619


Quarter: Net sales in the agricultural market were $195.0 million for the quarter ended June 30, 2015, as compared to $285.3 million in 2014, a decrease of 32%. Overall sales experienced reductions in volume of 16% and price/mix of 9% as the agricultural market remains in a cyclical downturn. Reduced farm incomes result in lower demand for new equipment, primarily high horsepower agricultural equipment. Unfavorable currency translation decreased sales by 7%.
 
Gross profit in the agricultural market was $35.0 million for the quarter ended June 30, 2015, as compared to $41.3 million in 2014.  Income from operations in the agricultural market was $25.7 million for the quarter ended June 30, 2015, as compared to $28.1 million in 2014.  Despite the large overall sales erosion resulting from the agricultural cyclical downturn, gross margin as a percentage of net sales benefited from the Business Improvement Framework instituted in 2014. Initiatives born from the framework helped to drive headcount reductions, expenditure rationalization, increased productivity, lower raw material costs, lower warranty costs, and pricing optimization.

Year-to-date: Net sales in the agricultural market were $408.0 million for the six months ended June 30, 2015, as compared to $602.4 million in 2014, a decrease of 32%. Overall sales experienced reductions in volume of 17% and price/mix of 8% as the agricultural market remains in a cyclical downturn. Reduced farm incomes result in lower demand for new equipment, primarily high horsepower agricultural equipment. Unfavorable currency translation decreased sales by 7%.
 
Gross profit in the agricultural market was $63.3 million for the six months ended June 30, 2015, as compared to $86.5 million in 2014.  Income from operations in the agricultural market was $44.6 million for the six months ended June 30, 2015, as compared to $58.6 million in 2014.  Despite the large overall sales erosion resulting from the agricultural cyclical downturn, gross margin as a percentage of net sales benefited from the Business Improvement Framework instituted in 2014. Initiatives born from the framework helped to drive headcount reductions, expenditure rationalization, increased productivity, lower raw material costs, lower warranty costs, and pricing optimization.

36



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Earthmoving/Construction Segment Results
Earthmoving/construction segment results were as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Net sales
$
135,658

 
$
163,961

 
$
278,142

 
$
316,901

Gross profit (loss)
12,853

 
(23,559
)
 
23,498

 
(20,018
)
Income (loss) from operations
124

 
(38,235
)
 
(1,738
)
 
(49,329
)

Quarter: The Company's earthmoving/construction market net sales were $135.7 million for the quarter ended June 30, 2015, as compared to $164.0 million in 2014, a decrease of 17%. Unfavorable currency translation decreased sales by 12%. Segment sales experienced price/mix reductions of 3% as a consequence of reduced demand for Titan products used in the mining industry, including giant OTR tires. The mining industry remains in a cyclical downturn. Overall volume in the earthmoving/construction market decreased 2%.
 
Gross profit in the earthmoving/construction market was $12.9 million for the quarter ended June 30, 2015, as compared to $(23.6) million in 2014. The Company's earthmoving/construction market income from operations was $0.1 million for the quarter ended June 30, 2015, as compared to a loss of $(38.2) million in 2014. In the second quarter of 2014, the Company recorded an asset impairment of $23.2 million on machinery, equipment and molds used to produce giant mining tires. In addition, the Company recorded an inventory writedown of $11.6 million to adjust the value of mining product inventory to estimated market value. When adjusted to remove these items, the gross profit for the quarter ended June 30, 2014, was $11.2 million and loss from operations was $(3.4) million. Despite the large overall sales erosion resulting from the mining cyclical downturn, gross margin as a percentage of net sales benefited from the Business Improvement Framework instituted in 2014. Initiatives born from the framework helped to drive headcount reductions, expenditure rationalization, increased productivity, lower raw material costs, lower warranty costs, and pricing optimization.

Year-to-date: The Company's earthmoving/construction market net sales were $278.1 million for the six months ended June 30, 2015, as compared to $316.9 million in 2014, a decrease of 12%. Unfavorable currency translation decreased sales by 12%. Segment sales experienced price/mix reductions of 1% as a consequence of reduced demand for Titan products used in the mining industry, including giant OTR tires. The mining industry remains in a cyclical downturn. Decreases in mining sales were partially offset by stable demand for products used in the construction industry, which contributed to a net increase in volume of 1%.
 
Gross profit in the earthmoving/construction market was $23.5 million for the six months ended June 30, 2015, as compared to $(20.0) million in 2014. The Company's earthmoving/construction market loss from operations was $(1.7) million for the six months ended June 30, 2015, as compared to $(49.3) million in 2014. In the second quarter of 2014, the Company recorded an asset impairment of $23.2 million on machinery, equipment and molds used to produce giant mining tires. In addition, the Company recorded an inventory writedown of $11.6 million to adjust the value of mining product inventory to estimated market value. When adjusted to remove these items, the gross profit for the six months ended June 30, 2014, was $14.8 million and loss from operations was $(14.5) million. Despite the large overall sales erosion resulting from the mining cyclical downturn, gross margin as a percentage of net sales benefited from the Business Improvement Framework instituted in 2014. Initiatives born from the framework helped to drive headcount reductions, expenditure rationalization, increased productivity, lower raw material costs, lower warranty costs, and pricing optimization.
 










37



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations



Consumer Segment Results
Consumer segment results were as follows (amounts in thousands):
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2015
 
2014
 
2015
 
2014
Net sales
$
45,411

 
$
74,496


$
91,985

 
$
143,330

Gross profit
3,748

 
3,810


7,896

 
7,686

Loss from operations
(848
)
 
(1,814
)

(1,092
)
 
(3,374
)

Quarter: Consumer market net sales were $45.4 million for the quarter ended June 30, 2015, as compared to $74.5 million in 2014. Sales in the consumer market decreased primarily as the result of unfavorable currency translation at overseas facilities. Lower sales also resulted from the loss of lower margin intermediate products produced under supply agreements with various customers.

Gross profit from the consumer market was $3.7 million for the quarter ended June 30, 2015, as compared to $3.8 million in 2014. Consumer market loss from operations was $(0.8) million for the quarter ended June 30, 2015, as compared to $(1.8) million in 2014. Although sales were lower in the second quarter of 2015, compared to 2014, the Company was successful in reducing costs related to the production of consumer segment products, resulting in higher gross profit percentage and income from operations.

Year-to-date: Consumer market net sales were $92.0 million for the six months ended June 30, 2015, as compared to $143.3 million in 2014. Sales in the consumer market decreased primarily as the result of unfavorable currency translation at overseas facilities. Lower sales also resulted from the loss of lower margin intermediate products produced under supply agreements with various customers.

Gross profit from the consumer market was $7.9 million for the six months ended June 30, 2015, as compared to $7.7 million in 2014. Consumer market loss from operations was $(1.1) million for the six months ended June 30, 2015, as compared to $(3.4) million in 2014. Although sales were lower in the first six months of 2015, compared to 2014, the Company was successful in reducing costs related to the production of consumer segment products, resulting in higher gross profit and income from operations.

Segment Summary (Amounts in thousands)
Three months ended June 30, 2015
 
Agricultural
 
Earthmoving/
Construction
 
Consumer
 
Corporate
 Expenses
 
Consolidated
 Totals
Net sales
 
$
194,998

 
$
135,658

 
$
45,411

 
$

 
$
376,067

Gross profit (loss)
 
34,989

 
12,853

 
3,748

 
(537
)
 
51,053

Income (loss) from operations
 
25,652

 
124

 
(848
)
 
(17,397
)
 
7,531

Three months ended June 30, 2014
 
 

 
 

 
 

 
 

 
 

Net sales
 
$
285,274

 
163,961

 
$
74,496

 
$

 
$
523,731

Gross profit (loss)
 
41,338

 
(23,559
)
 
3,810

 
(816
)
 
20,773

Income (loss) from operations
 
28,078

 
(38,235
)
 
(1,814
)
 
(17,496
)
 
(29,467
)

38



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Six months ended June 30, 2015
 
Agricultural
 
Earthmoving/
Construction
 
Consumer
 
Corporate
 Expenses
 
Consolidated
 Totals
Net sales
 
$
407,999

 
$
278,142

 
$
91,985

 
$

 
$
778,126

Gross profit (loss)
 
63,263

 
23,498

 
7,896

 
(810
)
 
93,847

Income (loss) from operations
 
44,556

 
(1,738
)
 
(1,092
)
 
(33,386
)
 
8,340

Six months ended June 30, 2014
 
 

 
 

 
 

 
 

 
 

Net sales
 
$
602,440

 
316,901

 
$
143,330

 
$

 
$
1,062,671

Gross profit (loss)
 
86,493

 
(20,018
)
 
7,686

 
(1,411
)
 
72,750

Income (loss) from operations
 
58,619

 
(49,329
)
 
(3,374
)
 
(35,119
)
 
(29,203
)

Corporate Expenses

Quarter: Income from operations on a segment basis does not include corporate expenses totaling $17.4 million for the quarter ended June 30, 2015, as compared to $17.5 million for 2014. Corporate expenses were composed of selling and marketing expenses of approximately $7 million for each of the quarters ended June 30, 2015, and 2014, respectively; and administrative expenses of approximately $10 million for each of the quarters ended June 30, 2015, and 2014, respectively.

Year-to-date: Income from operations on a segment basis does not include corporate expenses totaling $33.4 million for the six months ended June 30, 2015, as compared to $35.1 million for 2014. Corporate expenses were composed of selling and marketing expenses of approximately $15 million and $17 million for the six months ended June 30, 2015, and 2014, respectively; and administrative expenses of approximately $18 million for each of the six months ended June 30, 2015, and 2014, respectively. Corporate selling and marketing expenses were approximately $2 million lower in the six months ended June 30, 2015 primarily due to decreased selling incentive compensation and lower information technology expenses.

MARKET RISK SENSITIVE INSTRUMENTS
The Company's risks related to foreign currencies, commodity prices and interest rates are consistent with those for 2014. For more information, see the “Market Risk Sensitive Instruments” discussion in the Company's Form 10-K for the fiscal year ended December 31, 2014.

PENSIONS
The Company has three frozen defined benefit pension plans covering certain employees or former employees of three U.S. subsidiaries. The Company also has pension plans covering certain employees of several foreign subsidiaries. These plans are described in Note 29 of the Company's Notes to Consolidated Financial Statements in the 2014 Annual Report on Form 10-K.

The Company's recorded liability for pensions is based on a number of assumptions, including discount rates, rates of return on investments, mortality rates and other factors. Certain of these assumptions are determined by the Company with the assistance of outside actuaries. Assumptions are based on past experience and anticipated future trends. These assumptions are reviewed on a regular basis and revised when appropriate. Revisions in assumptions and actual results that differ from the assumptions affect future expenses, cash funding requirements and the carrying value of the related obligations. Titan expects to contribute approximately $2.6 million to these pension plans during the remainder of 2015.



39



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows
As of June 30, 2015, the Company had $187.5 million of cash.
(amounts in thousands)
June 30,
 
December 31,
 
 
 
2015
 
2014
 
Change
Cash
$
187,484

 
$
201,451

 
$
(13,967
)

The cash balance decreased by $14.0 million from December 31, 2014, due to the following items.

Operating Cash Flows
Summary of cash flows from operating activities:
(Amounts in thousands)
Six months ended June 30,
 
 
 
2015
 
2014
 
Change
Net income (loss)
$
3,220

 
$
(30,019
)
 
$
33,239

Depreciation and amortization
36,604

 
46,815

 
(10,211
)
Mining asset impairment

 
23,242

 
(23,242
)
Mining inventory writedown

 
11,555

 
(11,555
)
Deferred income tax provision
(5,602
)
 
(18,269
)
 
12,667

Accounts receivable
(37,149
)
 
(28,989
)
 
(8,160
)
Inventories
8,721

 
(3,046
)
 
11,767

Prepaid and other current assets
2,868

 
36,061

 
(33,193
)
Accounts payable
4,423

 
15,017

 
(10,594
)
Other current liabilities
(1,988
)
 
4,937

 
(6,925
)
Other liabilities
(4,748
)
 
(12,719
)
 
7,971

Other operating activities
1,493

 
(1,530
)
 
3,023

Cash provided by operating activities
$
7,842

 
$
43,055

 
$
(35,213
)
 
In the first six months of 2015, operating activities used $7.8 million of cash, including an increase in accounts receivable of $37.1 million, partially offset by a decrease in inventories of $8.7 million. Included in net loss of $3.2 million were noncash charges for depreciation and amortization of $36.6 million.

In the first six months of 2014, operating activities provided cash of $43.1 million, including an increase in accounts payable of $15.0 million and a decrease in prepaid and other current assets of $36.1 million, which included a $36.0 million tax refund received in the first quarter of 2014. Positive cash inflows were offset by an increase in accounts receivable of $29.0 million. Included in net loss of $30.0 million were noncash charges for depreciation and amortization of $46.8 million, mining asset impairment charge of $23.2 million, and mining inventory writedown of $11.6 million.

Operating cash flows decreased $35.2 million when comparing the first six months of 2015, to the first six months of 2014. The net income in the first six months of 2015 was a $33.2 million increase from the loss in the first six months of 2014. When comparing the first six months of 2015 to the first six months of 2014, cash flows from prepaid and other current assets and accounts payable decreased $33.2 million and $10.6 million, respectively, which was partially offset by increased cash flows from inventories of $11.8 million.

The Company's inventory balance was lower at June 30, 2015, as compared to December 31, 2014. Days sales in inventory increased to 76 days at June 30, 2015, from 68 days at December 31, 2014. The Company's accounts receivable balance was higher at June 30, 2015, as compared to December 31, 2014. Days sales outstanding increased to 54 days at June 30, 2015, from 47 days at December 31, 2014.


40



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Investing Cash Flows
Summary of cash flows from investing activities:
(Amounts in thousands)
Six months ended June 30,
 
 
 
2015
 
2014
 
Change
Capital expenditures
$
(22,505
)
 
$
(30,883
)
 
$
8,378

Acquisitions

 
(13,395
)
 
13,395

Decrease in restricted cash deposits

 
14,268

 
(14,268
)
Other investing activities
2,708

 
3,241

 
(533
)
Cash used for investing activities
$
(19,797
)
 
$
(26,769
)
 
$
6,972

 
Net cash used for investing activities was $19.8 million in the first six months of 2015, as compared to $26.8 million in the first six months of 2014. The Company invested a total of $22.5 million in capital expenditures in the first six months of 2015, compared to $30.9 million in 2014. The 2015 and 2014 expenditures represent various equipment purchases and improvements to enhance production capabilities of Titan's existing business and maintaining existing equipment. In the first six months of 2014, cash used for acquisitions of $13.4 million represents additional ownership percentage of Voltyre-Prom, which also decreased restricted cash deposits by $14.3 million.

Financing Cash Flows
Summary of cash flows from financing activities:
(Amounts in thousands)
Six months ended June 30,
 
 
 
2015
 
2014
 
Change
Proceeds from borrowings
$
13,239

 
$
6,217

 
$
7,022

Proceeds from exercise of stock options
144

 
141

 
3

Payment of financing fees

 
(33
)
 
33

Payment on debt
(8,517
)
 
(53,393
)
 
44,876

Excess tax benefit from stock-based compensation
(538
)
 
(45
)
 
(493
)
Dividends paid
(538
)
 
(536
)
 
(2
)
Cash provided by (used for) financing activities
$
3,790

 
$
(47,649
)
 
$
51,439

 
In the first six months of 2015, $3.8 million of cash was provided by financing activities. This cash was primarily provided by proceeds from borrowing of $13.2 million, partially offset by payment of debt of $8.5 million.
 
In the first six months of 2014, $47.6 million of cash was used for financing activities. This cash was primarily used for payment on debt of $53.4 million, partially offset by proceeds from borrowings of $6.2 million.

Financing cash flows increased by $51.4 million when comparing the first six months of 2015 to 2014. This increase was primarily the result of the additional proceeds from borrowings.

Other Issues
The Company’s business is subject to seasonal variations in sales that affect inventory levels and accounts receivable balances.  Historically, Titan tends to have higher production levels in the first and second quarters. 


41



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

Debt Restrictions
The Company’s revolving credit facility (credit facility) contains various restrictions, including:
Limits on dividends and repurchases of the Company’s stock.
Restrictions on the ability of the Company to make additional borrowings, or to consolidate, merge or otherwise fundamentally change the ownership of the Company.
Limitations on investments, dispositions of assets and guarantees of indebtedness.
Other customary affirmative and negative covenants.
 
These restrictions could limit the Company’s ability to respond to market conditions, to provide for unanticipated capital investments, to raise additional debt or equity capital, to pay dividends or to take advantage of business opportunities, including future acquisitions.

Liquidity Outlook
At June 30, 2015, the Company had $187.5 million of cash and cash equivalents and no outstanding borrowings on the Company's $150 million credit facility. Titan's availability under this domestic facility may be less than $150 million as a result of eligible accounts receivable and inventory balances at certain of its domestic subsidiaries. At June 30, 2015, the amount available was $97.5 million as a result of the Company's decrease in sales which impacted both accounts receivable and inventory balances. The cash and cash equivalents balance of $187.5 million includes $58.8 million held in foreign countries. The Company's current plans do not demonstrate a need to repatriate the foreign amounts to fund U.S. operations. However, if foreign funds were needed for U.S. operations, the Company would be required to accrue and pay taxes to repatriate the funds.
 
Capital expenditures for the remainder of 2015 are forecasted to be approximately $25 million to $30 million.  Cash payments for interest are currently forecasted to be approximately $16 million for the remainder of 2015 based on June 30, 2015 debt balances. The forecasted interest payments are comprised primarily of the semi-annual payment of $13.8 million (due October 1) for the 6.875% senior secured notes.
 
In the future, Titan may seek to grow by making acquisitions which will depend on the ability to identify suitable acquisition candidates, to negotiate acceptable terms for their acquisition and to finance those acquisitions.
 
Subject to the terms of indebtedness, the Company may finance future acquisitions with cash on hand, cash from operations, additional indebtedness and/or by issuing additional equity securities.
 
Cash on hand, anticipated internal cash flows from operations and utilization of remaining available borrowings are expected to provide sufficient liquidity for working capital needs, capital expenditures and potential acquisitions.

RECENTLY ISSUED ACCOUNTING STANDARDS
In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This update amends existing guidance to require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company is currently assessing the impact that adopting this new accounting guidance will have on the Company's consolidated financial statements.

MARKET CONDITIONS AND OUTLOOK
In the first half of 2015, Titan experienced lower sales when compared to the sales levels in the first half of 2014.  The lower sales levels were primarily the result of decreased demand for high horsepower equipment used in the agricultural market, which remains in a cyclical downturn, and unfavorable currency translation. These decreases were partially offset by increased demand for products used in the construction industry. In addition, competitive pressures and lower raw material prices, particularly in tire manufacturing, negatively impacted sales.

Energy, raw material and petroleum-based product costs have been volatile and may negatively impact the Company’s margins.  Many of Titan’s overhead expenses are fixed; therefore, lower seasonal trends may cause negative fluctuations in quarterly profit margins and affect the financial condition of the Company.

42



TITAN INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

 
AGRICULTURAL MARKET OUTLOOK
Agricultural market sales were lower in the first half of 2015 when compared to the first half of 2014 due to decreased demand for high horsepower equipment used in the agricultural market.  Farm net income is expected to be reduced in 2015 due to lower commodity prices. Lower income levels are putting pressure on the demand for large farm equipment. In addition, large equipment sales have deteriorated significantly after a robust cycle in recent years past. The mix shift to lower horsepower tractors has eroded both sales and gross margin. Many variables, including weather, commodity prices, export markets and future government policies and payments can greatly influence the overall health of the agricultural economy.

EARTHMOVING/CONSTRUCTION MARKET OUTLOOK
Earthmoving/construction market sales were lower in the first half of 2015 when compared to the first half of 2014 primarily due to unfavorable currency translation. Reduced demand for larger products used in the mining industry is expected to continue for the remainder of 2015 as weakness continues in the mining industry. Demand for small earthmoving/construction equipment used in the housing and commercial construction sectors has improved. Although metals, oil and gas prices may fluctuate in the short-term, in the long-term, these prices are expected to remain at levels that are attractive for continued investment, which should help support future earthmoving and mining sales.  The earthmoving/construction segment is affected by many variables, including commodity prices, road construction, infrastructure, government appropriations, housing starts and other macroeconomic drivers.

CONSUMER MARKET OUTLOOK
Consumer market sales were lower in the first half of 2015, when compared to the first half of 2014. Sales in the consumer market decreased primarily as the result of unfavorable currency translation at overseas facilities. The consumer market is expected to remain highly competitive for the remainder of 2015.

43



TITAN INTERNATIONAL, INC.

PART I. FINANCIAL INFORMATION

Item 3. Quantitative and Qualitative Disclosures About Market Risk

See the Company's 2014 Annual Report filed on Form 10-K (Item 7A). There has been no material change in this information.


Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures
Titan’s management, including the principal executive officer and principal financial officer, evaluated the effectiveness of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Form 10-Q. Based on this evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2015, because of a material weakness in internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) previously disclosed in the Company's 2014 Form 10-K.

Previously Disclosed Material Weakness
Management previously reported a material weakness in the Company's internal control over financial reporting in the Form 10-K for the year ended December 31, 2014. This material weakness related to accounting complexities, insufficient resources, and the challenge of financial controller continuity at select international locations. A material weakness is a deficiency or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

Management is actively taking steps to remediate the previously identified material weakness. Additional resources have been added at international locations. The structure of the corporate accounting group has been reviewed and a new structure identified which will address deficiencies with the structure, strengthen controls and include further segregation of duties. Management is in the process of implementing this structure and has been successful in recruiting the proper resources for several key roles.

Changes in Internal Controls
Other than the remediation steps described above, there were no material changes in internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the second quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Also, projections of any evaluations of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


44



TITAN INTERNATIONAL, INC.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is a party to routine legal proceedings arising out of the normal course of business. Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the Company believes at this time that none of these actions, individually or in the aggregate, will have a material adverse effect on the consolidated financial condition, results of operations or cash flows of the Company. However, due to the difficult nature of predicting unresolved and future legal claims, the Company cannot anticipate or predict the material adverse effect on its consolidated financial condition, results of operations or cash flows as a result of efforts to comply with, or its liabilities pertaining to, legal judgments.


Item 1A. Risk Factors

See the Company's 2014 Annual Report filed on Form 10-K/A (Item 1A) filed on November 6, 2015. There has been no material change in this information.


Item 6. Exhibits

31.1    Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2    Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002




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.

 
TITAN INTERNATIONAL, INC.
 
(Registrant)

Date:
November 5, 2015
By:
/s/ JOHN HRUDICKA
 
 
John Hrudicka
 
 
Chief Financial Officer
 
 
 
(Principal Financial Officer)




45