TWI 03.31.2013 10-Q


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended: March 31, 2013
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)
Illinois
 
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
 
April 22, 2013
 
 
 
Common stock, no par value per share
 
53,522,670




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
 
March 31,
 
2013
 
2012
Net sales
$
578,387

 
$
463,088

Cost of sales
481,636

 
369,725

Gross profit
96,751

 
93,363

Selling, general and administrative expenses
42,443

 
30,835

Research and development expenses
2,702

 
1,508

Royalty expense
3,723

 
2,349

Income from operations
47,883

 
58,671

Interest expense
(10,441
)
 
(6,295
)
Convertible debt conversion charge
(7,273
)
 

Other income
1,419

 
3,111

Income before income taxes
31,588

 
55,487

Provision for income taxes
12,199

 
20,093

Net income
19,389

 
35,394

Net loss attributable to noncontrolling interests
(86
)
 
(25
)
Net income attributable to Titan
$
19,475

 
$
35,419

 
 
 
 
Earnings per common share:
 

 
 

Basic
$
.38

 
$
.84

Diluted
$
.30

 
$
.68

Average common shares and equivalents outstanding:
 
 
 

Basic
51,816

 
42,105

Diluted
66,614

 
53,450

 
 
 
 
Dividends declared per common share:
$
.005

 
$
.005

 










See accompanying Notes to Consolidated Financial Statements.

1



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

 
Three months ended
 
March 31,
 
2013
 
2012
Net income
$
19,389

 
$
35,394

Unrealized gain (loss) on investments, net of tax of $0 and $3,475, respectively
(3
)
 
5,917

Currency translation adjustment, net
504

 
3,567

Pension liability adjustments, net of tax of $527 and $491, respectively
951

 
836

Comprehensive income
20,841

 
45,714

Net comprehensive loss attributable to noncontrolling interests
(86
)
 
(25
)
Comprehensive income attributable to Titan
$
20,927

 
$
45,739


 
 
 
 
 
 
 
 
































See accompanying Notes to Consolidated Financial Statements.

2



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

 
March 31,
 
December 31,
Assets
2013
 
2012
Current assets
 
 
 
Cash and cash equivalents
$
508,447

 
$
189,114

  Accounts receivable, net
329,368

 
297,798

Inventories
378,367

 
366,385

Deferred income taxes
32,208

 
50,558

Prepaid and other current assets
74,867

 
75,140

Total current assets
1,323,257

 
978,995

Property, plant and equipment, net
566,549

 
568,344

Goodwill
25,101

 
24,941

Deferred income taxes
25,508

 
8,383

Other assets
113,934

 
112,444

Total assets
$
2,054,349

 
$
1,693,107

Liabilities and Equity
 

 
 

Current liabilities
 

 
 

Short-term debt
$
230,658

 
$
145,801

Accounts payable
210,585

 
180,065

Other current liabilities
128,904

 
135,835

Total current liabilities
570,147

 
461,701

Long-term debt
634,171


441,438

Deferred income taxes
61,071

 
62,259

Other long-term liabilities
100,044

 
107,096

Total liabilities
1,365,433

 
1,072,494

Equity
 

 
 

Titan stockholders' equity
 
 
 
  Common stock (no par, 120,000,000 shares authorized, 55,253,092 and 50,350,048 issued,
  respectively)

 

Additional paid-in capital
554,488

 
507,199

Retained earnings
180,936

 
161,729

Treasury stock (at cost, 1,738,661 and 1,787,844 shares, respectively)
(16,004
)
 
(16,445
)
Treasury stock reserved for deferred compensation
(1,075
)
 
(1,075
)
Accumulated other comprehensive loss
(55,502
)
 
(56,954
)
Total Titan stockholders’ equity
662,843

 
594,454

Noncontrolling interests
26,073

 
26,159

Total equity
688,916

 
620,613

Total liabilities and equity
$
2,054,349

 
$
1,693,107

 




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, 2013
48,562,204

 
$
507,199

 
$
161,729

 
$
(16,445
)
 
$
(1,075
)
 
$
(56,954
)
 
$
594,454

 
$
26,159

 
$
620,613

Net income


 


 
19,475

 


 


 


 
19,475

 
(86
)
 
19,389

Currency translation adjustment
 
 
 
 
 
 
 
 
 
 
504

 
504

 
 
 
504

Pension liability adjustments, net of tax


 


 


 


 


 
951

 
951

 
 
 
951

Unrealized loss on investment


 


 


 


 


 
(3
)
 
(3
)
 
 
 
(3
)
Dividends on common stock


 


 
(268
)
 


 


 


 
(268
)
 
 
 
(268
)
Note conversion
4,903,044

 
45,903

 
 
 
 
 
 
 
 
 
45,903

 
 
 
45,903

Exercise of stock options
42,253

 
360

 


 
379

 


 


 
739

 
 
 
739

Stock-based compensation


 
963

 


 


 


 


 
963

 
 
 
963

Tax benefit related to stock-based compensation


 
(29
)
 


 


 


 


 
(29
)
 
 
 
(29
)
Issuance of treasury stock under 401(k) plan
6,930

 
92

 


 
62

 


 


 
154

 
 
 
154

Balance March 31, 2013
53,514,431

 
$
554,488

 
$
180,936

 
$
(16,004
)
 
$
(1,075
)
 
$
(55,502
)
 
$
662,843

 
$
26,073

 
$
688,916

 
















See accompanying Notes to Consolidated Financial Statements.

4



TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(All amounts in thousands)
 
Three months ended March 31,
Cash flows from operating activities:
2013
 
2012
Net income
$
19,389

 
$
35,394

Adjustments to reconcile net income to net cash
 

 
 

provided by operating activities:
 

 
 

Depreciation and amortization
19,984

 
11,843

Amortization of debt premium
(218
)
 

Deferred income tax provision
37

 
(8,091
)
Convertible debt conversion charge
7,273

 

Stock-based compensation
963

 
791

Excess tax benefit from stock options exercised
29

 
(6
)
Issuance of treasury stock under 401(k) plan
154

 
139

(Increase) decrease in assets:
 

 
 

Accounts receivable
(34,978
)
 
(54,988
)
Inventories
(16,310
)
 
(22,449
)
Prepaid and other current assets
(870
)
 
(3,033
)
Other assets
1,330

 
(3,089
)
Increase (decrease) in liabilities:
 

 
 

Accounts payable
33,902

 
35,334

Other current liabilities
(4,266
)
 
11,580

Other liabilities
(5,139
)
 
17,223

Net cash provided by operating activities
21,280

 
20,648

Cash flows from investing activities:
 

 
 

Capital expenditures
(21,174
)
 
(8,155
)
Other
(219
)
 
108

Net cash used for investing activities
(21,393
)
 
(8,047
)
Cash flows from financing activities:
 

 
 

Proceeds from borrowings
345,313

 

Payment on debt
(18,059
)
 
(12,444
)
Term loan borrowing
10,818

 

Convertible note conversion
(14,090
)
 

Proceeds from exercise of stock options
739

 
370

Excess tax benefit from stock options exercised
(29
)
 
6

Payment of financing fees
(5,064
)
 

Dividends paid
(243
)
 
(211
)
Net cash provided by (used for) financing activities
319,385

 
(12,279
)
Effect of exchange rate changes on cash
61

 
(184
)
Net increase in cash and cash equivalents
319,333

 
138

Cash and cash equivalents, beginning of period
189,114

 
129,170

Cash and cash equivalents, end of period
$
508,447

 
$
129,308

 
 
 
 
Supplemental information:
 
 
 
Interest paid
$
15,535

 
$
11,600

Income taxes paid
$
10,003

 
$
9,986

Noncash investing and financing information:
 
 
 
Issuance of common stock for convertible debt payment
$
45,903

 
$

 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 March 31, 2013, and the results of operations and cash flows for the three months ended March 31, 2013 and 2012.

Accounting policies have continued without significant change and are described in the Description of Business and Significant Accounting Policies contained in the Company's 2012 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 2012 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 7.875% senior secured notes due 2017 (senior secured notes) and 5.625% convertible senior subordinated notes due 2017 (convertible notes) are carried at cost of $545.1 million and $60.2 million at March 31, 2013, respectively. The fair value of these notes at March 31, 2013, as obtained through independent pricing sources, was approximately $586.9 million for the senior secured notes and approximately $134.7 million for the convertible notes. The increase in the fair value of the convertible notes is due primarily to the increased value of the underlying common stock.

Cash dividends
The Company declared cash dividends of $.005 per share of common stock for each of the three months ended March 31, 2013, and 2012. The first quarter 2013 cash dividend of $.005 per share of common stock was paid April 15, 2013, to stockholders of record on March 28, 2013.

Interest paid
Titan paid $15.5 million and $11.6 million for interest for the three months ended March 31, 2013 and 2012, respectively.
 
Income taxes paid
Titan paid $10.0 million and $10.0 million for income taxes for the three months ended March 31, 2013 and 2012, respectively.
 
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.

Subsequent Events
The Company has evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements through the date of issuance of the financial statements.

6



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


2. ACQUISITIONS

Acquisition of Titan Europe Plc.
On October 31, 2012, Titan acquired over 97% of the outstanding stock of Titan Europe Plc (Titan Europe) and in December 2012, the remaining 3% interest was acquired. Titan Europe is an international engineering group which designs and manufactures wheels, undercarriage components and assemblies for tracked and wheeled "off-road vehicles". The Titan Europe acquisition allowed the Company to expand its global presence and expand its product line. Prior to the acquisition, Titan held a 21.8% ownership percentage in Titan Europe. Titan Europe shareholders received one share of new Titan common stock for every 11 Titan Europe shares held. A total of 6,257,051 new shares of Titan were issued with a value of $121.8 million. In addition, Titan paid cash of $5.6 million for option payouts and partial shares. Titan's previous investment in Titan Europe had a fair value on the acquisition date of $31.7 million based on Titan Europe's stock price on the AIM market in London. Total consideration including the value of stock issued, cash payments, and the fair value of previously held Titan Europe shares totaled $159.1 million. A gain of $26.7 million was recorded on Titan's previously held interest in Titan Europe which was recorded as Noncash Titan Europe Plc gain in the consolidated statement of operations. This gain was previously recorded in other comprehensive income.

The purchase price was allocated to the assets acquired and liabilities assumed based on their fair values. Inventory was valued using the comparative sales method. Real and personal property was valued at fair value. The Company continues to evaluate the preliminary purchase price allocation, primarily the value of certain deferred taxes and property, plant & equipment, and may revise the purchase price allocation in future periods as these estimates are finalized.

The purchase price allocation of the Titan Europe acquisition consisted of the following (amounts in thousands):
Cash
$
39,122

Accounts receivable
128,585

Inventories
178,407

Deferred income taxes - current asset
22,068

Prepaid & other current assets
21,745

Property, plant & equipment
217,309

Investment in Wheels India Limited
36,804

Other assets
8,414

Short term debt
(96,822
)
Accounts payable
(142,752
)
Other current liabilities
(51,045
)
Long term debt
(158,183
)
Deferred income taxes - noncurrent liability
(12,636
)
Other noncurrent liabilities
(31,874
)
Net assets acquired
$
159,142


Pro forma financial information
The following unaudited pro forma financial information gives effect to the acquisition of Titan Europe Plc as if the acquisition had taken place on January 1, 2012. The pro forma financial information for Titan Europe Plc was derived from the historical accounting records of Titan Europe. The Titan Europe results were adjusted to reflect additional depreciation.
 

7



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

Pro forma financial information is as follows (in thousands, except per share data):
 
 
Three Months ended March 31, 2012
Net sales
 
$
664,695

Net income
 
40,016

Net income attributable to Titan
 
40,041

Basic earnings per share
 
$
.83

Diluted earnings per share
 
.69


The pro forma information is presented for illustrative purposes only and may not be indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2012, nor is it necessarily indicative of Titan's future consolidated results of operations or financial position.


3. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following (amounts in thousands):
 
March 31,
2013
 
December 31,
2012
Accounts receivable
$
335,514

 
$
302,928

Allowance for doubtful accounts
(6,146
)
 
(5,130
)
Accounts receivable, net
$
329,368

 
$
297,798

 
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):
 
March 31,
2013
 
December 31,
2012
Raw material
$
140,528

 
$
153,308

Work-in-process
62,342

 
69,030

Finished goods
181,521

 
154,785

 
384,391

 
377,123

Adjustment to LIFO basis
(6,024
)
 
(10,738
)
 
$
378,367

 
$
366,385

 
At March 31, 2013, approximately 17% of the Company's inventories were valued under the last-in, first-out (LIFO) method. At December 31, 2012, approximately 16% 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. The LIFO reserve decreased primarily as a result of the composition of inventory. An overall increase in raw material relative to total inventory resulted in a greater decrease in the FIFO cost versus the LIFO cost.



8



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):
 
March 31,
2013
 
December 31, 2012
Land and improvements
$
65,223

 
$
66,012

Buildings and improvements
192,242

 
192,135

Machinery and equipment
569,814

 
555,261

Tools, dies and molds
117,163

 
117,341

Construction-in-process
57,976

 
49,136

 
1,002,418

 
979,885

Less accumulated depreciation
(435,869
)
 
(411,541
)
 
$
566,549

 
$
568,344

 
Depreciation on fixed assets for the three months ended March 31, 2013 and 2012, totaled $19.0 million and $11.4 million, respectively.

Included in the total building and improvements are capital leases of $4.3 million and $4.5 million at March 31, 2013, and December 31, 2012, respectively. Included in the total of machinery and equipment are capital leases of $35.5 million and $36.0 million at March 31, 2013, and December 31, 2012, respectively.


6. GOODWILL AND INTANGIBLE ASSETS

Changes in goodwill consisted of the following (amounts in thousands):
 
2013
 
2012
 
 
 
Earthmoving/
 
 
 
 
 
Earthmoving/
 
 
 
Agricultural
 
Construction
 
 
 
Agricultural
 
Construction
 
 
 
Segment
 
Segment
 
Total
 
Segment
 
Segment
 
Total
Goodwill balance, January 1
$
11,522

 
$
13,419

 
$
24,941

 
$
19,841

 
$

 
$
19,841

   Acquisition adjustment

 

 

 
(10,134
)
 

 
(10,134
)
   Foreign currency translation
105

 
55

 
160

 
585

 

 
585

Goodwill balance, March 31
$
11,627

 
$
13,474

 
$
25,101

 
$
10,292

 
$

 
$
10,292

 
The Company's agricultural segment goodwill balance is related to the acquisition of Goodyear's Latin American farm tire business which included the Sao Paulo, Brazil manufacturing facility. The Company's earthmoving/construction goodwill balance is related to the acquisition of Planet Group in August 2012. 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. The Company's consumer segment does not have any recorded goodwill.


9



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)
 
March 31, 2013
 
December 31, 2012
Amortizable intangible assets:
 
 
 
 
 
     Customer relationships
14.2
 
19,430

 
19,357

     Patents, trademarks and other
2.4
 
3,670

 
3,658

          Total at cost
 
 
23,100

 
23,015

     Less accumulated amortization
 
 
(2,416
)
 
(1,807
)
 
 
 
20,684

 
21,208

 
Amortization related to intangible assets for the three months ended March 31, 2013 and 2012, totaled $0.6 million and $0.0 million, respectively. Intangible assets are included as a component of other assets in the consolidated condensed balance sheet.

The estimated aggregate amortization expense at March 31, 2013, is as follows (amounts in thousands):
April 1 - December 31, 2013
$
1,804

2014
2,381

2015
1,960

2016
1,312

2017
1,250

Thereafter
11,977

 
$
20,684



7. WARRANTY

Changes in the warranty liability consisted of the following (amounts in thousands):
 
2013
 
2012
Warranty liability, January 1
$
27,482

 
$
17,659

Provision for warranty liabilities
7,946

 
7,773

Warranty payments made
(7,625
)
 
(5,899
)
Warranty liability, March 31
$
27,803

 
$
19,533


The Company provides limited warranties on workmanship on 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.












10



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):
 
March 31,
2013
 
December 31,
2012
7.875% senior secured notes due 2017 - Issued 2013
$
325,000

 
$

Unamortized premium based on 7.875% notes issued 2013
20,095

 

7.875% senior secured notes due 2017 - Issued 2010
200,000

 
200,000

European credit facilities
195,259

 
202,097

5.625% convertible senior subordinated notes due 2017
60,161

 
112,881

Other debt
61,077

 
69,151

Capital leases
3,237

 
3,110

 
864,829

 
587,239

Less amounts due within one year
230,658

 
145,801

 
$
634,171

 
$
441,438

 
Aggregate maturities of long-term debt at March 31, 2013, were as follows (amounts in thousands):
April 1 - December 31, 2013
$
227,149

2014
19,561

2015
9,964

2016
15,228

2017
590,255

Thereafter
2,672

 
$
864,829

 
7.875% senior secured notes due 2017
The Company’s 7.875% senior secured notes (senior secured notes) are due October 2017.  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 outstanding balance was $525.0 million at March 31, 2013 including $200.0 million issued in 2010 and $325.0 million issued in 2013. The 2013 amount was issued at a premium. Otherwise, all the notes have the same terms. The senior secured notes issued in 2013 have an imputed interest rate of 6.277% and an unamortized premium balance of $20.1 million at March 31, 2013.

Titan Europe credit facilities
These credit facilities consist primarily of a facility from Intesa Sanpaolo S.p.A and Unicredit Corporate Banking S.p.A totaling $109.3 million at March 31, 2013. This facility contains various covenants. These covenants are tested on six month intervals and the Company would be noncompliant if the covenants were not met for two successive six month periods. The Company did not meet certain financial covenants at December 31, 2012. The Company was in compliance with these covenants as of March 31, 2013, as the covenants were not met for only one of two testing periods. The credit facilities containing these covenants were paid off in April of 2013.

The Titan Europe credit facilities also contain borrowings from various institutions totaling $86.0 million at March 31, 2013. Maturity dates on this debt range from less than one year to eleven years and interest rates range from 2% to 6.9%. The European facilities are secured by the assets of select European subsidiaries.
 


11



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

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 March 31, 2013.

In the first quarter of 2013, the Company closed an Exchange Agreement with a note holder of the convertible notes. The two parties privately negotiated an agreement to exchange approximately $52.7 million in aggregate principal amount of the convertible notes for approximately 4.9 million shares of the Company's common stock plus a cash payment totaling $14.2 million. In connection with this exchange, the Company recognized a charge of $7.3 million in accordance with accounting standards related to debt conversions.

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 Titan and certain of its domestic subsidiaries.  During the first three months of 2013 and at March 31, 2013, there were no borrowings under the credit facility.

Other debt
Brazil Term Loan
In May 2011, the Company entered into a two-year, unsecured $10.0 million Term Loan with Bank of America, N.A. (BoA Term Loan) to provide working capital for the Sao Paulo, Brazil manufacturing facility. Borrowings under the BoA Term Loan bear interest at a rate equal to London Interbank Offered Rate (LIBOR) plus 200 basis points. The BoA Term Loan shall be a minimum of $5.0 million with the option for an additional $5.0 million loan for a maximum of $10.0 million. The BoA Term Loan is due May 2013. The Company entered into an interest rate swap agreement and cross currency swap transaction with Bank of America Merrill Lynch Banco Multiplo S.A. that is designed to convert the outstanding $5.0 million US Dollar based LIBOR loan to a Brazilian Real based Certificate of Deposit Interbank (CDI) loan. See Note 9 for additional information. As of March 31, 2013, the Company had $5.0 million outstanding on this loan and the interest rate including the effect of the swap agreement was approximately 9%.

Brazil Revolving Line of Credit
The Company's wholly-owned Brazilian subsidiary, Titan Pneus Do Brasil Ltda (Titan Brazil), has a revolving line of credit (Brazil line of credit) established with Bank of America Merrill Lynch Banco Multiplo S.A. in May 2011. Titan Brazil could borrow up to 16.0 million Brazilian Reais, which equates to approximately $7.9 million dollars as of March 31, 2013, for working capital purposes. Under the terms of the Brazil line of credit, borrowings, if any, bear interest at a rate of 1 month LIBOR plus 247 basis points. During the first three months of 2013 and at March 31, 2013 there were no borrowings outstanding on this line of credit.

Brazil Other Debt
Titan Brazil has working capital loans for the Sao Paulo, Brazil manufacturing facility totaling $6.2 million at March 31, 2013.

Australia Other Debt
Titan National Australia Holdings has capital leases totaling $1.6 million at March 31, 2013.

Titan Europe Other Debt
Titan Europe has overdraft facilities totaling $48.3 million at March 31, 2013.

Titan Europe Capital Leases
Titan Europe has capital lease obligations totaling $3.2 million at March 31, 2013.



12



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

9. DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses financial derivatives to mitigate its exposure to volatility in the interest rate and foreign currency exchange rate in Brazil. The Company uses these derivative instruments to hedge exposure in the ordinary course of business and does not invest in derivative instruments for speculative purposes. In order to reduce interest rate and foreign currency risk on the BoA Term Loan, the Company entered into an interest rate swap agreement and cross currency swap transactions with Bank of America Merrill Lynch Banco Multiplo S.A. that are designed to convert the outstanding $5.0 million US Dollar based LIBOR loan to a Brazilian Real based CDI loan. The Company has not designated these agreements as a hedging instrument. Changes in the fair value of the cross currency swap are recorded in other income (expense) and changes in the fair value of the interest rate swap agreement are recorded as interest expense (or gain as an offset to interest expense). For the three months ended March 31, 2013, the Company recorded $(0.1) million of other expense and $0.1 million of interest expense related to these derivatives.

The Company also used derivative financial instruments to manage its exposure to market risks from changes in interest rates in Europe. 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 taken to interest expense. For the three months ended March 31, 2013, the Company recorded an offset to interest expense of $1.2 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 March 31, 2013, future minimum rental commitments under noncancellable operating leases with initial terms of at least one year were as follows (amounts in thousands):
April 1 - December 31, 2013
$
6,196

2014
5,302

2015
4,091

2016
3,913

2017
6,119

Total future minimum lease payments
$
25,621


At March 31, 2013, the Company had assets held as capital leases with a net book value of $9.8 million included in property, plant and equipment. Total future capital lease obligations relating to these leases are as follows (amounts in thousands):
April 1 - December 31, 2013
$
1,103

2014
961

2015
588

2016
319

2017
132

Thereafter
134

Total future capital lease obligation payments
3,237

Less amount representing interest
(161
)
Present value of future capital lease obligation payments
$
3,076




13



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

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 $1.5 million to the frozen defined pension plans during the three months ended March 31, 2013 and expects to contribute approximately $5.3 million to the frozen pension plans during the remainder of 2013.

The components of net periodic pension cost consisted of the following (amounts in thousands):
 
Three months ended
 
March 31,
 
2013
 
2012
Service cost
$
172

 
$

Interest cost
1,355

 
1,133

Expected return on assets
(1,396
)
 
(1,252
)
Amortization of unrecognized prior service cost
34

 
34

Amortization of net unrecognized loss
1,318

 
1,293

      Net periodic pension cost
$
1,483

 
$
1,208



12. 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 $3.7 million and $2.3 million for the three months ended March 31, 2013 and 2012, respectively.


13. OTHER INCOME

Other income consisted of the following (amounts in thousands):
 
Three months ended
 
March 31,
 
2013
 
2012
Discount amortization on prepaid royalty
$
916

 
$
1,039

Interest income
401

 
205

Building rental income
180

 
175

Wheels India Limited equity loss
(185
)
 

Investment gain (loss) related to contractual obligation investments
(120
)
 
1,268

Other income
227

 
424

 
$
1,419

 
$
3,111


The income (loss) of the investment in Wheels India Limited is being recorded on a one month lag due to the availability of required financial information from the majority owner.



14



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

14. INCOME TAXES

The Company recorded income tax expense of $12.2 million and $20.1 million for the quarters ended March 31, 2013 and 2012, respectively. The Company's effective income tax rate was 39% and 36% for the three months ended March 31, 2013 and 2012, respectively.

The Company's 2013 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 state tax expense, expense for unrecognized tax benefits, foreign earnings, domestic production activities deduction, and tax deductible expenses related to the convertible bond repurchase.

Accounting standards for income taxes provide that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination. The Company's unrecognized tax benefits were $15.3 million and $14.3 million as of March 31, 2013 and December 31, 2012, respectively. As of March 31, 2013, $12.2 million would affect income tax expense if recognized. The majority of the increase in unrecognized tax benefits relates to potential state tax exposures. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. The amount of accrued interest and penalties included in the unrecognized tax benefits at March 31, 2013 and December 31, 2012 was $2.5 million and $2.4 million, respectively.


15. EARNINGS PER SHARE

Earnings per share (EPS) were as follows (amounts in thousands, except per share data):
 
Three months ended
 
March 31, 2013
 
March 31, 2012
 
Titan Net income
 
Weighted-
average shares
 
Per share
 amount
 
Titan Net income
 
Weighted-
average shares
 
Per share
 amount
Basic earnings per share
$
19,475

 
51,816

 
$
0.38

 
$
35,419

 
42,105

 
$
0.84

   Effect of stock options/trusts

 
299

 
 

 

 
274

 
 

   Effect of convertible notes
772

 
14,499

 
 
 
1,143

 
11,071

 
 
Diluted earnings per share
$
20,247

 
66,614

 
$
0.30

 
$
36,562

 
53,450

 
$
0.68

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
There were no stock options/trusts or convertible notes that were antidilutive for the periods presented.


16. 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.



15



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

17. SEGMENT INFORMATION

The table below presents information about certain revenues and income from operations used by the chief executive officer of the Company for the three months ended March 31, 2013 and 2012 (amounts in thousands):
 
Three months ended
 
March 31,
 
2013
 
2012
Revenues from external customers
 
 
 
Agricultural
$
310,553

 
$
295,805

Earthmoving/construction
209,616

 
104,568

Consumer
58,218

 
62,715

 
$
578,387

 
$
463,088

Gross profit
 

 
 

Agricultural
$
54,070

 
$
66,092

Earthmoving/construction
37,495

 
22,347

Consumer
6,147

 
5,699

Unallocated corporate
(961
)
 
(775
)
 
$
96,751

 
$
93,363

Income from operations
 

 
 

Agricultural
$
41,615

 
$
60,663

Earthmoving/construction
20,679

 
20,401

Consumer
3,142

 
3,102

Unallocated corporate
(17,553
)
 
(25,495
)
      Income from operations
47,883

 
58,671

 
 
 
 
Interest expense
(10,441
)
 
(6,295
)
Convertible debt conversion charge
(7,273
)
 

Other income, net
1,419

 
3,111

      Income before income taxes
$
31,588

 
$
55,487


Assets by segment were as follows (amounts in thousands):
 
March 31,
2013
 
December 31,
2012
Total assets
 

 
 

Agricultural
$
739,463

 
$
626,454

Earthmoving/construction
783,287

 
838,806

Consumer
153,410

 
142,170

Unallocated corporate
378,189

 
85,677

 
$
2,054,349

 
$
1,693,107

 

16



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


18. 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):
 
March 31, 2013
 
December 31, 2012
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
Contractual obligation investments
$
7,289


$
7,289


$


$

 
$
7,408

 
$
7,408

 
$

 
$

Interest rate swap
961

 

 
961

 

 
1,048

 

 
1,048

 

Preferred stock
250

 

 

 
250

 
250

 

 

 
250

Derivative financial instruments liability
(6,011
)
 

 
(6,011
)
 

 
(7,376
)
 

 
(7,376
)
 

Total
$
2,489

 
$
7,289

 
$
(5,050
)
 
$
250

 
$
1,330

 
$
7,408

 
$
(6,328
)
 
$
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, 2012
$
250

  Total realized and unrealized gains and losses

Balance as of March 31, 2013
$
250



19. SUBSEQUENT EVENT

Titan Italy Earthquake Insurance Settlement
In May of 2012, Titan Europe's wheel manufacturing facility in Finale Emilia, Italy experienced damage from an earthquake.  The plant was closed for production during initial remedial work. This resulted in a limited transfer of production to other facilities within Titan Europe as well as sourcing product from facilities in the US owned by Titan and competitors.  The full restoration of the facility is a lengthy project that will continue through 2014.  In April of 2013, Titan reached a preliminary agreement subject to final approval with the insurance companies to settle the claim for 35 million Euros net of deductible and other fees.



17



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

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 and is 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; and OTR Wheel Engineering.  Sales of Titan products to these companies were approximately $0.6 million and $0.4 million for the first quarter of 2013 and 2012, respectively. Titan had trade receivables due from these companies of approximately $0.2 million at March 31, 2013, and approximately $0.2 million at December 31, 2012.  On other sales referred to Titan from the above manufacturing representative companies, commissions were approximately $0.7 million and $0.7 million during the first quarter of 2013 and 2012, respectively.

The Company has a 35.9% 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 at March 31, 2013, and approximately $0.4 million at December 31, 2012.


21. SUBSIDIARY GUARANTOR FINANCIAL INFORMATION

The Company's 7.875% senior secured notes 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 & marketing expenses recorded by non-guarantor subsidiaries have not been allocated to the guarantor subsidiaries.

(Amounts in thousands)
Consolidating Condensed Statements of Operations
For the Three Months Ended March 31, 2013
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
323,894

 
$
254,493

 
$

 
$
578,387

Cost of sales
390

 
256,226

 
225,020

 

 
481,636

Gross profit (loss)
(390
)
 
67,668

 
29,473

 

 
96,751

Selling, general and administrative expenses
2,317

 
17,824

 
22,302

 

 
42,443

Research and development expenses
10

 
1,313

 
1,379

 

 
2,702

Royalty expense

 
1,778

 
1,945

 

 
3,723

Income (loss) from operations
(2,717
)
 
46,753

 
3,847

 

 
47,883

Interest expense
(7,731
)
 

 
(2,710
)
 

 
(10,441
)
Convertible debt conversion charge
(7,273
)
 

 

 

 
(7,273
)
Intercompany interest income (expense)
497

 

 
(497
)
 

 

Other income
644

 
24

 
751

 

 
1,419

Income (loss) before income taxes
(16,580
)
 
46,777

 
1,391

 

 
31,588

Provision (benefit) for income taxes
(8,335
)
 
16,953

 
3,581

 

 
12,199

Equity in earnings of subsidiaries
27,634

 

 
18,632

 
(46,266
)
 

Net income (loss)
19,389

 
29,824

 
16,442

 
(46,266
)
 
19,389

Net loss noncontrolling interests

 

 

 
(86
)
 
(86
)
Net income (loss) attributable to Titan
$
19,389

 
$
29,824

 
$
16,442

 
$
(46,180
)
 
$
19,475

 

18



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

(Amounts in thousands)
Consolidating Condensed Statements of Operations
For the Three Months Ended March 31, 2012
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
366,181

 
$
96,907

 
$

 
$
463,088

Cost of sales
302

 
280,031

 
89,392

 

 
369,725

Gross profit (loss)
(302
)
 
86,150

 
7,515

 

 
93,363

Selling, general and administrative expenses
10,587

 
15,157

 
5,091

 

 
30,835

Research and development expenses
124

 
1,232

 
152

 

 
1,508

Royalty expense

 
1,693

 
656

 

 
2,349

Income (loss) from operations
(11,013
)
 
68,068

 
1,616

 

 
58,671

Interest expense
(6,062
)
 

 
(233
)
 

 
(6,295
)
Other income
2,174

 
314

 
623

 

 
3,111

Income (loss) before income taxes
(14,901
)
 
68,382

 
2,006

 

 
55,487

Provision (benefit) for income taxes
(6,952
)
 
25,114

 
1,931

 

 
20,093

Equity in earnings of subsidiaries
43,343

 

 
32,552

 
(75,895
)
 

Net income (loss)
35,394

 
43,268

 
32,627

 
(75,895
)
 
35,394

Net loss noncontrolling interests

 

 

 
(25
)
 
(25
)
Net income (loss) attributable to Titan
$
35,394

 
$
43,268

 
$
32,627

 
$
(75,870
)
 
$
35,419

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(Amounts in thousands)
Consolidating Condensed Statements of Comprehensive Income
For the Three Months Ended March 31, 2013
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income (loss)
$
19,389

 
$
29,824

 
$
16,442

 
$
(46,266
)
 
$
19,389

Unrealized gain (loss) on investments, net of tax
(3
)
 

 
(3
)
 
3

 
(3
)
Currency translation adjustment, net
504

 

 
(504
)
 
504

 
504

Pension liability adjustments, net of tax
951

 
781

 
170

 
(951
)
 
951

Comprehensive income (loss)
20,841

 
30,605

 
16,105

 
(46,710
)
 
20,841

Net comprehensive loss attributable to noncontrolling interests

 

 

 
(86
)
 
(86
)
Comprehensive income (loss) attributable to Titan
$
20,841

 
$
30,605

 
$
16,105

 
$
(46,624
)
 
$
20,927




19



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

(Amounts in thousands)
Consolidating Condensed Statements of Comprehensive Income
For the Three Months Ended March 31, 2012
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income (loss)
$
35,394

 
$
43,268

 
$
32,627

 
$
(75,895
)
 
$
35,394

Unrealized gain (loss) on investments, net of tax
5,917

 

 
5,917

 
(5,917
)
 
5,917

Currency translation adjustment, net
3,567

 

 
3,567

 
(3,567
)
 
3,567

Pension liability adjustments, net of tax
836

 
790

 
46

 
(836
)
 
836

Comprehensive income (loss)
45,714

 
44,058

 
42,157

 
(86,215
)
 
45,714

Net comprehensive loss attributable to noncontrolling interests

 

 

 
(25
)
 
(25
)
Comprehensive income (loss) attributable to Titan
$
45,714

 
$
44,058

 
$
42,157

 
$
(86,190
)
 
$
45,739

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(Amounts in thousands)
Consolidating Condensed Balance Sheets
March 31, 2013
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
423,372

 
$
4

 
$
85,071

 
$

 
$
508,447

Accounts receivable

 
160,779

 
168,589

 

 
329,368

Inventories

 
148,590

 
229,777

 

 
378,367

Prepaid and other current assets
60,721

 
2,762

 
43,592

 

 
107,075

Total current assets
484,093

 
312,135

 
527,029

 

 
1,323,257

Property, plant and equipment, net
13,170

 
209,264

 
344,115

 

 
566,549

Investment in subsidiaries
556,750

 

 
105,859

 
(662,609
)
 

Other assets
38,540

 
1,834

 
124,169

 

 
164,543

Total assets
$
1,092,553

 
$
523,233

 
$
1,101,172

 
$
(662,609
)
 
$
2,054,349

Liabilities and Stockholders’ Equity
 

 
 

 
 

 
 

 
 

Short-term debt
$
3,995

 
$

 
$
226,663

 
$

 
$
230,658

Accounts payable
647

 
25,672

 
184,266

 

 
210,585

Other current liabilities
9,065

 
53,279

 
66,560

 

 
128,904

Total current liabilities
13,707

 
78,951

 
477,489

 

 
570,147

Long-term debt
601,261

 

 
32,910

 

 
634,171

Other long-term liabilities
44,817

 
34,512

 
81,786

 

 
161,115

Intercompany accounts
(230,075
)
 
(40,526
)
 
270,601

 

 

Titan stockholders' equity
662,843

 
450,296

 
238,386

 
(688,682
)
 
662,843

Noncontrolling interests

 

 

 
26,073

 
26,073

Total liabilities and stockholders’ equity
$
1,092,553

 
$
523,233

 
$
1,101,172

 
$
(662,609
)
 
$
2,054,349

 

20



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

(Amounts in thousands)
Consolidating Condensed Balance Sheets
December 31, 2012
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
103,154

 
$
4

 
$
85,956

 
$

 
$
189,114

Accounts receivable
(72
)
 
128,917

 
168,953

 

 
297,798

Inventories

 
142,070

 
224,315

 

 
366,385

Prepaid and other current assets
49,438

 
17,021

 
59,239

 

 
125,698

Total current assets
152,520

 
288,012

 
538,463

 

 
978,995

Property, plant and equipment, net
11,497

 
208,734

 
348,113

 

 
568,344

Investment in subsidiaries
527,489

 

 
86,189

 
(613,678
)
 

Other assets
35,564

 
499

 
109,705

 

 
145,768

Total assets
$
727,070

 
$
497,245

 
$
1,082,470

 
$
(613,678
)
 
$
1,693,107

Liabilities and Stockholders’ Equity
 

 
 

 
 

 
 

 
 

Short-term debt
$


$


$
145,801


$

 
$
145,801

Accounts payable
1,000

 
21,222

 
157,843

 

 
180,065

Other current liabilities
13,911

 
55,290

 
66,634

 

 
135,835

Total current liabilities
14,911

 
76,512

 
370,278

 

 
461,701

Long-term debt
312,881

 

 
128,557

 

 
441,438

Other long-term liabilities
44,512

 
35,482

 
89,361

 

 
169,355

Intercompany accounts
(239,688
)
 
(34,272
)
 
273,960

 

 

Titan stockholders' equity
594,454

 
419,523

 
220,314

 
(639,837
)
 
594,454

Noncontrolling interests

 

 

 
26,159

 
26,159

Total liabilities and stockholders’ equity
$
727,070

 
$
497,245

 
$
1,082,470

 
$
(613,678
)
 
$
1,693,107



21



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

(Amounts in thousands)
Consolidating Condensed Statements of Cash Flows
For the Three Months Ended March 31, 2013
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidated
Net cash provided by (used for) operating activities
$
(4,453
)
 
$
9,099

 
$
16,634

 
$
21,280

Cash flows from investing activities:
 

 
 

 
 

 
 

Capital expenditures
(1,955
)
 
(9,099
)
 
(10,120
)