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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

titancolora07.jpg

FORM 10-Q
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended: September 30, 2018
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, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
Accelerated filer þ
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company o
Emerging growth company ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No þ

Indicate the number of shares of Titan International, Inc. outstanding: 59,916,973 shares common stock, $0.0001 par value, as of October 25, 2018.




TITAN INTERNATIONAL, INC.

TABLE OF CONTENTS

 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I. FINANCIAL INFORMATION

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

Nine months ended
 
September 30,

September 30,
 
2018

2017

2018

2017
 
 
 
 
 
 
 
 
Net sales
$
384,719

 
$
370,988

 
$
1,239,005

 
$
1,092,888

Cost of sales
341,015

 
330,851

 
1,077,428

 
968,530

Gross profit
43,704

 
40,137

 
161,577

 
124,358

Selling, general and administrative expenses
33,709

 
39,753

 
102,308

 
115,553

Research and development expenses
2,591

 
2,457

 
8,222

 
7,908

Royalty expense
2,581

 
2,596

 
7,878

 
7,739

Income (loss) from operations
4,823

 
(4,669
)
 
43,169

 
(6,842
)
Interest expense
(7,596
)
 
(7,537
)
 
(22,786
)
 
(22,578
)
Foreign exchange gain (loss)
855

 
815

 
(7,187
)
 
48

Other income
7,437

 
2,569

 
17,664

 
6,996

Income (loss) before income taxes
5,519

 
(8,822
)
 
30,860

 
(22,376
)
Provision for income taxes
2,841

 
2,396

 
3,738

 
5,964

Net income (loss)
2,678

 
(11,218
)
 
27,122

 
(28,340
)
Net income (loss) attributable to noncontrolling interests
383

 
800

 
(1,256
)
 
1,424

Net income (loss) attributable to Titan
2,295

 
(12,018
)
 
28,378

 
(29,764
)
   Redemption value adjustment
(4,045
)
 
(882
)
 
(11,066
)
 
(3,981
)
Net (loss) income applicable to common shareholders
$
(1,750
)
 
$
(12,900
)
 
$
17,312

 
$
(33,745
)
 
 
 
 
 
 
 
 
Earnings per common share:
 

 
 

 
 

 
 

Basic
$
(0.03
)
 
$
(0.22
)
 
$
0.29

 
$
(0.57
)
Diluted
$
(0.03
)
 
$
(0.22
)
 
$
0.29

 
$
(0.57
)
Average common shares and equivalents outstanding:
 
 
 

 
 
 
 

Basic
59,897

 
59,600

 
59,787

 
59,247

Diluted
59,897

 
59,600

 
59,893

 
59,247

 
 
 
 
 
 
 
 
Dividends declared per common share:
$
0.005

 
$
0.005

 
$
0.015

 
$
0.015

 
 








See accompanying Notes to Condensed Consolidated Financial Statements.

1



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

 
Three months ended
 
September 30,
 
2018
 
2017
Net income (loss)
$
2,678

 
$
(11,218
)
Currency translation adjustment
(13,577
)
 
14,015

Pension liability adjustments, net of tax of $4 and $166, respectively
733

 
180

Comprehensive (loss) income
(10,166
)
 
2,977

Net comprehensive (loss) income attributable to redeemable and noncontrolling interests
(811
)
 
1,436

Comprehensive (loss) income attributable to Titan
$
(9,355
)
 
$
1,541



 
 Nine months ended
 
September 30,
 
2018
 
2017
Net income (loss)
$
27,122

 
$
(28,340
)
Currency translation adjustment
(43,853
)
 
33,040

Pension liability adjustments, net of tax of $(40) and $55, respectively
2,306

 
1,902

Comprehensive (loss) income
(14,425
)
 
6,602

Net comprehensive (loss) income attributable to redeemable and noncontrolling interests
(4,036
)
 
2,657

Comprehensive (loss) income attributable to Titan
$
(10,389
)
 
$
3,945



























See accompanying Notes to Condensed Consolidated Financial Statements.

2



TITAN INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share data)
 
September 30, 2018
 
December 31, 2017
 
 
 
(unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
96,799

 
$
143,570

  Accounts receivable, net
259,354

 
226,703

Inventories
381,969

 
339,836

Prepaid and other current assets
66,553

 
73,084

Total current assets
804,675

 
783,193

Property, plant and equipment, net
384,985

 
421,248

Deferred income taxes
2,320

 
3,779

Other assets
82,100

 
81,892

Total assets
$
1,274,080

 
$
1,290,112

 
 
 
 
Liabilities
 

 
 

Current liabilities
 

 
 

Short-term debt
$
50,257

 
$
43,651

Accounts payable
208,237

 
195,497

Other current liabilities
123,244

 
133,774

Total current liabilities
381,738

 
372,922

Long-term debt
411,019

 
407,171

Deferred income taxes
10,359

 
13,545

Other long-term liabilities
62,424

 
73,197

Total liabilities
865,540

 
866,835

 
 
 
 
Redeemable noncontrolling interest
119,897

 
113,193

 
 
 
 
Equity
 

 
 

Titan shareholders' equity


 


  Common stock ($0.0001 par value, 120,000,000 shares authorized, 60,715,356 issued, 59,897,619 outstanding at September 30, 2018 and 59,800,559 outstanding at December 31, 2017)

 

Additional paid-in capital
520,389

 
531,708

Retained deficit
(16,456
)
 
(44,022
)
Treasury stock (at cost, 817,737 and 914,797 shares, respectively)
(8,004
)
 
(8,606
)
Stock reserved for deferred compensation

 
(1,075
)
Accumulated other comprehensive loss
(200,168
)
 
(157,076
)
Total Titan shareholders’ equity
295,761

 
320,929

Noncontrolling interests
(7,118
)
 
(10,845
)
Total equity
288,643

 
310,084

Total liabilities and equity
$
1,274,080

 
$
1,290,112


 See accompanying Notes to Condensed Consolidated Financial Statements.

3



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


 
 Number of
common shares
 
Additional
paid-in
capital
 
Retained (deficit) earnings
 
Treasury stock
 
Stock
 reserved for
deferred compensation
 
Accumulated other comprehensive (loss) income
 
Total Titan Equity
 
 Noncontrolling interest
 
Total Equity
Balance January 1, 2018
59,800,559

 
$
531,708

 
$
(44,022
)
 
$
(8,606
)
 
$
(1,075
)
 
$
(157,076
)
 
$
320,929

 
$
(10,845
)
 
$
310,084

Net income (loss) *


 


 
28,378

 


 


 


 
28,378

 
(150
)
 
28,228

Currency translation adjustment, net *
 
 
 
 
 
 
 
 
 
 
(41,073
)
 
(41,073
)
 
476

 
(40,597
)
Pension liability adjustments, net of tax


 


 


 


 


 
2,306

 
2,306

 
 
 
2,306

Dividends declared


 


 
(900
)
 


 


 


 
(900
)
 
 
 
(900
)
Accounting standards adoption


 


 
88

 
 
 
 
 
 
 
88

 
35

 
123

Restricted stock awards
61,897

 


 
 
 


 
 
 
 
 

 
 
 

Acquisition of additional interest


 
(1,032
)
 


 


 


 
(4,325
)
 
(5,357
)
 
5,208

 
(149
)
Redemption value adjustment


 
(11,066
)
 
 
 


 
 
 
 
 
(11,066
)
 
 
 
(11,066
)
Stock-based compensation


 
561

 


 
286

 


 


 
847

 
 
 
847

VIE distributions


 


 


 


 


 


 

 
(1,842
)
 
(1,842
)
Deferred compensation transactions


 
113

 


 


 
1,075

 


 
1,188

 
 
 
1,188

Issuance of treasury stock under 401(k) plan
35,163

 
105

 


 
316

 


 


 
421

 
 
 
421

Balance September 30, 2018
59,897,619

 
$
520,389

 
$
(16,456
)
 
$
(8,004
)
 
$

 
$
(200,168
)
 
$
295,761

 
$
(7,118
)
 
$
288,643

 
* Net income (loss) excludes $(1,106) of net loss attributable to redeemable noncontrolling interest. Currency translation adjustment excludes $(3,256) of currency translation related to redeemable noncontrolling interest.














See accompanying Notes to Condensed Consolidated Financial Statements.

4



TITAN INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(All amounts in thousands)
 
Nine months ended September 30,
Cash flows from operating activities:
2018
 
2017
Net income (loss)
$
27,122

 
$
(28,340
)
Adjustments to reconcile net income (loss) to net cash
used for operating activities:
 

 
 

Depreciation and amortization
43,395

 
44,029

Deferred income tax provision
(863
)
 
(476
)
Stock-based compensation
847

 
1,173

Issuance of treasury stock under 401(k) plan
421

 
413

Foreign currency translation loss
3,667

 
1,061

(Increase) decrease in assets:
 

 
 

Accounts receivable
(52,818
)
 
(46,715
)
Inventories
(62,560
)
 
(46,083
)
Prepaid and other current assets
2,299

 
20,046

Other assets
(6,021
)
 
2,948

Increase (decrease) in liabilities:
 

 
 

Accounts payable
25,213

 
26,372

Other current liabilities
(5,072
)
 
8,821

Other liabilities
(8,336
)
 
1,539

Net cash used for operating activities
(32,706
)
 
(15,212
)
Cash flows from investing activities:
 

 
 

Capital expenditures
(26,498
)
 
(23,580
)
Certificates of deposit

 
50,000

Other
1,484

 
1,293

Net cash (used for) provided by investing activities
(25,014
)
 
27,713

Cash flows from financing activities:
 

 
 

Proceeds from borrowings
48,108

 
33,540

Payment on debt
(30,139
)
 
(41,003
)
Dividends paid
(900
)
 
(868
)
Net cash provided by (used for) financing activities
17,069

 
(8,331
)
Effect of exchange rate changes on cash
(6,120
)
 
3,678

Net (decrease) increase in cash and cash equivalents
(46,771
)
 
7,848

Cash and cash equivalents, beginning of period
143,570

 
147,827

Cash and cash equivalents, end of period
$
96,799

 
$
155,675

 
 
 
 
Supplemental information:
 
 
 
Interest paid
$
16,814

 
$
18,360

Income taxes paid, net of refunds received
$
7,379

 
$
550

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

 
$
58,460










See accompanying Notes to Condensed Consolidated Financial Statements.

5



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


1.
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
 
The accompanying unaudited condensed consolidated interim financial statements include the accounts of Titan International, Inc. and its subsidiaries (Titan or the Company) and have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the SEC). Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the Company's financial position as of September 30, 2018, and the results of operations and cash flows for the three and nine months ended September 30, 2018 and 2017, and should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 23, 2018 (the 2017 Form 10-K). All significant intercompany transactions have been eliminated in consolidation. These unaudited condensed consolidated interim financial statements include estimates and assumptions of management that affect the amounts reported in the condensed consolidated financial statements. Actual results could differ from these estimates.

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 6.50% senior secured notes due 2023 (senior secured notes) were carried at a cost of $394.9 million at September 30, 2018. The fair value of the senior secured notes at September 30, 2018, as obtained through an independent pricing source, was approximately $388.3 million.

Cash dividends
The Company declared cash dividends of $0.005 and $0.015 per share of common stock for the three and nine months ended September 30, 2018 and 2017, respectively. The third quarter 2018 cash dividend of $0.005 per share of common stock was paid on October 15, 2018, to shareholders of record on September 28, 2018.

New accounting standards:

Adoption of new accounting standards
The Company adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, "Revenue from Contracts with Customers" (the New Revenue Standard), effective January 1, 2018, using the modified retrospective approach which requires the recognition of the cumulative effect of initially applying the standard as an adjustment to opening retained earnings for the fiscal year beginning January 1, 2018. The adoption of the New Revenue Standard resulted in the recognition of an immaterial cumulative adjustment to opening retained earnings as of January 1, 2018, and had an immaterial effect on the Company’s financial position and results of operation. Results for reporting periods beginning after January 1, 2018 are presented under the New Revenue Standard which prescribes that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Titan's contracts typically contain a single performance obligation that is fulfilled on the date of delivery based on shipping terms stipulated in the contract.

Disaggregated Revenues
The following table presents revenues disaggregated by the major markets Titan serves (amounts in thousands):
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
Net sales
 

 
 
 
 

 
 
Agricultural
$
163,367

 
$
170,895

 
$
544,404

 
$
524,335

Earthmoving/construction
180,362

 
156,442

 
568,057

 
443,030

Consumer
40,990

 
43,651

 
126,544

 
125,523

 
$
384,719

 
$
370,988

 
$
1,239,005

 
$
1,092,888



6



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

The Company adopted Accounting Standards Update (ASU) No. 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" on January 1, 2018, using the retrospective transition method. This standard changed the presentation of net periodic pension and postretirement benefit cost (net benefit cost) within the Statement of Operations. Under the previous guidance, net benefit cost was reported as an employee cost within operating income. The amendment requires the bifurcation of net benefit cost, with the service cost component to be presented with other employee compensation costs in operating income, while the other components will be reported separately outside of income from operations. The adoption of this accounting standard resulted in a change in certain previously reported amounts, whereby the Company reclassed $0.5 million and $1.4 million of non-service cost from cost of sales to other income on the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2017, respectively. See Note 11 - Employee Benefit Plans in Part I, Item 1 of this Form 10-Q for further discussion.

The Company early-adopted ASU No. 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," effective September 30, 2018, using the retrospective approach. ASU 2018-15 requires a customer in a hosting arrangement that is a service contract to apply the guidance on internal-use software to determine which implementation costs to recognize as an asset and which costs to expense. Costs to develop or obtain internal-use software that cannot be capitalized under Subtopic 350-40, such as training costs and certain data conversion costs, also cannot be capitalized for a hosting arrangement that is a service contract. The amendments in this update require a customer in a hosting arrangement that is a service contract to determine whether an implementation activity relates to the preliminary project stage, the application development stage, or the post-implementation stage. Costs for implementation activities in the application development stage will be capitalized depending on the nature of the costs, while costs incurred during the preliminary project and post-implementation stages will be expensed. As a result of the adoption of this accounting standard, the Company capitalized an aggregate of $6.1 million of implementation costs at September 30, 2018, from selling, general and administration in the Condensed Consolidated Statement of Operations to other assets in the Condensed Consolidated Balance Sheets. Of the $6.1 million reclassification, $2.1 million was related to the three months ended September 30, 2018, and $4.0 million related to the previously reported selling, general and administration amounts in the Condensed Consolidated Statement of Operations for the six months ended June 30, 2018.
 
In March 2018, the FASB issued ASU No. 2018-05, "Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118." This ASU updates the income tax accounting in US GAAP to reflect the SEC's interpretive guidance released on December 22, 2017, when the 2017 Tax Cuts and Jobs Act (2017 TCJA) was enacted. See Note 15 for more information regarding the impact of the 2017 TCJA.

In May 2017, the FASB issued ASU No. 2017-09, "Stock Compensation (Topic 718): Scope of Modification Accounting." This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Disclosure requirements under Topic 718 remain unchanged. The Company adopted ASU 2017-09 effective January 1, 2018. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements; no changes were made to the terms or conditions of share-based payments.
 
In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The Company adopted this guidance effective January 1, 2018, with no resulting changes to the Company's consolidated financial statements.

Accounting standards issued but not yet adopted
 
In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." This update was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The primary effect of adopting the new standard will be to record assets and obligations for the Company's operating leases. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has a significant number of leases for both property and equipment. As such, the Company expects that there will be a material impact on our financial position and disclosures upon the adoption of ASU 2016-02. The Company has hired outside consultants to assist with the implementation of this standard and are reporting our progress to management and to the audit committee of our board of directors on a periodic basis. The Company is in the process of abstracting data from known leases and validating and testing the completeness and accuracy of this data.  The Company will provide additional disclosure as the implementation progresses.

7



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

In February 2018, the FASB issued ASU No. 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 TCJA. Consequently, the amendments eliminate the stranded tax effects resulting from the 2017 TCJA and will improve the usefulness of information reported to financial statement users. The amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2018-02.

In August 2018, the FASB issued ASU No. 2018-13, "Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The amendments in this update are effective for fiscal years beginning after December 15, 2019. The adoption of this guidance is not expected to have a material effect on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-14, "Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments in this update are effective for fiscal years ending after December 15, 2020. The adoption of this guidance is not expected to have a material effect on the Company's consolidated financial statements.


2. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following as of the dates set forth below (amounts in thousands):
 
September 30,
2018
 
December 31,
2017
Accounts receivable
$
263,370

 
$
229,677

Allowance for doubtful accounts
(4,016
)
 
(2,974
)
Accounts receivable, net
$
259,354

 
$
226,703


Accounts receivable are reduced by an estimated allowance for doubtful accounts, which is based on known risks and historical losses.


3. INVENTORIES
 
Inventories consisted of the following as of the dates set forth below (amounts in thousands):
 
September 30,
2018
 
December 31,
2017
Raw material
$
105,206

 
$
83,541

Work-in-process
44,456

 
40,525

Finished goods
232,307

 
215,770

 
$
381,969

 
$
339,836


 
Inventories are valued at the lower of cost or net realizable value. Net realizable value is estimated based on current selling prices. Inventory costs are calculated using the first-in, first-out (FIFO) method or average cost method. Estimated provisions are established for slow-moving and obsolete inventory.



8



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

4. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following as of the dates set forth below (amounts in thousands):
 
September 30,
2018
 
December 31,
2017
Land and improvements
$
43,471

 
$
46,998

Buildings and improvements
254,788

 
264,078

Machinery and equipment
589,605

 
598,411

Tools, dies and molds
107,890

 
108,649

Construction-in-process
13,638

 
15,349

 
1,009,392

 
1,033,485

Less accumulated depreciation
(624,407
)
 
(612,237
)
 
$
384,985

 
$
421,248


 
Depreciation on property, plant and equipment for the nine months ended September 30, 2018 and 2017, totaled $40.7 million and $41.0 million, respectively.

Capital leases included in property, plant, and equipment consisted of the following as of the dates set forth below (amounts in thousands):
 
September 30,
2018
 
December 31,
2017
Buildings and improvements
$
3,871

 
$
4,056

Less accumulated amortization
(2,266
)
 
(2,294
)
 
$
1,605

 
$
1,762

 
 
 
 
Machinery and equipment
$
33,160

 
$
32,379

Less accumulated amortization
(26,576
)
 
(27,260
)
 
$
6,584

 
$
5,119




5. INTANGIBLE ASSETS

The components of intangible assets consisted of the following as of the dates set forth below (amounts in thousands):
 
Weighted Average Useful Lives (in years) September 30, 2018
 
September 30,
2018
 
December 31,
2017
Amortizable intangible assets:
 
 
 
 
 
     Customer relationships
8.9
 
$
13,274

 
$
13,922

     Patents, trademarks and other
7.6
 
14,022

 
15,208

          Total at cost
 
 
27,296

 
29,130

     Less accumulated amortization
 
 
(14,857
)
 
(13,855
)
 
 
 
$
12,439

 
$
15,275


   
Amortization related to intangible assets for the nine months ended September 30, 2018 and 2017, totaled $1.8 million and $2.2 million, respectively. Intangible assets are included as a component of other assets in the Condensed Consolidated Balance Sheet.


9



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

The estimated aggregate amortization expense at September 30, 2018, for each of the years (or other periods) set forth below was as follows (amounts in thousands):
October 1 - December 31, 2018
$
490

2019
2,091

2020
2,074

2021
1,440

2022
1,012

Thereafter
5,332

 
$
12,439




6. WARRANTY

Changes in the warranty liability consisted of the following (amounts in thousands):
 
2018
 
2017
Warranty liability, January 1
$
18,612

 
$
17,926

Provision for warranty liabilities
5,522

 
5,377

Warranty payments made
(5,407
)
 
(5,693
)
Warranty liability, September 30
$
18,727

 
$
17,610



The Company provides limited warranties on workmanship on its products in all market segments. The majority of the Company’s products are subject to a limited warranty that ranges between less than one year and ten years, with certain product warranties 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 Condensed Consolidated Balance Sheet.


7. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT
 
Long-term debt consisted of the following as of the dates set forth below (amounts in thousands):
 
September 30, 2018
 
Principal Balance
 
Unamortized Debt Issuance
 
Net Carrying Amount
6.50% senior secured notes due 2023
$
400,000

 
$
(5,101
)
 
$
394,899

Titan Europe credit facilities
36,157

 

 
36,157

Other debt
27,946

 

 
27,946

Capital leases
2,274

 

 
2,274

     Total debt
466,377

 
(5,101
)
 
461,276

Less amounts due within one year
50,257

 

 
50,257

     Total long-term debt
$
416,120

 
$
(5,101
)
 
$
411,019


 

10



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

 
December 31, 2017
 
Principal Balance
 
Unamortized Debt Issuance
 
Net Carrying Amount
6.50% senior secured notes due 2023
$
400,000

 
$
(5,716
)
 
$
394,284

Titan Europe credit facilities
33,485

 

 
33,485

Other debt
22,564

 

 
22,564

Capital leases
489

 

 
489

     Total debt
456,538

 
(5,716
)
 
450,822

Less amounts due within one year
43,651

 

 
43,651

     Total long-term debt
$
412,887

 
$
(5,716
)
 
$
407,171



Aggregate principal maturities of long-term debt at September 30, 2018, for each of the years (or other periods) set forth below were as follows (amounts in thousands):
October 1 - December 31, 2018
$
25,736

2019
26,929

2020
8,916

2021
3,494

2022
654

Thereafter
400,648

 
$
466,377


 
6.50% senior secured notes due 2023
The senior secured notes are due November 2023. Including the impact of debt issuance costs, these notes had an effective yield of 6.79% at issuance. 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.

Titan Europe credit facilities
The Titan Europe credit facilities contain borrowings from various institutions totaling $36.2 million in aggregate principal amount at September 30, 2018. 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 Titan's subsidiaries in Italy, Spain, Germany, and Brazil.

Revolving credit facility
The Company has a $75 million revolving credit facility (credit facility) with agent BMO Harris Bank N.A. and other financial institutions party thereto. The credit facility is collateralized by accounts receivable and inventory of certain of the Company’s domestic subsidiaries and is scheduled to mature in February 2022. From time to time Titan's availability under this credit facility may be less than $75 million as a result of outstanding letters of credit and eligible accounts receivable and inventory balances at certain of its domestic subsidiaries. At September 30, 2018, an outstanding letter of credit under the credit facility totaled $12.3 million and the amount available under the facility totaled $62.7 million based upon eligible accounts receivable and inventory balances. During the first nine months of 2018 and at September 30, 2018, there were no borrowings under the credit facility.

Other debt
The Company has working capital loans at Titan Pneus do Brasil Ltda and Voltyre-Prom at various interest rates, which totaled $7.7 million and $22.2 million at September 30, 2018, respectively. Maturity dates on this debt range from less than one year to three years.



11



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

8. 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 and nine months ended September 30, 2018, the Company recorded currency exchange gain related to these derivatives of $0.1 million and $0.2 million, respectively.


9. REDEEMABLE NONCONTROLLING INTEREST

The Company, in partnership with One Equity Partners (OEP) and the Russian Direct Investment Fund (RDIF), owns all of the equity interests in Voltyre-Prom, a leading producer of agricultural and industrial tires in Volgograd, Russia. The Company is party to a shareholders' agreement with OEP and RDIF which was entered into in connection with the acquisition of Voltyre-Prom. The agreement contains a settlement put option that is exercisable during a six-month period beginning July 9, 2018, and may require Titan to purchase the equity interests from OEP and RDIF in Voltyre-Prom with cash or Titan common stock, at a value set by the agreement. The value set by the agreement is the greater of: the aggregate of the investment of the selling party and an amount representing an internal rate of return of 8%, or the last twelve months of EBITDA multiplied by 5.5 less net debt times the selling party's ownership percentage. As of September 30, 2018, the value of the redeemable noncontrolling interest held by OEP and RDIF was recorded at the aggregate of the investment of the selling party and an amount representing an internal rate of return of 8%.

The redemption features of the settlement put option are not solely within the Company’s control. The noncontrolling interest is presented as a redeemable noncontrolling interest separately from total equity in the Condensed Consolidated Balance Sheet at the redemption value of the settlement put option. If the redemption value is greater than the carrying value of the noncontrolling interest, the increase in the redemption value is adjusted directly to retained earnings of the affected entity, 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 September 30, 2018 and 2017 (amounts in thousands):
 
2018
 
2017
Balance at January 1
$
113,193

 
$
104,809

   (Loss) gain attributable to redeemable noncontrolling interest
(1,106
)
 
271

   Currency translation
(3,256
)
 
1,955

   Redemption value adjustment
11,066

 
3,981

Balance at September 30
$
119,897

 
$
111,016



This obligation approximates the cost to the Company if all remaining equity interests in the consortium were purchased by the Company on September 30, 2018 and is presented in the Condensed Consolidated Balance Sheet in redeemable noncontrolling interest, which is treated as mezzanine equity.



12



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

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 September 30, 2018, future minimum rental commitments under noncancellable operating leases with initial terms of at least one year were as follows (amounts in thousands):
October 1 - December 31, 2018
$
2,167

2019
7,148

2020
4,985

2021
3,930

2022
2,985

Thereafter
7,045

Total future minimum lease payments
$
28,260


At September 30, 2018, the Company had assets held as capital leases with a net book value of $8.2 million included in property, plant and equipment. At September 30, 2018, total future capital lease obligations relating to these leases were as follows (amounts in thousands):
October 1 - December 31, 2018
$
192

2019
609

2020
488

2021
474

2022
476

Thereafter
339

Total future capital lease obligation payments
2,578

Less amount representing interest
(304
)
Present value of future capital lease obligation payments
$
2,274


 
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 a number of defined contribution plans in the U.S. and at foreign subsidiaries. The Company contributed approximately $3.6 million to the pension plans during the nine months ended September 30, 2018, and expects to contribute approximately $1.8 million to the pension plans during the remainder of 2018.
 
The components of net periodic pension cost consisted of the following for the periods set forth below (amounts in thousands):
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
Service cost
$
169

 
$
129

 
$
447

 
$
482

Interest cost
1,056

 
1,197

 
3,237

 
3,531

Expected return on assets
(1,487
)
 
(1,372
)
 
(4,470
)
 
(4,109
)
Amortization of unrecognized prior service cost
50

 
34

 
150

 
102

Amortization of net unrecognized loss
682

 
663

 
2,048

 
1,992

      Net periodic pension cost
$
470

 
$
651

 
$
1,412

 
$
1,998


Service cost is recorded as cost of sales in the Condensed Consolidated Statement of Operations while all other components are recorded in other income.

13



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


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 that primarily distribute mining products. Titan is the 50% owner of one of these distribution facilities, which is located in Canada, and the 40% owner of the other such facility, which is located in Australia. The Company’s variable interests in these two joint ventures relate to sales of Titan product to these entities, consigned inventory, and working capital loans. The third joint venture is the consortium that owns Voltyre-Prom. Titan owns 43% of the consortium owning Voltyre-Prom, which is subject to a shareholders' agreement containing a settlement put option that may require Titan to purchase the remaining equity interests in the consortium. See Note 9 for additional information.
 
The Company also holds a variable interest in five other entities for which Titan is the primary beneficiary. Each of these entities provides specific manufacturing related services at the Company's Tennessee facility. Titan's variable interest in these entities relates to financial support through providing many of the assets used by these entities in their business. The Company owns no equity in these entities.
 
As the primary beneficiary of these variable interest entities (VIEs), the VIEs’ assets, liabilities, and results of operations are included in the Company’s consolidated financial statements. The other equity holders’ interests are reflected in “Net income (loss) attributable to noncontrolling interests” in the Condensed Consolidated Statements of Operations and “Noncontrolling interests” in the Condensed Consolidated Balance Sheets.
 
The following table summarizes the carrying amount of the entities’ assets and liabilities included in the Company’s Condensed Consolidated Balance Sheets at September 30, 2018, and December 31, 2017 (amounts in thousands):
 
September 30,
2018
 
December 31, 2017
Cash and cash equivalents
$
9,761

 
$
10,621

Inventory
15,162

 
13,494

Other current assets
30,057

 
36,334

Property, plant and equipment, net
29,623

 
33,717

Other noncurrent assets
3,446

 
4,250

   Total assets
$
88,049

 
$
98,416

 
 
 
 
Current liabilities
$
30,937

 
$
32,172

Noncurrent liabilities
7,317

 
8,291

  Total liabilities
$
38,254

 
$
40,463


 
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.
 

14



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

The Company holds variable interests in certain VIEs that are not consolidated because Titan is not the primary beneficiary. The Company's involvement with these entities is in the form of direct equity interests and prepayments related to purchases of materials. The maximum exposure to loss as reflected in the table below represents the loss of assets recognized by Titan relating to non-consolidated entities and amounts due to the non-consolidated assets. The assets and liabilities recognized in Titan's Condensed Consolidated Balance Sheets related to Titan's interest in these non-consolidated VIEs and the Company's maximum exposure to loss relating to non-consolidated VIEs as of the dates set forth below were as follows (amounts in thousands):
 
September 30,
2018
 
December 31, 2017
Investments
$
3,884

 
$
3,823

Other current assets
1,277

 
1,261

     Total VIE assets
5,161

 
5,084

Accounts payable
1,989

 
1,413

  Maximum exposure to loss
$
7,150

 
$
6,497




13. ROYALTY EXPENSE

The Company has trademark license agreements with The Goodyear Tire & Rubber Company to manufacture and sell certain farm tires under the Goodyear name. These agreements cover sales in North America, Latin America, Europe, the Middle East, Africa, Russia, and other Commonwealth of Independent States countries. Each of these agreements expires in 2025. The Company also has a trademark license agreement with Goodyear to manufacture and sell certain non-farm tire products in Latin America which expires in June 2019. Royalty expenses recorded were $2.6 million for each of the three months ended September 30, 2018 and 2017. Royalty expenses recorded were $7.9 million and $7.7 million for the nine months ended September 30, 2018 and 2017, respectively.


14. OTHER INCOME

Other income consisted of the following for the periods set forth below (amounts in thousands):
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
Equity investment income
$
1,016

 
$
1,391

 
$
3,199

 
$
2,741

Interest income
456

 
872

 
1,605

 
2,646

Building rental income
381

 
594

 
1,369

 
1,789

Investment gain related to investments for deferred compensation

 
480

 
688

 
1,827

Other income (expense)
5,584

 
(768
)
 
10,803

 
(2,007
)
 
$
7,437

 
$
2,569

 
$
17,664

 
$
6,996





15



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

15. INCOME TAXES

The Company recorded income tax expense of $2.8 million and $2.4 million for the quarters ended September 30, 2018 and 2017, respectively. For the nine months ended September 30, 2018 and 2017, the Company recorded income tax expense of $3.7 million and $6.0 million, respectively. The Company's effective income tax rate was 51% and (27)% for the quarters ended September 30, 2018 and 2017, respectively, and 12% and (27)% for the nine months ended September 30, 2018 and 2017, respectively.

The Company’s 2018 income tax expense and rate differed 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 a reduction of the liability for unrecognized tax positions and U.S. and certain foreign jurisdictions that incurred a full valuation allowance on deferred tax assets created by current year projected losses. In addition, there were non-deductible royalty expenses and statutorily required income adjustments made in certain foreign jurisdictions that negatively impacted the tax rate for the nine months ended September 30, 2018.

The Company’s 2017 income tax expense and rate differed 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 U.S. and certain foreign jurisdictions that incurred a full valuation allowance on deferred tax assets created by current year projected losses. In addition, there were non-deductible royalty expenses and statutorily required income adjustments made in certain foreign jurisdictions that negatively impacted the tax rate for the period. During the second quarter of 2017, the IRS income tax audit for tax years 2010 through 2014 was settled, which did not result in any material change to the Company's income tax expense.

The Company continues to monitor the realization of its deferred tax assets and assesses the need for a valuation allowance. The Company analyzes available positive and negative evidence to determine if a valuation allowance is needed based on the weight of the evidence. This objectively verifiable evidence primarily includes the past three years' profit and loss positions. This process requires management to make estimates, assumptions, and judgments that are uncertain in nature. The Company has established valuation allowances with respect to deferred tax assets in U.S. and certain foreign jurisdictions and continues to monitor and assess potential valuation allowances in all its jurisdictions.

The 2017 TCJA was enacted on December 22, 2017, and includes a number of changes to the Internal Revenue Code, including a one-time transition tax on the mandatory deemed repatriation of cumulative undistributed foreign earnings and a permanent reduction in the U.S. federal statutory income tax rate from 35% to 21% effective January 1, 2018.  The 2017 TCJA also created a new requirement that certain income (i.e., global intangible low taxed income, hereinafter referred to as GILTI) earned by foreign subsidiaries must be included currently in the gross income of the U.S. shareholder.  Consistent with guidance issued by SEC Staff Accounting Bulletin (SAB) No. 118, which provides for a measurement period of one year from the enactment date to finalize the accounting for effects of the 2017 TCJA, the Company has provisionally recorded no additional income tax expense related to the one-time mandatory deemed repatriation provision of the 2017 TCJA. For 2018, the Company has estimated an amount of GILTI income that is included in the calculation of 2018 income tax expense. This GILTI income inclusion, however, is fully offset by a change in the valuation allowance. The remeasurement of the U.S. net deferred asset from the 2017 corporate income tax rate change was fully offset by a change in the valuation allowance in 2017.



16



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

16. EARNINGS PER SHARE
 
Earnings per share (EPS) were as follows for the periods presented below (amounts in thousands, except per share data):
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Net income (loss) attributable to Titan
$
2,295

 
$
(12,018
)
 
$
28,378

 
$
(29,764
)
   Redemption value adjustment
(4,045
)
 
(882
)
 
(11,066
)
 
(3,981
)
Net income (loss) applicable to common shareholders
$
(1,750
)
 
$
(12,900
)
 
$
17,312

 
$
(33,745
)
Determination of shares:
 
 
 
 
 
 
 
   Weighted average shares outstanding (basic)
59,897

 
59,600

 
59,787

 
59,247

   Effect of stock options/trusts

 

 
106

 

   Weighted average shares outstanding (diluted)
59,897

 
59,600

 
59,893

 
59,247

Earnings per share:
 
 
 
 
 
 
 
   Basic and diluted
(0.03
)
 
(0.22
)
 
0.29

 
(0.57
)

The effect of stock options, shares held by certain trusts, and convertible notes has been excluded from the calculation of EPS for the three months ended September 30, 2018, and the three and nine months ended September 30, 2017, as the effect would have been antidilutive. The weighted average share amount excluded for stock options was 0.0 million for the three months ended September 30, 2018. The weighted average share amount excluded for stock options and shares held by certain trusts was 0.2 million for each of the three and nine months ended September 30, 2017. The weighted average share amount excluded for convertible notes totaled 0.3 million shares for the nine months ended September 30, 2017.
 



17



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

17. LITIGATION
 
The Company is a party to routine legal proceedings arising out of the normal course of business. 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 liabilities pertaining to, legal judgments.

At September 30, 2018, two of Titan’s subsidiaries were involved in litigation concerning environmental laws and regulations.

In June 2015, Titan Tire Corporation (Titan Tire) and Dico, Inc. (Dico) appealed a U.S. District Court order granting the U.S. motion for summary judgment that found Dico liable for violating the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and an Environmental Protection Agency (EPA) Administrative Order and awarded response costs, civil penalties, and punitive damages.

In December 2015, the United States Court of Appeals for the Eighth Circuit reversed the District Court’s summary judgment order with respect to “arranger” liability for Titan Tire and Dico under CERCLA and the imposition of punitive damages against Dico for violating the EPA Administrative Order, but affirmed the summary judgment order imposing civil penalties in the amount of $1.62 million against Dico for violating the EPA Administrative Order. The case was remanded to the District Court for a new trial on the remaining issues.

The trial occurred in April 2017. On September 5, 2017, the District Court issued an order: (a) concluding Titan Tire and Dico arranged for the disposal of a hazardous substance in violation of 42 U.S.C. § 9607(a); (b) holding Titan Tire and Dico jointly and severally liable for $5.45 million in response costs previously incurred and reported by the United States relating to the alleged violation, including enforcement costs and attorney’s fees; and (c) awarding a declaratory judgment holding Titan Tire and Dico jointly and severally liable for all additional response costs previously incurred but not yet reported or to be incurred in the future, including enforcement costs and attorney’s fees. The District Court also held Dico liable for $5.45 million in punitive damages under 42 U.S.C. § 9607(c)(3) for violating a unilateral administrative order. The punitive damages award does not apply to Titan Tire. The Company accrued a contingent liability of $6.5 million, representing $5.45 million in costs incurred by the United States and $1.05 million of additional response costs, for this order in the quarter ended September 30, 2017.

Titan Tire and Dico are appealing the case to the United States Court of Appeals for the Eighth Circuit. The Notice of Appeal was filed on November 2, 2017, and the Appellants' brief was filed on February 26, 2018. The Appellee’s brief was filed on May 30, 2018, and the Appellants’ reply was filed on July 9, 2018. While the Company believes it has meritorious arguments, the outcome of this appeal cannot be predicted. An appeal bond was secured to stay the execution of any collection actions underlying judgment pending the outcome of the appeal.





18



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

18. SEGMENT INFORMATION
 
The Company has aggregated its operating units into reportable segments based on its three customer markets: agricultural, earthmoving/construction, and consumer. These segments are based on the information used by the Chief Executive Officer to make certain operating decisions, allocate portions of capital expenditures, and assess segment performance. Segment external sales, expenses, and income from operations are determined based on the results of operations for the operating units of the Company's manufacturing facilities. Expenses and income from operations are allocated to appropriate segments based on the sales of operating units of manufacturing facilities. Segment assets are generally determined on the basis of the tangible assets located at such operating units’ manufacturing facilities and the intangible assets associated with the acquisitions of such operating units. However, certain operating units’ property, plant and equipment balances are carried at the corporate level. Titan is organized primarily on the basis of products being included in three market segments, with each reportable segment including wheels, tires, wheel/tire assemblies, and undercarriage systems and components.
The table below presents information about certain operating results, separated by market segments, for each of the three and nine months ended September 30, 2018 and 2017 (amounts in thousands):

Three months ended
 
Nine months ended

September 30,
 
September 30,
 
2018
 
2017
 
2018
 
2017
Net sales
 
 
 
 

 

Agricultural
$
163,367

 
$
170,895

 
$
544,404

 
$
524,335

Earthmoving/construction
180,362

 
156,442

 
568,057

 
443,030

Consumer
40,990

 
43,651

 
126,544

 
125,523

 
$
384,719

 
$
370,988

 
$
1,239,005

 
$
1,092,888

Gross profit
 

 
 

 
 
 
 
Agricultural
$
19,921

 
$
19,072

 
$
77,153

 
$
63,988

Earthmoving/construction
17,819

 
14,810

 
64,541

 
41,963

Consumer
5,964

 
6,255

 
19,883

 
18,407

 
$
43,704

 
$
40,137

 
$
161,577

 
$
124,358

Income (loss) from operations
 

 
 

 
 
 
 
Agricultural
$
11,539

 
$