FORM 10-Q |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Illinois | 36-3228472 | |
(State of Incorporation) | (I.R.S. Employer Identification No.) |
Large accelerated filer þ | Accelerated filer ¨ |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Shares Outstanding at | ||
Class | April 23, 2012 | |
Common stock, no par value per share | 42,242,524 |
Page | ||
Three months ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Net sales | $ | 463,088 | $ | 280,829 | |||
Cost of sales | 369,725 | 224,557 | |||||
Gross profit | 93,363 | 56,272 | |||||
Selling, general and administrative expenses | 30,835 | 25,293 | |||||
Research and development expenses | 1,508 | 1,183 | |||||
Royalty expense | 2,349 | 2,917 | |||||
Income from operations | 58,671 | 26,879 | |||||
Interest expense | (6,295 | ) | (6,280 | ) | |||
Noncash convertible debt conversion charge | — | (16,135 | ) | ||||
Other income | 3,111 | 193 | |||||
Income before income taxes | 55,487 | 4,657 | |||||
Provision for income taxes | 20,093 | 7,693 | |||||
Net income (loss) | 35,394 | (3,036 | ) | ||||
Net loss attributable to noncontrolling interests | (25 | ) | — | ||||
Net income (loss) attributable to Titan | $ | 35,419 | $ | (3,036 | ) | ||
Earnings (loss) per common share: | |||||||
Basic | $ | .84 | $ | (.07 | ) | ||
Diluted | $ | .68 | $ | (.07 | ) | ||
Average common shares and equivalents outstanding: | |||||||
Basic | 42,105 | 40,511 | |||||
Diluted | 53,450 | 40,511 | |||||
Dividends declared per common share: | $ | .005 | $ | .005 |
Three months ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Net income (loss) | $ | 35,394 | $ | (3,036 | ) | ||
Unrealized gain (loss) on investments, net of tax of $3,475 and $535, respectively | 5,917 | (993 | ) | ||||
Currency translation adjustment | 3,567 | — | |||||
Pension liability adjustments, net of tax of $491and $363, respectively | 836 | 593 | |||||
Comprehensive income (loss) | 45,714 | (3,436 | ) | ||||
Net comprehensive loss attributable to noncontrolling interests | (25 | ) | — | ||||
Comprehensive income (loss) attributable to Titan | $ | 45,739 | $ | (3,436 | ) |
March 31, | December 31, | ||||||
Assets | 2012 | 2011 | |||||
Current assets | |||||||
Cash and cash equivalents | $ | 129,308 | $ | 129,170 | |||
Accounts receivable, net | 245,948 | 189,527 | |||||
Inventories | 214,154 | 190,872 | |||||
Deferred income taxes | 34,098 | 26,775 | |||||
Prepaid and other current assets | 31,528 | 28,249 | |||||
Total current assets | 655,036 | 564,593 | |||||
Property, plant and equipment, net | 333,918 | 334,742 | |||||
Other assets | 110,245 | 110,951 | |||||
Total assets | $ | 1,099,199 | $ | 1,010,286 | |||
Liabilities and Equity | |||||||
Current liabilities | |||||||
Short-term debt | $ | — | $ | 11,723 | |||
Accounts payable | 112,666 | 76,574 | |||||
Other current liabilities | 99,481 | 87,469 | |||||
Total current liabilities | 212,147 | 175,766 | |||||
Long-term debt | 317,881 | 317,881 | |||||
Deferred income taxes | 38,414 | 38,691 | |||||
Other long-term liabilities | 87,069 | 81,069 | |||||
Total liabilities | 655,511 | 613,407 | |||||
Equity: | |||||||
Titan stockholder's equity | |||||||
Common stock (no par, 120,000,000 shares authorized, 44,092,997 issued) | 37 | 37 | |||||
Additional paid-in capital | 381,328 | 380,295 | |||||
Retained earnings | 102,261 | 67,053 | |||||
Treasury stock (at cost, 1,856,828 and 1,887,316 shares, respectively) | (17,065 | ) | (17,338 | ) | |||
Treasury stock reserved for deferred compensation | (1,233 | ) | (1,233 | ) | |||
Accumulated other comprehensive loss | (23,255 | ) | (33,575 | ) | |||
Total Titan stockholders’ equity | 442,073 | 395,239 | |||||
Noncontrolling interests | 1,615 | 1,640 | |||||
Total equity | 443,688 | 396,879 | |||||
Total liabilities and equity | $ | 1,099,199 | $ | 1,010,286 |
Number of common shares | Common Stock | Additional paid-in capital | Retained earnings | Treasury stock | Treasury stock reserved for contractual obligations | Accumulated other comprehensive income (loss) | Total Titan Equity | Noncontrolling interest | Total Equity | |||||||||||||||||||||||||||||
Balance January 1, 2012 | 42,205,681 | $ | 37 | $ | 380,295 | $ | 67,053 | $ | (17,338 | ) | $ | (1,233 | ) | $ | (33,575 | ) | $ | 395,239 | $ | 1,640 | $ | 396,879 | ||||||||||||||||
Net income | 35,419 | 35,419 | (25 | ) | 35,394 | |||||||||||||||||||||||||||||||||
Currency translation adjustment | 3,567 | 3,567 | 3,567 | |||||||||||||||||||||||||||||||||||
Pension liability adjustments, net of tax | 836 | 836 | 836 | |||||||||||||||||||||||||||||||||||
Unrealized gain on investment, net of tax | 5,917 | 5,917 | 5,917 | |||||||||||||||||||||||||||||||||||
Dividends on common stock | (211 | ) | (211 | ) | (211 | ) | ||||||||||||||||||||||||||||||||
Exercise of stock options | 23,490 | 160 | 210 | 370 | 370 | |||||||||||||||||||||||||||||||||
Stock-based compensation | 791 | 791 | 791 | |||||||||||||||||||||||||||||||||||
Tax benefit related to stock-based compensation | 6 | 6 | 6 | |||||||||||||||||||||||||||||||||||
Issuance of treasury stock under 401(k) plan | 6,998 | 76 | 63 | 139 | 139 | |||||||||||||||||||||||||||||||||
Balance March 31, 2012 | 42,236,169 | $ | 37 | $ | 381,328 | $ | 102,261 | $ | (17,065 | ) | $ | (1,233 | ) | $ | (23,255 | ) | $ | 442,073 | $ | 1,615 | $ | 443,688 |
Three months ended March 31, | |||||||
Cash flows from operating activities: | 2012 | 2011 | |||||
Net income (loss) | $ | 35,394 | $ | (3,036 | ) | ||
Adjustments to reconcile net income to net cash | |||||||
provided by (used for) operating activities: | |||||||
Depreciation and amortization | 11,843 | 9,299 | |||||
Deferred income tax provision | (8,091 | ) | 7,415 | ||||
Noncash convertible debt conversion charge | — | 16,135 | |||||
Stock-based compensation | 791 | 393 | |||||
Excess tax benefit from stock options exercised | (6 | ) | — | ||||
Issuance of treasury stock under 401(k) plan | 139 | 126 | |||||
(Increase) decrease in assets: | |||||||
Accounts receivable | (54,988 | ) | (50,021 | ) | |||
Inventories | (22,449 | ) | (5,697 | ) | |||
Prepaid and other current assets | (3,033 | ) | 632 | ||||
Other assets | (3,089 | ) | 10 | ||||
Increase in liabilities: | |||||||
Accounts payable | 35,334 | 9,905 | |||||
Other current liabilities | 11,580 | 8,442 | |||||
Other liabilities | 17,223 | 802 | |||||
Net cash provided by (used for) operating activities | 20,648 | (5,595 | ) | ||||
Cash flows from investing activities: | |||||||
Capital expenditures | (8,155 | ) | (3,469 | ) | |||
Other | 108 | 623 | |||||
Net cash used for investing activities | (8,047 | ) | (2,846 | ) | |||
Cash flows from financing activities: | |||||||
Repurchase of senior unsecured notes | — | (1,064 | ) | ||||
Payment on debt | (12,444 | ) | — | ||||
Proceeds from exercise of stock options | 370 | 230 | |||||
Excess tax benefit from stock options exercised | 6 | — | |||||
Dividends paid | (211 | ) | (177 | ) | |||
Net cash used for financing activities | (12,279 | ) | (1,011 | ) | |||
Effect of exchange rate changes on cash | (184 | ) | — | ||||
Net increase (decrease) in cash and cash equivalents | 138 | (9,452 | ) | ||||
Cash and cash equivalents, beginning of period | 129,170 | 239,500 | |||||
Cash and cash equivalents, end of period | $ | 129,308 | $ | 230,048 |
1. | ACCOUNTING POLICIES |
Cash | $ | 1,018 | |
Inventories | 14,562 | ||
Deferred income taxes - current asset | 2,948 | ||
Prepaid & other current assets | 4,929 | ||
Property, plant & equipment | 108,905 | ||
Goodwill | 11,536 | ||
Other assets | 39,263 | ||
Other current liabilities | (21,127 | ) | |
Deferred income taxes - noncurrent liability | (22,573 | ) | |
Other noncurrent liabilities | (40,823 | ) | |
Net assets acquired | $ | 98,638 |
Three months ended March 31, | ||||||
2012 (Actual) | 2011 (Pro forma) | |||||
Net sales | $ | 463,088 | $ | 309,229 | ||
Net income | 35,394 | 1,094 | ||||
Net income attributable to Titan | 35,419 | 1,094 | ||||
Basic earnings per share | $ | .84 | $ | .03 | ||
Diluted earnings per share | .68 | .04 |
March 31, 2012 | December 31, 2011 | ||||||
Accounts receivable | $ | 250,740 | $ | 193,731 | |||
Allowance for doubtful accounts | (4,792 | ) | (4,204 | ) | |||
Accounts receivable, net | $ | 245,948 | $ | 189,527 |
March 31, 2012 | December 31, 2011 | ||||||
Raw material | $ | 101,312 | $ | 97,257 | |||
Work-in-process | 31,751 | 31,141 | |||||
Finished goods | 89,169 | 75,137 | |||||
222,232 | 203,535 | ||||||
Adjustment to LIFO basis | (8,078 | ) | (12,663 | ) | |||
$ | 214,154 | $ | 190,872 |
March 31, 2012 | December 31, 2011 | ||||||
Land and improvements | $ | 20,834 | $ | 20,330 | |||
Buildings and improvements | 124,036 | 121,847 | |||||
Machinery and equipment | 456,170 | 456,236 | |||||
Tools, dies and molds | 89,711 | 88,676 | |||||
Construction-in-process | 14,366 | 14,606 | |||||
705,117 | 701,695 | ||||||
Less accumulated depreciation | (371,199 | ) | (366,953 | ) | |||
$ | 333,918 | $ | 334,742 |
March 31, 2012 | December 31, 2011 | ||||||
Investment in Titan Europe Plc | $ | 38,389 | $ | 28,998 |
2012 | 2011 | |||||||
Agricultural segment | ||||||||
Goodwill balance, January 1 | $ | 19,841 | $ | — | ||||
Acquisition adjustment | (10,134 | ) | — | |||||
Foreign currency translation | 585 | — | ||||||
Goodwill balance, March 31 | $ | 10,292 | $ | — |
2012 | 2011 | ||||||
Warranty liability, January 1 | $ | 17,659 | $ | 12,471 | |||
Provision for warranty liabilities | 7,773 | 5,256 | |||||
Warranty payments made | (5,899 | ) | (3,743 | ) | |||
Warranty liability, March 31 | $ | 19,533 | $ | 13,984 |
March 31, 2012 | December 31, 2011 | ||||||
7.875% senior secured notes due 2017 | $ | 200,000 | $ | 200,000 | |||
5.625% convertible senior subordinated notes due 2017 | 112,881 | 112,881 | |||||
Other debt | 5,000 | 16,723 | |||||
317,881 | 329,604 | ||||||
Less amounts due within one year | — | 11,723 | |||||
$ | 317,881 | $ | 317,881 |
April 1 - December 31, 2012 | $ | — | |
2013 | 5,000 | ||
2014 | — | ||
2015 | — | ||
2016 | — | ||
Thereafter | 312,881 | ||
$ | 317,881 |
April 1 - December 31, 2012 | $ | 450 | |
2013 | 475 | ||
2014 | 389 | ||
Thereafter | 66 | ||
Total future minimum lease payments | $ | 1,380 |
Three months ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Interest cost | $ | 1,133 | $ | 1,272 | |||
Expected return on assets | (1,252 | ) | (1,315 | ) | |||
Amortization of unrecognized prior service cost | 34 | 34 | |||||
Amortization of unrecognized deferred taxes | — | (14 | ) | ||||
Amortization of net unrecognized loss | 1,293 | 936 | |||||
Net periodic pension cost | $ | 1,208 | $ | 913 |
Three months ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Gain related to contractual obligation investments | $ | 1,268 | $ | 93 | |||
Discount amortization on prepaid royalty | 1,039 | — | |||||
Interest income | 205 | 145 | |||||
Building rental income | 175 | — | |||||
Other income (expense) | 424 | (45 | ) | ||||
$ | 3,111 | $ | 193 |
Three months ended | |||||||
March 31, | |||||||
2012 | 2011 | ||||||
Revenues from external customers | |||||||
Agricultural | $ | 295,805 | $ | 209,997 | |||
Earthmoving/construction | 104,568 | 66,511 | |||||
Consumer | 62,715 | 4,321 | |||||
$ | 463,088 | $ | 280,829 | ||||
Gross profit | |||||||
Agricultural | $ | 66,092 | $ | 47,700 | |||
Earthmoving/construction | 22,347 | 8,195 | |||||
Consumer | 5,699 | 1,002 | |||||
Unallocated corporate | (775 | ) | (625 | ) | |||
$ | 93,363 | $ | 56,272 | ||||
Income from operations | |||||||
Agricultural | $ | 60,663 | $ | 42,868 | |||
Earthmoving/construction | 20,401 | 6,288 | |||||
Consumer | 3,102 | 916 | |||||
Unallocated corporate | (25,495 | ) | (23,193 | ) | |||
Income from operations | 58,671 | 26,879 | |||||
Interest expense | (6,295 | ) | (6,280 | ) | |||
Noncash convertible debt conversion charge | — | (16,135 | ) | ||||
Other income, net | 3,111 | 193 | |||||
Income before income taxes | $ | 55,487 | $ | 4,657 |
March 31, 2012 | December 31, 2011 | ||||||
Total assets | |||||||
Agricultural | $ | 519,223 | $ | 444,611 | |||
Earthmoving/construction | 212,687 | 193,566 | |||||
Consumer | 147,371 | 139,161 | |||||
Unallocated corporate | 219,918 | 232,948 | |||||
$ | 1,099,199 | $ | 1,010,286 |
Three months ended | |||||||||||||||||||||
March 31, 2012 | March 31, 2011 | ||||||||||||||||||||
Titan Net income (loss) | Weighted- average shares | Per share amount | Titan Net income (loss) | Weighted- average shares | Per share amount | ||||||||||||||||
Basic earnings per share | $ | 35,419 | 42,105 | $ | 0.84 | $ | (3,036 | ) | 40,511 | $ | (0.07 | ) | |||||||||
Effect of stock options/trusts | — | 274 | — | — | |||||||||||||||||
Effect of convertible notes | 1,143 | 11,071 | — | — | |||||||||||||||||
Diluted earnings per share | $ | 36,562 | 53,450 | $ | 0.68 | $ | (3,036 | ) | 40,511 | $ | (0.07 | ) |
March 31, 2012 | December 31, 2011 | ||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
Investment in Titan Europe Plc (a) | $ | 38,389 | $ | 38,389 | $ | — | $ | — | $ | 28,998 | $ | 28,998 | $ | — | $ | — | |||||||||||||||
Contractual obligation investments | 13,662 | 13,662 | 12,395 | 12,395 | |||||||||||||||||||||||||||
Preferred stock | 1,000 | — | — | 1,000 | 1,000 | — | — | 1,000 | |||||||||||||||||||||||
Interest rate swap | 545 | — | 545 | — | 634 | — | 634 | — | |||||||||||||||||||||||
Total | $ | 53,596 | $ | 52,051 | $ | 545 | $ | 1,000 | $ | 43,027 | $ | 41,393 | $ | 634 | $ | 1,000 |
Preferred stock | |||
Balance at December 31, 2011 | $ | 1,000 | |
Total realized and unrealized gains and losses | — | ||
Balance as of March 31, 2012 | $ | 1,000 |
(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 | $ | — | $ | 371,129 | $ | 91,959 | $ | — | $ | 463,088 | |||||||||
Cost of sales | 302 | 285,024 | 84,399 | — | 369,725 | ||||||||||||||
Gross profit (loss) | (302 | ) | 86,105 | 7,560 | — | 93,363 | |||||||||||||
Selling, general and administrative expenses | 10,587 | 15,675 | 4,573 | — | 30,835 | ||||||||||||||
Research and development expenses | 124 | 1,298 | 86 | — | 1,508 | ||||||||||||||
Royalty expense | — | 1,693 | 656 | — | 2,349 | ||||||||||||||
Income (loss) from operations | (11,013 | ) | 67,439 | 2,245 | — | 58,671 | |||||||||||||
Interest expense | (6,062 | ) | — | (233 | ) | — | (6,295 | ) | |||||||||||
Other income | 2,174 | 497 | 440 | — | 3,111 | ||||||||||||||
Income (loss) before income taxes | (14,901 | ) | 67,936 | 2,452 | — | 55,487 | |||||||||||||
Provision (benefit) for income taxes | (6,952 | ) | 25,041 | 2,004 | — | 20,093 | |||||||||||||
Equity in earnings of subsidiaries | 43,343 | — | — | (43,343 | ) | — | |||||||||||||
Net income (loss) | 35,394 | 42,895 | 448 | (43,343 | ) | 35,394 | |||||||||||||
Net loss noncontrolling interests | — | — | — | (25 | ) | (25 | ) | ||||||||||||
Net income (loss) attributable to Titan | $ | 35,394 | $ | 42,895 | $ | 448 | $ | (43,318 | ) | $ | 35,419 |
(Amounts in thousands) | Consolidating Condensed Statements of Operations For the Three Months Ended March 31, 2011 | ||||||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 280,829 | $ | — | $ | — | $ | 280,829 | |||||||||
Cost of sales | 361 | 223,754 | 442 | — | 224,557 | ||||||||||||||
Gross profit (loss) | (361 | ) | 57,075 | (442 | ) | — | 56,272 | ||||||||||||
Selling, general and administrative expenses | 15,405 | 2,725 | 7,163 | — | 25,293 | ||||||||||||||
Research and development expenses | — | 1,183 | — | — | 1,183 | ||||||||||||||
Royalty expense | — | 2,917 | — | — | 2,917 | ||||||||||||||
Income (loss) from operations | (15,766 | ) | 50,250 | (7,605 | ) | — | 26,879 | ||||||||||||
Interest expense | (6,280 | ) | — | — | — | (6,280 | ) | ||||||||||||
Noncash convertible debt conversion charge | (16,135 | ) | — | — | — | (16,135 | ) | ||||||||||||
Other income (expense) | 317 | (202 | ) | 78 | — | 193 | |||||||||||||
Income (loss) before income taxes | (37,864 | ) | 50,048 | (7,527 | ) | — | 4,657 | ||||||||||||
Provision (benefit) for income taxes | (8,039 | ) | 18,518 | (2,786 | ) | — | 7,693 | ||||||||||||
Equity in earnings of subsidiaries | 26,789 | — | — | (26,789 | ) | — | |||||||||||||
Net income (loss) | $ | (3,036 | ) | $ | 31,530 | $ | (4,741 | ) | $ | (26,789 | ) | $ | (3,036 | ) |
(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 | $ | 42,895 | $ | 448 | $ | (43,343 | ) | $ | 35,394 | ||||||||
Unrealized gain (loss) on investments, net of tax | 5,917 | — | 5,917 | (5,917 | ) | 5,917 | |||||||||||||
Currency translation adjustment | 3,567 | — | 3,567 | (3,567 | ) | 3,567 | |||||||||||||
Pension liability adjustments, net of tax | 836 | 790 | 46 | (836 | ) | 836 | |||||||||||||
Comprehensive income (loss) | 45,714 | 43,685 | 9,978 | (53,663 | ) | 45,714 | |||||||||||||
Net comprehensive loss attributable to noncontrolling interests | — | — | — | (25 | ) | (25 | ) | ||||||||||||
Comprehensive income (loss) attributable to Titan | $ | 45,714 | $ | 43,685 | $ | 9,978 | $ | (53,638 | ) | $ | 45,739 |
(Amounts in thousands) | Consolidating Condensed Statements of Comprehensive Income For the Three Months Ended March 31, 2011 | ||||||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net income (loss) | $ | (3,036 | ) | $ | 31,530 | $ | (4,741 | ) | $ | (26,789 | ) | $ | (3,036 | ) | |||||
Unrealized gain (loss) on investments, net of tax | (993 | ) | — | (993 | ) | 993 | (993 | ) | |||||||||||
Currency translation adjustment | — | — | — | — | — | ||||||||||||||
Pension liability adjustments, net of tax | 593 | 553 | 40 | (593 | ) | 593 | |||||||||||||
Comprehensive income (loss) | (3,436 | ) | 32,083 | (5,694 | ) | (26,389 | ) | (3,436 | ) | ||||||||||
Net comprehensive loss attributable to noncontrolling interests | — | — | — | — | — | ||||||||||||||
Comprehensive income (loss) attributable to Titan | $ | (3,436 | ) | $ | 32,083 | $ | (5,694 | ) | $ | (26,389 | ) | $ | (3,436 | ) |
(Amounts in thousands) | Consolidating Condensed Balance Sheets March 31, 2012 | ||||||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 116,518 | $ | 6 | $ | 12,784 | $ | — | $ | 129,308 | |||||||||
Accounts receivable | — | 192,351 | 53,597 | — | 245,948 | ||||||||||||||
Inventories | — | 184,114 | 30,040 | — | 214,154 | ||||||||||||||
Prepaid and other current assets | 33,400 | 17,325 | 14,901 | — | 65,626 | ||||||||||||||
Total current assets | 149,918 | 393,796 | 111,322 | — | 655,036 | ||||||||||||||
Property, plant and equipment, net | 8,805 | 217,232 | 107,881 | — | 333,918 | ||||||||||||||
Investment in subsidiaries | 220,693 | — | — | (220,693 | ) | — | |||||||||||||
Other assets | 44,910 | 1,403 | 63,932 | — | 110,245 | ||||||||||||||
Total assets | $ | 424,326 | $ | 612,431 | $ | 283,135 | $ | (220,693 | ) | $ | 1,099,199 | ||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||
Accounts payable | $ | 1,084 | $ | 52,185 | $ | 59,397 | $ | — | $ | 112,666 | |||||||||
Other current liabilities | 1,893 | 69,570 | 28,018 | — | 99,481 | ||||||||||||||
Total current liabilities | 2,977 | 121,755 | 87,415 | — | 212,147 | ||||||||||||||
Long-term debt | 312,881 | — | 5,000 | — | 317,881 | ||||||||||||||
Other long-term liabilities | 37,072 | 37,522 | 50,889 | — | 125,483 | ||||||||||||||
Intercompany accounts | (370,677 | ) | 141,897 | 228,780 | — | — | |||||||||||||
Titan stockholders' equity | 442,073 | 311,257 | (88,949 | ) | (222,308 | ) | 442,073 | ||||||||||||
Noncontrolling interests | — | — | — | 1,615 | 1,615 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 424,326 | $ | 612,431 | $ | 283,135 | $ | (220,693 | ) | $ | 1,099,199 |
(Amounts in thousands) | Consolidating Condensed Balance Sheets December 31, 2011 | ||||||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 125,266 | $ | 6 | $ | 3,898 | $ | — | $ | 129,170 | |||||||||
Accounts receivable | — | 137,226 | 52,301 | — | 189,527 | ||||||||||||||
Inventories | — | 162,134 | 28,738 | — | 190,872 | ||||||||||||||
Prepaid and other current assets | 27,251 | 15,490 | 12,283 | — | 55,024 | ||||||||||||||
Total current assets | 152,517 | 314,856 | 97,220 | — | 564,593 | ||||||||||||||
Property, plant and equipment, net | 9,562 | 219,734 | 105,446 | — | 334,742 | ||||||||||||||
Investment in subsidiaries | 184,317 | — | — | (184,317 | ) | — | |||||||||||||
Other assets | 44,918 | 1,454 | 64,579 | — | 110,951 | ||||||||||||||
Total assets | $ | 391,314 | $ | 536,044 | $ | 267,245 | $ | (184,317 | ) | $ | 1,010,286 | ||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||
Short-term debt | $ | — | $ | — | $ | 11,723 | $ | — | $ | 11,723 | |||||||||
Accounts payable | 930 | 33,563 | 42,081 | — | 76,574 | ||||||||||||||
Other current liabilities | 22,687 | 39,457 | 25,325 | — | 87,469 | ||||||||||||||
Total current liabilities | 23,617 | 73,020 | 79,129 | — | 175,766 | ||||||||||||||
Long-term debt | 312,881 | — | 5,000 | — | 317,881 | ||||||||||||||
Other long-term liabilities | 29,267 | 38,187 | 52,306 | — | 119,760 | ||||||||||||||
Intercompany accounts | (369,690 | ) | 157,264 | 212,426 | — | — | |||||||||||||
Titan stockholders' equity | 395,239 | 267,573 | (81,616 | ) | (185,957 | ) | 395,239 | ||||||||||||
Noncontrolling interests | — | — | — | 1,640 | 1,640 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 391,314 | $ | 536,044 | $ | 267,245 | $ | (184,317 | ) | $ | 1,010,286 |
(Amounts in thousands) | Consolidating Condensed Statements of Cash Flows For the Three Months Ended March 31, 2012 | ||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidated | ||||||||||||
Net cash provided by (used for) operating activities | $ | (7,535 | ) | $ | 6,204 | $ | 21,979 | $ | 20,648 | ||||||
Cash flows from investing activities: | |||||||||||||||
Capital expenditures | (1,378 | ) | (6,225 | ) | (552 | ) | (8,155 | ) | |||||||
Other, net | — | 21 | 87 | 108 | |||||||||||
Net cash used for investing activities | (1,378 | ) | (6,204 | ) | (465 | ) | (8,047 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Payment on debt | — | — | (12,444 | ) | (12,444 | ) | |||||||||
Proceeds from exercise of stock options | 370 | — | — | 370 | |||||||||||
Excess tax benefit from stock options exercised | 6 | — | — | 6 | |||||||||||
Dividends paid | (211 | ) | — | — | (211 | ) | |||||||||
Net cash provided by (used for) financing activities | 165 | — | (12,444 | ) | (12,279 | ) | |||||||||
Effect of exchange rate change on cash | — | — | (184 | ) | (184 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (8,748 | ) | — | 8,886 | 138 | ||||||||||
Cash and cash equivalents, beginning of period | 125,266 | 6 | 3,898 | 129,170 | |||||||||||
Cash and cash equivalents, end of period | $ | 116,518 | $ | 6 | $ | 12,784 | $ | 129,308 |
(Amounts in thousands) | Consolidating Condensed Statements of Cash Flows For the Three Months Ended March 31, 2011 | ||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidated | ||||||||||||
Net cash provided by (used for) operating activities | $ | (8,115 | ) | $ | 2,487 | $ | 33 | $ | (5,595 | ) | |||||
Cash flows from investing activities: | |||||||||||||||
Capital expenditures | (312 | ) | (3,100 | ) | (57 | ) | (3,469 | ) | |||||||
Other, net | — | 614 | 9 | 623 | |||||||||||
Net cash used for investing activities | (312 | ) | (2,486 | ) | (48 | ) | (2,846 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Repurchase of senior unsecured notes | (1,064 | ) | — | — | (1,064 | ) | |||||||||
Proceeds from exercise of stock options | 230 | — | — | 230 | |||||||||||
Dividends paid | (177 | ) | — | — | (177 | ) | |||||||||
Net cash used for financing activities | (1,011 | ) | — | — | (1,011 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (9,438 | ) | 1 | (15 | ) | (9,452 | ) | ||||||||
Cash and cash equivalents, beginning of period | 239,362 | 6 | 132 | 239,500 | |||||||||||
Cash and cash equivalents, end of period | $ | 229,924 | $ | 7 | $ | 117 | $ | 230,048 |
(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 Operations For the Three Months Ended March 31, 2011 | ||||||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 274,961 | $ | 5,868 | $ | — | $ | 280,829 | |||||||||
Cost of sales | 361 | 217,995 | 6,201 | — | 224,557 | ||||||||||||||
Gross profit (loss) | (361 | ) | 56,966 | (333 | ) | — | 56,272 | ||||||||||||
Selling, general and administrative expenses | 15,405 | 2,649 | 7,239 | — | 25,293 | ||||||||||||||
Research and development expenses | — | 1,183 | — | — | 1,183 | ||||||||||||||
Royalty expense | — | 2,917 | — | — | 2,917 | ||||||||||||||
Income (loss) from operations | (15,766 | ) | 50,217 | (7,572 | ) | — | 26,879 | ||||||||||||
Interest expense | (6,280 | ) | — | — | — | (6,280 | ) | ||||||||||||
Noncash convertible debt conversion charge | (16,135 | ) | — | — | — | (16,135 | ) | ||||||||||||
Other income (expense) | 317 | (235 | ) | 111 | — | 193 | |||||||||||||
Income (loss) before income taxes | (37,864 | ) | 49,982 | (7,461 | ) | — | 4,657 | ||||||||||||
Provision (benefit) for income taxes | (8,039 | ) | 18,493 | (2,761 | ) | — | 7,693 | ||||||||||||
Equity in earnings of subsidiaries | 26,789 | — | — | (26,789 | ) | — | |||||||||||||
Net income (loss) | $ | (3,036 | ) | $ | 31,489 | $ | (4,700 | ) | $ | (26,789 | ) | $ | (3,036 | ) |
(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 | 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 Statements of Comprehensive Income For the Three Months Ended March 31, 2011 | ||||||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net income (loss) | $ | (3,036 | ) | $ | 31,489 | $ | (4,700 | ) | $ | (26,789 | ) | $ | (3,036 | ) | |||||
Unrealized gain (loss) on investments, net of tax | (993 | ) | — | (993 | ) | 993 | (993 | ) | |||||||||||
Currency translation adjustment | — | — | — | — | — | ||||||||||||||
Pension liability adjustments, net of tax | 593 | 553 | 40 | (593 | ) | 593 | |||||||||||||
Comprehensive income (loss) | (3,436 | ) | 32,042 | (5,653 | ) | (26,389 | ) | (3,436 | ) | ||||||||||
Net comprehensive loss attributable to noncontrolling interests | — | — | — | — | — | ||||||||||||||
Comprehensive income (loss) attributable to Titan | $ | (3,436 | ) | $ | 32,042 | $ | (5,653 | ) | $ | (26,389 | ) | $ | (3,436 | ) |
(Amounts in thousands) | Consolidating Condensed Balance Sheets March 31, 2012 | ||||||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 116,518 | $ | 4 | $ | 12,786 | $ | — | $ | 129,308 | |||||||||
Accounts receivable | — | 189,351 | 56,597 | — | 245,948 | ||||||||||||||
Inventories | — | 166,077 | 48,077 | — | 214,154 | ||||||||||||||
Prepaid and other current assets | 33,400 | 17,182 | 15,044 | — | 65,626 | ||||||||||||||
Total current assets | 149,918 | 372,614 | 132,504 | — | 655,036 | ||||||||||||||
Property, plant and equipment, net | 8,805 | 202,722 | 122,391 | — | 333,918 | ||||||||||||||
Investment in subsidiaries | 220,693 | — | 41,516 | (262,209 | ) | — | |||||||||||||
Other assets | 44,910 | 1,403 | 63,932 | — | 110,245 | ||||||||||||||
Total assets | $ | 424,326 | $ | 576,739 | $ | 360,343 | $ | (262,209 | ) | $ | 1,099,199 | ||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||
Accounts payable | $ | 1,084 | $ | 51,531 | $ | 60,051 | $ | — | $ | 112,666 | |||||||||
Other current liabilities | 1,893 | 69,119 | 28,469 | — | 99,481 | ||||||||||||||
Total current liabilities | 2,977 | 120,650 | 88,520 | — | 212,147 | ||||||||||||||
Long-term debt | 312,881 | — | 5,000 | — | 317,881 | ||||||||||||||
Other long-term liabilities | 37,072 | 37,460 | 50,951 | — | 125,483 | ||||||||||||||
Intercompany accounts | (370,677 | ) | 70,730 | 299,947 | — | — | |||||||||||||
Titan stockholders' equity | 442,073 | 347,899 | (84,075 | ) | (263,824 | ) | 442,073 | ||||||||||||
Noncontrolling interests | — | — | — | 1,615 | 1,615 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 424,326 | $ | 576,739 | $ | 360,343 | $ | (262,209 | ) | $ | 1,099,199 |
(Amounts in thousands) | Consolidating Condensed Balance Sheets December 31, 2011 | ||||||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Assets | |||||||||||||||||||
Cash and cash equivalents | $ | 125,266 | $ | 4 | $ | 3,900 | $ | — | $ | 129,170 | |||||||||
Accounts receivable | — | 133,320 | 56,207 | — | 189,527 | ||||||||||||||
Inventories | — | 144,511 | 46,361 | — | 190,872 | ||||||||||||||
Prepaid and other current assets | 27,251 | 15,385 | 12,388 | — | 55,024 | ||||||||||||||
Total current assets | 152,517 | 293,220 | 118,856 | — | 564,593 | ||||||||||||||
Property, plant and equipment, net | 9,562 | 205,027 | 120,153 | — | 334,742 | ||||||||||||||
Investment in subsidiaries | 184,307 | — | — | (184,307 | ) | — | |||||||||||||
Other assets | 44,918 | 1,454 | 64,579 | — | 110,951 | ||||||||||||||
Total assets | $ | 391,304 | $ | 499,701 | $ | 303,588 | $ | (184,307 | ) | $ | 1,010,286 | ||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||
Short-term debt | $ | — | $ | — | $ | 11,723 | $ | — | $ | 11,723 | |||||||||
Accounts payable | 930 | 33,070 | 42,574 | — | 76,574 | ||||||||||||||
Other current liabilities | 22,687 | 39,104 | 25,678 | — | 87,469 | ||||||||||||||
Total current liabilities | 23,617 | 72,174 | 79,975 | — | 175,766 | ||||||||||||||
Long-term debt | 312,881 | — | 5,000 | — | 317,881 | ||||||||||||||
Other long-term liabilities | 29,267 | 38,125 | 52,368 | — | 119,760 | ||||||||||||||
Intercompany accounts | (369,700 | ) | 85,560 | 284,140 | — | — | |||||||||||||
Titan stockholders' equity | 395,239 | 303,842 | (117,895 | ) | (185,947 | ) | 395,239 | ||||||||||||
Noncontrolling interests | — | — | — | 1,640 | 1,640 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 391,304 | $ | 499,701 | $ | 303,588 | $ | (184,307 | ) | $ | 1,010,286 |
(Amounts in thousands) | Consolidating Condensed Statements of Cash Flows For the Three Months Ended March 31, 2012 | ||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidated | ||||||||||||
Net cash provided by (used for) operating activities | $ | (7,535 | ) | $ | 6,025 | $ | 22,158 | $ | 20,648 | ||||||
Cash flows from investing activities: | |||||||||||||||
Capital expenditures | (1,378 | ) | (6,046 | ) | (731 | ) | (8,155 | ) | |||||||
Other, net | — | 21 | 87 | 108 | |||||||||||
Net cash used for investing activities | (1,378 | ) | (6,025 | ) | (644 | ) | (8,047 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Payment on debt | — | — | (12,444 | ) | (12,444 | ) | |||||||||
Proceeds from exercise of stock options | 370 | — | — | 370 | |||||||||||
Excess tax benefit from stock options exercised | 6 | — | — | 6 | |||||||||||
Dividends paid | (211 | ) | — | — | (211 | ) | |||||||||
Net cash provided by (used for) financing activities | 165 | — | (12,444 | ) | (12,279 | ) | |||||||||
Effect of exchange rate change on cash | — | — | (184 | ) | (184 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (8,748 | ) | — | 8,886 | 138 | ||||||||||
Cash and cash equivalents, beginning of period | 125,266 | 4 | 3,900 | 129,170 | |||||||||||
Cash and cash equivalents, end of period | $ | 116,518 | $ | 4 | $ | 12,786 | $ | 129,308 |
(Amounts in thousands) | Consolidating Condensed Statements of Cash Flows For the Three Months Ended March 31, 2011 | ||||||||||||||
Titan Intl., Inc. (Parent) | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidated | ||||||||||||
Net cash provided by operating activities | $ | (8,115 | ) | $ | 2,487 | $ | 33 | $ | (5,595 | ) | |||||
Cash flows from investing activities: | |||||||||||||||
Capital expenditures | (312 | ) | (3,100 | ) | (57 | ) | (3,469 | ) | |||||||
Other, net | — | 614 | 9 | 623 | |||||||||||
Net cash used for investing activities | (312 | ) | (2,486 | ) | (48 | ) | (2,846 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Repurchase of senior unsecured notes | (1,064 | ) | — | — | (1,064 | ) | |||||||||
Proceeds from exercise of stock options | 230 | — | — | 230 | |||||||||||
Dividends paid | (177 | ) | — | — | (177 | ) | |||||||||
Net cash used for financing activities | (1,011 | ) | — | — | (1,011 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (9,438 | ) | 1 | (15 | ) | (9,452 | ) | ||||||||
Cash and cash equivalents, beginning of period | 239,362 | 3 | 135 | 239,500 | |||||||||||
Cash and cash equivalents, end of period | $ | 229,924 | $ | 4 | $ | 120 | $ | 230,048 |
• | Anticipated trends in the Company’s business |
• | Future expenditures for capital projects |
• | The Company’s ability to continue to control costs and maintain quality |
• | Ability to meet financial covenants and conditions of loan agreements |
• | The Company’s business strategies, including its intention to introduce new products |
• | Expectations concerning the performance and success of the Company’s existing and new products |
• | The Company’s intention to consider and pursue acquisition and divestiture opportunities |
• | The effect of a recession on the Company and its customers and suppliers |
• | Changes in the Company’s end-user markets as a result of world economic or regulatory influences |
• | Changes in the marketplace, including new products and pricing changes by the Company’s competitors |
• | Ability to maintain satisfactory labor relations |
• | Unfavorable outcomes of legal proceedings |
• | Availability and price of raw materials |
• | Levels of operating efficiencies |
• | Unfavorable product liability and warranty claims |
• | Actions of domestic and foreign governments |
• | Results of investments |
• | Fluctuations in currency translations |
• | Climate change and related laws and regulations |
• | Risks associated with environmental laws and regulations |
2012 | 2011 | % Increase | ||||||||
Net sales | $ | 463,088 | $ | 280,829 | 65 | % | ||||
Gross profit | 93,363 | 56,272 | 66 | % | ||||||
Income from operations | 58,671 | 26,879 | 118 | % | ||||||
Net income (loss) | 35,394 | (3,036 | ) | n/a |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Net sales | $ | 463,088 | $ | 280,829 | |||
Cost of sales | 369,725 | 224,557 | |||||
Gross profit | 93,363 | 56,272 | |||||
Gross profit percentage | 20.2 | % | 20.0 | % |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Selling, general and administrative | $ | 30,835 | $ | 25,293 | |||
Percentage of net sales | 6.7 | % | 9.0 | % |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Research and development | $ | 1,508 | $ | 1,183 | |||
Percentage of net sales | 0.3 | % | 0.4 | % |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Royalty expense | $ | 2,349 | $ | 2,917 |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Income from operations | $ | 58,671 | $ | 26,879 | |||
Percentage of net sales | 12.7 | % | 9.6 | % |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Interest expense | $ | 6,295 | $ | 6,280 |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Noncash convertible debt conversion charge | $ | — | $ | 16,135 |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Other income | $ | 3,111 | $ | 193 |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Income tax expense | $ | 20,093 | $ | 7,693 |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Net income (loss) | $ | 35,394 | $ | (3,036 | ) |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Net sales | $ | 295,805 | $ | 209,997 | |||
Gross profit | 66,092 | 47,700 | |||||
Income from operations | 60,663 | 42,868 |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Net sales | $ | 104,568 | $ | 66,511 | |||
Gross profit | 22,347 | 8,195 | |||||
Income from operations | 20,401 | 6,288 |
Three months ended March 31, | |||||||
2012 | 2011 | ||||||
Net sales | $ | 62,715 | $ | 4,321 | |||
Gross profit | 5,699 | 1,002 | |||||
Income from operations | 3,102 | 916 |
Three months ended March 31, 2012 | Agricultural | Earthmoving/ Construction | Consumer | Corporate Expenses | Consolidated Totals | |||||||||||||||
Net sales | $ | 295,805 | $ | 104,568 | $ | 62,715 | $ | — | $ | 463,088 | ||||||||||
Gross profit (loss) | 66,092 | 22,347 | 5,699 | (775 | ) | 93,363 | ||||||||||||||
Income (loss) from operations | 60,663 | 20,401 | 3,102 | (25,495 | ) | 58,671 | ||||||||||||||
Three months ended March 31, 2011 | ||||||||||||||||||||
Net sales | $ | 209,997 | 66,511 | $ | 4,321 | $ | — | $ | 280,829 | |||||||||||
Gross profit (loss) | 47,700 | 8,195 | 1,002 | (625 | ) | 56,272 | ||||||||||||||
Income (loss) from operations | 42,868 | 6,288 | 916 | (23,193 | ) | 26,879 |
(amounts in thousands) | March 31, | December 31, | |||||||||
2012 | 2011 | Change | |||||||||
Cash | $ | 129,308 | $ | 129,170 | $ | 138 |
(Amounts in thousands) | Three months ended March 31, | ||||||||||
2012 | 2011 | Change | |||||||||
Net income (loss) | $ | 35,394 | $ | (3,036 | ) | $ | 38,430 | ||||
Depreciation and amortization | 11,843 | 9,299 | 2,544 | ||||||||
Noncash convertible debt conversion charge | — | 16,135 | (16,135 | ) | |||||||
Deferred income tax provision | (8,091 | ) | 7,415 | (15,506 | ) | ||||||
Accounts receivable | (54,988 | ) | (50,021 | ) | (4,967 | ) | |||||
Inventories | (22,449 | ) | (5,697 | ) | (16,752 | ) | |||||
Accounts payable | 35,334 | 9,905 | 25,429 | ||||||||
Other current liabilities | 11,580 | 8,442 | 3,138 | ||||||||
Other operating activities | 12,025 | 1,963 | 10,062 | ||||||||
Cash provided by (used for) operating activities | $ | 20,648 | $ | (5,595 | ) | $ | 26,243 |
(Amounts in thousands) | Three months ended March 31, | ||||||||||
2012 | 2011 | Change | |||||||||
Capital expenditures | $ | (8,155 | ) | $ | (3,469 | ) | $ | (4,686 | ) | ||
Other investing activities | 108 | 623 | (515 | ) | |||||||
Cash used for investing activities | $ | (8,047 | ) | $ | (2,846 | ) | $ | (5,201 | ) |
(Amounts in thousands) | Three months ended March 31, | ||||||||||
2012 | 2011 | Change | |||||||||
Repurchase of senior notes | $ | — | $ | (1,064 | ) | $ | 1,064 | ||||
Proceeds from exercise of stock options | 370 | 230 | 140 | ||||||||
Payment on debt | (12,444 | ) | — | (12,444 | ) | ||||||
Excess tax benefit from stock options exercised | 6 | — | 6 | ||||||||
Dividends paid | (211 | ) | (177 | ) | (34 | ) | |||||
Cash used for financing activities | $ | (12,279 | ) | $ | (1,011 | ) | $ | (11,268 | ) |
• | Collateral coverage be equal to or greater than 1.2 times the outstanding revolver balance. |
• | If the 30-day average of the outstanding revolver balance exceeds $70 million, the fixed charge coverage ratio be equal to or greater than a 1.1 to 1.0 ratio. |
• | Limits on payments of dividends and repurchases of the Company’s stock. |
• | Restrictions on the ability of the Company to make additional borrowings, or to consolidate, merge or otherwise fundamentally change the ownership of the Company. |
• | Limitations on investments, dispositions of assets and guarantees of indebtedness. |
• | Other customary affirmative and negative covenants. |
TITAN INTERNATIONAL, INC. | |
(Registrant) |
Date: | April 25, 2012 | By: | /s/ MAURICE M. TAYLOR JR. |
Maurice M. Taylor Jr. | |||
Chairman and Chief Executive Officer (Principal Executive Officer) |
By: | /s/ PAUL G. REITZ | |
Paul G. Reitz | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Titan International, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | April 25, 2012 | By: | /s/ MAURICE M. TAYLOR JR. |
Maurice M. Taylor Jr. | |||
Chief Executive Officer and Chairman | |||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Titan International, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | April 25, 2012 | By: | /s/ PAUL G. REITZ |
Paul G. Reitz | |||
Chief Financial Officer | |||
(Principal Financial Officer) |
TITAN INTERNATIONAL, INC. | |
(Registrant) |
Date: | April 25, 2012 | By: | /s/ MAURICE M. TAYLOR JR. |
Maurice M. Taylor Jr. | |||
Chairman and Chief Executive Officer | |||
(Principal Executive Officer) |
By: | /s/ PAUL G. REITZ | ||
Paul G. Reitz | |||
Chief Financial Officer | |||
(Principal Financial Officer) |
REVOLVING CREDIT FACILITY AND LONG-TERM DEBT (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] | Long-term debt consisted of the following (amounts in thousands):
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Schedule of Maturities of Long-term Debt [Table Text Block] | Aggregate maturities of long-term debt at March 31, 2012, were as follows (amounts in thousands):
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GOODWILL (Details) (Agricultural [Member], USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
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Mar. 31, 2012
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Mar. 31, 2011
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Agricultural [Member]
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Goodwill [Roll Forward] | ||
Goodwill at beginning of period | $ 19,841 | $ 0 |
Goodwill, Translation and Purchase Accounting Adjustments | (10,134) | 0 |
Foreign currency translation | 585 | 0 |
Goodwill at end of period | $ 10,292 | $ 0 |
ACCOUNTING POLICIES (Details) (USD $)
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3 Months Ended | |||||
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Mar. 31, 2012
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Mar. 31, 2011
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Mar. 31, 2012
7.875% senior secured notes [Member]
|
Dec. 31, 2011
7.875% senior secured notes [Member]
|
Mar. 31, 2012
5.625% convertible senior subordinated notes [Member]
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Dec. 31, 2011
5.625% convertible senior subordinated notes [Member]
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Organization And Accounting Policies [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.875% | 5.625% | ||||
Senior Notes | $ 200,000,000 | $ 200,000,000 | $ 200,000,000 | |||
Convertible Debt | 112,900,000 | 112,881,000 | 112,881,000 | |||
Debt Instrument, Fair Value Disclosure | 213,000,000 | |||||
Convertible Debt, Fair Value Disclosures | 277,600,000 | |||||
Common Stock, Dividends, Per Share, Declared | $ 0.005 | $ 0.005 | ||||
Interest Paid | 11,500,000 | 13,000,000 | ||||
Income Taxes Paid | $ 10,700,000 | $ 100,000 |
WARRANTY (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
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Mar. 31, 2012
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Mar. 31, 2011
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Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Warranty liability at beginning of year | $ 17,659 | $ 12,471 |
Provision for warranty liabilities | 7,773 | 5,256 |
Warranty payments made | (5,899) | (3,743) |
Warranty liability at March 31 | $ 19,533 | $ 13,984 |
Minimum [Member]
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Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Length of Limited Warranty, Term | 0 years | |
Maximum [Member]
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Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Length of Limited Warranty, Term | 10 years |
SUBSIDIARY GUARANTOR FINANCIAL INFORMATION-5.625% CONVERTIBLE NOTES (Tables) (Convertible Senior Subordinated Notes 5.625 Percent [Member])
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Mar. 31, 2012
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Convertible Senior Subordinated Notes 5.625 Percent [Member]
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Condensed Financial Statements, Captions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information, Condensed Statement of Operations [Table Text Block] |
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Condensed Financial Information, Condensed Statement of Comprehensive Income [Table Text Block] |
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Condensed Financial Information, Condensed Balance Sheet [Table Text Block] |
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Condensed Financial Information, Condensed Statement of Cash Flows [Table Text Block] |
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ACCOUNTS RECEIVABLE (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | Accounts receivable consisted of the following (amounts in thousands):
|
DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended |
---|---|
Mar. 31, 2012
|
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Derivative [Member]
|
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Derivative [Line Items] | |
Derivative Instruments, Gain (Loss) Recognized in Income, Net | $ 0.1 |
Brazil Term Loan [Member]
|
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Derivative [Line Items] | |
Unsecured Debt, Amount Outstanding | $ 5.0 |
FAIR VALUE MEASUREMENTS
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS ASC 820 Fair Value Measurements establishes 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):
(a) The fair value for all periods presented has been decreased by cumulative translation adjustment of $1.2 million, which relates to the Company's Titan Europe Plc ownership in 2005 and before. 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):
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ACCOUNTS RECEIVABLE (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
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Dec. 31, 2011
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Receivables [Abstract] | ||
Accounts receivable | $ 250,740 | $ 193,731 |
Allowance for doubtful accounts | (4,792) | (4,204) |
Accounts receivable, net | $ 245,948 | $ 189,527 |
OTHER INCOME (Tables)
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Interest and Other Income [Table Text Block] | Other income consisted of the following (amounts in thousands):
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GOODWILL (Tables)
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GOODWILL [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] | hanges in goodwill consisted of the following (amounts in thousands):
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RELATED PARTY TRANSACTIONS (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |
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Mar. 31, 2012
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Mar. 31, 2011
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Related Party Transactions [Abstract] | ||
Related Party Transaction, Revenues from Transactions with Related Party | $ 0.4 | $ 0.9 |
Related Party Transaction, Due from (to) Related Party | 0.2 | 0 |
Related Party Transaction, Expenses from Transactions with Related Party | $ 0.7 | $ 0.6 |
OTHER INCOME (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
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Mar. 31, 2012
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Mar. 31, 2011
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OTHER INCOME, NET [Abstract] | ||
Investment gain (loss) related to contractual obligations | $ 1,268 | $ 93 |
Discount amortization on prepaid royalty | 1,039 | 0 |
Interest income | 205 | 145 |
Building rental income | 175 | 0 |
Other income (expense) | 424 | (45) |
Nonoperating Income (Expense) | $ 3,111 | $ 193 |
SUBSIDIARY GUARANTOR FINANCIAL INFORMATION-7.875% SENIOR NOTES (Tables) (7.875% senior secured notes [Member])
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7.875% senior secured notes [Member]
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Condensed Financial Information, Condensed Statement of Operations [Table Text Block] |
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Condensed Financial Information, Condensed Statement of Comprehensive Income [Table Text Block] |
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Condensed Financial Information, Condensed Balance Sheet [Table Text Block] |
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Condensed Financial Information, Condensed Statement of Cash Flows [Table Text Block] |
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DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
ACCOUNTING POLICIES | 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, 2012, and the results of operations and cash flows for the three months ended March 31, 2012 and 2011. Accounting policies have continued without significant change and are described in the Description of Business and Significant Accounting Policies contained in the Company's 2011 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 2011 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. 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 $200.0 million and $112.9 million at March 31, 2012, respectively. The fair value of these notes at March 31, 2012, as obtained through independent pricing sources, was approximately $213.0 million for the senior secured notes and approximately $277.6 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, 2012, and 2011. Interest paid Titan paid $11.5 million and $13.0 million for interest for the three months ended March 31, 2012 and 2011, respectively. Income taxes paid Titan paid $10.7 million and $0.1 million for income taxes for the three months ended March 31, 2012 and 2011, 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. |
INCOME TAXES (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
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Mar. 31, 2012
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Mar. 31, 2011
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INCOME TAXES [Abstract] | ||
Income Tax Expense (Benefit) | $ 20,093 | $ 7,693 |
Effective Income Tax Rate, Continuing Operations | 36.21209% | 165.19218% |
Noncash convertible debt conversion charge | $ 0 | $ 16,135 |