Company Quick10K Filing
Titan International
Market
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 60 $279
Financial Filings
10-Q 2019-11-07 Quarter: 2019-09-30
10-Q 2019-08-01 Quarter: 2019-06-30
10-Q 2019-05-03 Quarter: 2019-03-31
10-K 2019-03-07 Annual: 2018-12-31
10-Q 2018-11-02 Quarter: 2018-09-30
10-Q 2018-08-03 Quarter: 2018-06-30
10-Q 2018-05-03 Quarter: 2018-03-31
10-K 2018-02-23 Annual: 2017-12-31
10-Q 2017-11-02 Quarter: 2017-09-30
10-Q 2017-08-03 Quarter: 2017-06-30
10-Q 2017-05-04 Quarter: 2017-03-31
10-K 2017-03-15 Annual: 2016-12-31
10-Q 2016-11-03 Quarter: 2016-09-30
10-Q 2016-08-04 Quarter: 2016-06-30
10-Q 2016-05-05 Quarter: 2016-03-31
10-K 2016-02-25 Annual: 2015-12-31
10-Q 2015-07-29 Quarter: 2015-06-30
10-Q 2015-11-06 Quarter: 2015-06-30
10-Q 2015-04-30 Quarter: 2015-03-31
10-K 2015-02-26 Annual: 2014-12-31
10-Q 2014-10-28 Quarter: 2014-09-30
10-Q 2014-07-24 Quarter: 2014-06-30
10-Q 2014-04-24 Quarter: 2014-03-31
10-K 2014-02-20 Annual: 2013-12-31
10-Q 2013-10-29 Quarter: 2013-09-30
10-Q 2013-07-24 Quarter: 2013-06-30
10-Q 2013-04-24 Quarter: 2013-03-31
10-K 2013-02-27 Annual: 2012-12-31
10-Q 2012-10-24 Quarter: 2012-09-30
10-Q 2012-07-26 Quarter: 2012-06-30
10-Q 2012-04-26 Quarter: 2012-03-31
10-K 2012-02-23 Annual: 2011-12-31
10-Q 2011-07-27 Quarter: 2011-06-30
10-Q 2011-04-27 Quarter: 2011-03-31
10-Q 2011-11-09 Quarter: 2010-12-31
10-K 2011-02-24 Annual: 2010-12-31
10-Q 2010-10-28 Quarter: 2010-09-30
10-Q 2010-07-28 Quarter: 2010-06-30
10-Q 2010-04-26 Quarter: 2010-03-31
10-K 2010-02-25 Annual: 2009-12-31
Current Reports
8-K 2019-11-07 Earnings, Exhibits
8-K 2019-10-03 Other Events, Exhibits
8-K 2019-08-01 Earnings, Exhibits
8-K 2019-06-12 Officers, Exhibits
8-K 2019-06-12 Shareholder Vote
8-K 2019-05-17 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-05-03 Earnings, Exhibits
8-K 2019-05-03 Officers
8-K 2019-03-25 Other Events, Exhibits
8-K 2019-03-07 Earnings, Exhibits
8-K 2019-02-26 Other Events, Exhibits
8-K 2019-02-25 Other Events, Exhibits
8-K 2019-02-25 Enter Agreement, Exhibits
8-K 2019-02-11 Enter Agreement, Sale of Shares, Exhibits
8-K 2018-11-20 Regulation FD, Exhibits
8-K 2018-11-02 Earnings, Exhibits
8-K 2018-08-03 Earnings, Exhibits
8-K 2018-07-10 Officers, Exhibits
8-K 2018-06-14 Officers, Exhibits
8-K 2018-06-12 Shareholder Vote
8-K 2018-05-03 Earnings, Exhibits
8-K 2018-05-02 Officers
8-K 2018-04-16 Officers, Exhibits
8-K 2018-02-23 Earnings, Exhibits
TWI 2019-09-30
Content
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
Exhibits
EX-10 twi09302019ex10.htm
EX-31.1 twi09302019ex311.htm
EX-31.2 twi09302019ex312.htm
EX-32 twi09302019ex32.htm

Titan International Earnings 2019-09-30

TWI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow
Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
SXCP 531 1,634 1,038 908 32 52 224 1,348 4% 6.0 3%
HAYN 457 588 258 483 60 6 24 435 12% 17.9 1%
IIIN 432 305 56 464 46 17 38 424 10% 11.3 6%
TMST 351 1,180 572 1,524 106 -38 52 330 7% 6.3 -3%
TWI 279 1,270 926 1,575 164 -14 83 729 10% 8.8 -1%
NWPX 244 279 55 242 27 33 37 234 11% 6.3 12%
SYNL 140 281 174 314 41 4 18 226 13% 12.6 2%
USAP 135 364 123 257 33 8 31 204 13% 6.6 2%
FRD 44 84 11 180 8 5 7 34 5% 4.9 6%
OSN 23 162 42 0 0 0 0 15 0%
Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

titancolora25.jpg

FORM 10-Q
☑
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended: September 30, 2019
or
☐
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)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol
Name of each exchange on which registered
Common stock, $0.0001 par value
TWI
New York Stock Exchange


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  ☑ No ☐
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 ☑  No ☐
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
☑
Non-accelerated filer
☐
 
Smaller reporting company
☐
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. ☐ 

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

Indicate the number of shares of Titan International, Inc. outstanding: 60,287,585 shares of common stock, $0.0001 par value, as of October 31, 2019.



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,
 
2019

2018

2019

2018
 
 
 
 
 
 
 
 
Net sales
$
345,905

 
$
384,719

 
$
1,146,876

 
$
1,239,005

Cost of sales
318,805

 
341,015

 
1,036,204

 
1,077,428

Gross profit
27,100

 
43,704

 
110,672

 
161,577

Selling, general and administrative expenses
34,954

 
33,709

 
106,605

 
102,308

Research and development expenses
2,309

 
2,591

 
7,470

 
8,222

Royalty expense
2,453

 
2,581

 
7,507

 
7,878

(Loss) income from operations
(12,616
)
 
4,823

 
(10,910
)
 
43,169

Interest expense
(8,357
)
 
(7,596
)
 
(24,585
)
 
(22,786
)
Foreign exchange (loss) gain
(2,266
)
 
855

 
2,218

 
(7,187
)
Other income
5,259

 
7,437

 
8,324

 
17,664

(Loss) income before income taxes
(17,980
)
 
5,519

 
(24,953
)
 
30,860

Provision for income taxes
2,064

 
2,841

 
761

 
3,738

Net (loss) income
(20,044
)
 
2,678

 
(25,714
)
 
27,122

Net (loss) income attributable to noncontrolling interests
(900
)
 
383

 
(2,124
)
 
(1,256
)
Net (loss) income attributable to Titan
(19,144
)
 
2,295

 
(23,590
)
 
28,378

   Redemption value adjustment
(491
)
 
(4,045
)
 
(1,928
)
 
(11,066
)
Net (loss) income applicable to common shareholders
$
(19,635
)
 
$
(1,750
)
 
$
(25,518
)
 
$
17,312

 
 
 
 
 
 
 
 
Earnings per common share:
 

 
 

 
 

 
 

Basic
$
(0.33
)
 
$
(0.03
)
 
$
(0.43
)
 
$
0.29

Diluted
$
(0.33
)
 
$
(0.03
)
 
$
(0.43
)
 
$
0.29

Average common shares and equivalents outstanding:
 
 
 

 
 
 
 

Basic
60,161

 
59,897

 
60,037

 
59,787

Diluted
60,161

 
59,897

 
60,037

 
59,893

 
 
 
 
 
 
 
 
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,
 
2019
 
2018
Net (loss) income
$
(20,044
)
 
$
2,678

Currency translation adjustment
(20,324
)
 
(13,577
)
Pension liability adjustments, net of tax of $79 and $4, respectively
590

 
733

Comprehensive loss
(39,778
)
 
(10,166
)
Net comprehensive loss attributable to redeemable and noncontrolling interests
(1,213
)
 
(811
)
Comprehensive loss attributable to Titan
$
(38,565
)
 
$
(9,355
)


 
Nine months ended
 
September 30,
 
2019
 
2018
Net (loss) income
$
(25,714
)
 
$
27,122

Currency translation adjustment
(19,280
)
 
(43,853
)
Pension liability adjustments, net of tax of $311 and $(40), respectively
1,594

 
2,306

Comprehensive loss
(43,400
)
 
(14,425
)
Net comprehensive loss attributable to redeemable and noncontrolling interests
(897
)
 
(4,036
)
Comprehensive loss attributable to Titan
$
(42,503
)
 
$
(10,389
)
























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, 2019
 
December 31, 2018
 
 
 
(unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
78,603

 
$
81,685

  Accounts receivable, net
221,228

 
241,832

Inventories
351,871

 
395,735

Prepaid and other current assets
80,692

 
60,229

Total current assets
732,394

 
779,481

Property, plant and equipment, net
366,121

 
384,872

Operating lease assets
23,497

 
—

Deferred income taxes
1,657

 
2,874

Other assets
65,933

 
84,029

Total assets
$
1,189,602

 
$
1,251,256

 
 
 
 
Liabilities
 

 
 

Current liabilities
 

 
 

Short-term debt
$
64,228

 
$
51,885

Accounts payable
182,337

 
212,129

Other current liabilities
119,383

 
111,054

Total current liabilities
365,948

 
375,068

Long-term debt
464,827

 
409,572

Deferred income taxes
7,435

 
9,416

Other long-term liabilities
78,216

 
67,290

Total liabilities
916,426

 
861,346

 
 
 
 
Redeemable noncontrolling interest
25,000

 
119,813

 
 
 
 
Equity
 

 
 

Titan shareholders' equity


 


  Common stock ($0.0001 par value, 120,000,000 shares authorized, 60,715,356 issued at September 30, 2019, and December 31, 2018)
—

 
—

Additional paid-in capital
533,538

 
519,498

Retained deficit
(49,197
)
 
(29,048
)
Treasury stock (at cost, 548,881 and 798,383 shares, respectively)
(6,490
)
 
(7,831
)
Accumulated other comprehensive loss
(233,620
)
 
(203,571
)
Total Titan shareholders’ equity
244,231

 
279,048

Noncontrolling interests
3,945

 
(8,951
)
Total equity
248,176

 
270,097

Total liabilities and equity
$
1,189,602

 
$
1,251,256


 See accompanying Notes to Condensed Consolidated Financial Statements.

3


TITAN INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS 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) *
 
 
 
 
17,647

 
 
 
 
 
 
 
17,647

 
(1,164
)
 
16,483

Currency translation adjustment, net *
 
 
 
 
 
 
 
 
 
 
7,423

 
7,423

 
291

 
7,714

Pension liability adjustments, net of tax
 
 
 
 
 
 
 
 
 
 
883

 
883

 
 
 
883

Dividends declared
 
 
 
 
(299
)
 
 
 
 
 
 
 
(299
)
 
 
 
(299
)
Accounting standards adoption
 
 
 
 
88

 
 
 
 
 
 
 
88

 
35

 
123

Redemption value adjustment
 
 
(2,343
)
 
 
 
 
 
 
 
 
 
(2,343
)
 
 
 
(2,343
)
Stock-based compensation
 
 
73

 
 
 
 
 
 
 
 
 
73

 
 
 
73

VIE contributions
 
 
 
 
 
 
 
 
 
 
 
 
—

 
476

 
476

Issuance of treasury stock under 401(k) plan
10,211

 
42

 
 
 
91

 
 
 
 
 
133

 
 
 
133

Balance March 31, 2018
59,810,770

 
$
529,480

 
$
(26,586
)
 
$
(8,515
)
 
$
(1,075
)
 
$
(148,770
)
 
$
344,534

 
$
(11,207
)
 
$
333,327

Net income (loss) *
 
 
 
 
8,436

 
 
 
 
 
 
 
8,436

 
(14
)
 
8,422

Currency translation adjustment, net *
 
 
 
 
 
 
 
 
 
 
(36,113
)
 
(36,113
)
 
330

 
(35,783
)
Pension liability adjustments, net of tax
 
 
 
 
 
 
 
 
 
 
690

 
690

 
 
 
690

Dividends declared
 
 
 
 
(300
)
 
 
 
 
 
 
 
(300
)
 
 
 
(300
)
Restricted stock awards
30,000

 
 
 
 
 
 
 
 
 
 
 
—

 
 
 
—

Acquisition of additional interest
 
 
(1,032
)
 
 
 
 
 
 
 
(4,325
)
 
(5,357
)
 
5,208

 
(149
)
Redemption value adjustment
 
 
(4,678
)
 
 
 
 
 
 
 
 
 
(4,678
)
 
 
 
(4,678
)
Stock-based compensation
 
 
545

 
 
 
 
 
 
 
 
 
545

 
 
 
545

VIE distributions
 
 
 
 
 
 
 
 
 
 
 
 
—

 
(1,429
)
 
(1,429
)
Deferred compensation transactions
 
 
113

 
 
 
 
 
1,075

 
 
 
1,188

 
 
 
1,188

Issuance of treasury stock under 401(k) plan
12,011

 
38

 
 
 
108

 
 
 
 
 
146

 
 
 
146

Balance June 30, 2018
59,852,781

 
$
524,466

 
$
(18,450
)
 
$
(8,407
)
 
$
—

 
$
(188,518
)
 
$
309,091

 
$
(7,112
)
 
$
301,979

Net income *
 
 
 
 
2,295

 
 
 
 
 
 
 
2,295

 
1,028

 
3,323

Currency translation adjustment, net *
 
 
 
 
 
 
 
 
 
 
(12,383
)
 
(12,383
)
 
(145
)
 
(12,528
)
Pension liability adjustments, net of tax
 
 
 
 
 
 
 
 
 
 
733

 
733

 
 
 
733

Dividends declared
 
 
 
 
(301
)
 
 
 
 
 
 
 
(301
)
 
 
 
(301
)
Restricted stock awards
31,897

 
 
 
 
 
 
 
 
 
 
 
—

 
 
 
—

Redemption value adjustment
 
 
(4,045
)
 
 
 
 
 
 
 
 
 
(4,045
)
 
 
 
(4,045
)
Stock-based compensation
 
 
(57
)
 
 
 
286

 
 
 
 
 
229

 
 
 
229

VIE distributions
 
 
 
 
 
 
 
 
 
 
 
 
—

 
(889
)
 
(889
)
Issuance of treasury stock under 401(k) plan
12,941

 
25

 
 
 
117

 
 
 
 
 
142

 
 
 
142

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 net income (loss) attributable to redeemable noncontrolling interest of $(515), $54, and $(645) for the three months ended March 31, 2018; June 30, 2018, and September 30, 2018, respectively. Currency translation adjustment excludes $348, $(2,555), and $(1,049) of currency translation related to redeemable noncontrolling interest for the three months ended March 31, 2018; June 30, 2018; and September 30, 2018, respectively.

4



 
 Number of
common shares
 
Additional
paid-in
capital
 
Retained (deficit) earnings
 
Treasury stock
 
Accumulated other comprehensive (loss) income
 
Total Titan Equity
 
 Noncontrolling interest
 
Total Equity
Balance January 1, 2019
59,916,973

 
$
519,498

 
$
(29,048
)
 
$
(7,831
)
 
$
(203,571
)
 
$
279,048

 
$
(8,951
)
 
$
270,097

Net income (loss) *


 


 
1,977

 


 


 
1,977

 
(636
)
 
1,341

Currency translation adjustment, net *
 
 
 
 
 
 
 
 
(5,281
)
 
(5,281
)
 
474

 
(4,807
)
Pension liability adjustments, net of tax


 


 


 


 
466

 
466

 
 
 
466

Dividends declared


 


 
(301
)
 


 


 
(301
)
 
 
 
(301
)
Accounting standards adoption


 


 
4,346

 
 
 
(4,933
)
 
(587
)
 


 
(587
)
Redeemable noncontrolling interest activity


 
9,437

 


 


 


 
9,437

 
15,445

 
24,882

Redemption value adjustment


 
(776
)
 
 
 


 
 
 
(776
)
 
 
 
(776
)
Stock-based compensation


 
269

 


 


 


 
269

 
 
 
269

VIE distributions


 


 


 


 


 
—

 
(1,054
)
 
(1,054
)
Issuance of treasury stock under 401(k) plan
29,414

 
(123
)
 


 
264

 


 
141

 
 
 
141

Balance March 31, 2019
59,946,387

 
$
528,305

 
$
(23,026
)
 
$
(7,567
)
 
$
(213,319
)
 
$
284,393

 
$
5,278

 
$
289,671

Net (loss) income *
 
 
 
 
(6,424
)
 
 
 
 
 
(6,424
)
 
12

 
(6,412
)
Currency translation adjustment, net *
 
 
 
 
 
 
 
 
4,785

 
4,785

 
317

 
5,102

Pension liability adjustments, net of tax
 
 
 
 
 
 
 
 
538

 
538

 
 
 
538

Dividends declared
 
 
 
 
(301
)
 
 
 
 
 
(301
)
 
 
 
(301
)
Redemption value adjustment
 
 
(661
)
 
 
 
 
 
 
 
(661
)
 
 
 
(661
)
Stock-based compensation
 
 
286

 
 
 
 
 
 
 
286

 
 
 
286

VIE distributions
 
 
 
 
 
 
 
 
 
 
—

 
(450
)
 
(450
)
Issuance of treasury stock under 401(k) plan
53,983

 
(167
)
 
 
 
485

 
 
 
318

 
 
 
318

Balance June 30, 2019
60,000,370

 
$
527,763

 
$
(29,751
)
 
$
(7,082
)
 
$
(207,996
)
 
$
282,934

 
$
5,157

 
$
288,091

Net loss *
 
 
 
 
(19,144
)
 
 
 
 
 
(19,144
)
 
(680
)
 
(19,824
)
Currency translation adjustment, net *
 
 
 
 
 
 
 
 
(20,011
)
 
(20,011
)
 
(247
)
 
(20,258
)
Pension liability adjustments, net of tax
 
 
 
 
 
 
 
 
590

 
590

 
 
 
590

Dividends declared
 
 
 
 
(302
)
 
 
 
 
 
(302
)
 
 
 
(302
)
Acquisition of additional interest
 
 
6,203

 
 
 
 
 
(6,203
)
 
—

 
—

 
—

Redemption value adjustment
 
 
(491
)
 
 
 
 
 
 
 
(491
)
 
 
 
(491
)
Stock-based compensation
100,118

 
347

 
 
 
 
 
 
 
347

 
 
 
347

VIE distributions
 
 
 
 
 
 
 
 
 
 
—

 
(285
)
 
(285
)
Issuance of treasury stock under 401(k) plan
65,987

 
(284
)
 
 
 
592

 
 
 
308

 
 
 
308

Balance September 30, 2019
60,166,475

 
$
533,538

 
$
(49,197
)
 
$
(6,490
)
 
$
(233,620
)
 
$
244,231

 
$
3,945

 
$
248,176

 
* Net income (loss) excludes $(334), $(265), and $(220) of net loss attributable to redeemable noncontrolling interest for the three months ended March 31, 2019; June 30, 2019; and September 30, 2019, respectively. Currency translation adjustment excludes $428, $321, and $(66) of currency translation related to redeemable noncontrolling interest for the three months ended March 31, 2019; June 30, 2019; and September 30, 2019, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

5


TITAN INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(All amounts in thousands)
 
Nine months ended September 30,
Cash flows from operating activities:
2019
 
2018
Net (loss) income
$
(25,714
)
 
$
27,122

Adjustments to reconcile net income to net cash
used for operating activities:
 

 
 

Depreciation and amortization
41,347

 
43,395

Deferred income tax provision
(738
)
 
(863
)
Gain on investment sale
(4,695
)
 
—

Stock-based compensation
959

 
847

Issuance of treasury stock under 401(k) plan
767

 
421

Foreign currency translation (gain) loss
(2,327
)
 
3,667

(Increase) decrease in assets:
 

 
 

Accounts receivable
16,124

 
(52,818
)
Inventories
36,920

 
(62,560
)
Prepaid and other current assets
(3,073
)
 
2,299

Other assets
(1,110
)
 
(6,021
)
Increase (decrease) in liabilities:
 

 
 

Accounts payable
(24,998
)
 
25,213

Other current liabilities
3,634

 
(5,072
)
Other liabilities
(5,884
)
 
(8,336
)
Net cash provided by (used for) operating activities
31,212

 
(32,706
)
Cash flows from investing activities:
 

 
 

Capital expenditures
(26,254
)
 
(26,498
)
Payments related to redeemable noncontrolling interest
(71,722
)
 
—

Other
1,354

 
1,484

Net cash used for investing activities
(96,622
)
 
(25,014
)
Cash flows from financing activities:
 

 
 

Proceeds from borrowings
124,153

 
48,108

Payment on debt
(59,296
)
 
(30,139
)
Dividends paid
(901
)
 
(900
)
Net cash provided by financing activities
63,956

 
17,069

Effect of exchange rate changes on cash
(1,628
)
 
(6,120
)
Net decrease in cash and cash equivalents
(3,082
)
 
(46,771
)
Cash and cash equivalents, beginning of period
81,685

 
143,570

Cash and cash equivalents, end of period
$
78,603

 
$
96,799

 
 
 
 
Supplemental information:
 
 
 
Interest paid
$
18,060

 
$
16,814

Income taxes paid, net of refunds received
$
6,120

 
$
7,379











See accompanying Notes to Condensed Consolidated Financial Statements.

6


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, 2019, and the results of operations and cash flows for the three and nine months ended September 30, 2019 and 2018, 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, 2018, filed with the SEC on March 7, 2019 (the 2018 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 $395.7 million at September 30, 2019. The fair value of the senior secured notes at September 30, 2019, as obtained through an independent pricing source, was approximately $319.4 million.

Cash dividends
The Company declared cash dividends of $0.005 per share of common stock for each of the quarters ended September 30, 2019 and 2018, respectively. The third quarter 2019 cash dividend of $0.005 per share of common stock was paid on October 15, 2019, to shareholders of record on September 30, 2019.

New accounting standards:

Adoption of new accounting standards
On January 1, 2019, the Company adopted Accounting Standards Update (ASU) No. 2016-02, "Leases (Topic 842)" (the New Lease Standard) to increase transparency and comparability among entities by recognizing lease assets and liabilities on the balance sheet and disclosing key information about lease arrangements. Titan elected the modified retrospective with cumulative effect transition approach to adopt the New Lease Standard and thus will not restate its comparative periods in the year of transition. The Company adopted the practical expedients of the New Lease Standard which include (i) not reassessing whether expired or existing contracts contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not revaluing initial direct costs for existing leases. The Company did not elect the hindsight practical expedient. The adoption of this standard resulted in the recognition of operating lease right-of-use assets and corresponding lease liabilities on the Condensed Consolidated Balance Sheet, which resulted in a net credit adjustment to retained earnings as of January 1, 2019, of $0.6 million. The New Lease Standard did not materially impact operating results or liquidity. Further disclosures related to the New Lease Standard are included in Note 10, Leases.

The Company adopted ASU No. 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" effective January 1, 2019. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act (the 2017 TCJA). Consequently, the amendments eliminate the stranded tax effects resulting from the 2017 TCJA and improve the usefulness of information reported to financial statement users. As a result of adopting this standard, the Company recorded a $4.9 million reclassification to decrease accumulated other comprehensive income and increase retained earnings as of January 1, 2019.

7


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


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 operations. 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 recognizes revenue when the performance obligations specified in the Company's contracts have been satisfied. 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. The impact of the Company's adoption of the New Revenue Standard on net sales was immaterial and the disaggregation of revenues, which is based on the major markets the Company serves, has not changed from how it is presented in Note 18, Segment Information in Item 1 of this Form 10-Q.
The Company adopted 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 Condensed Consolidated 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 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 $7.4 million of implementation costs for the year ended December 31, 2018, from selling, general and administration in the Condensed Consolidated Statement of Operations to other assets in the Condensed Consolidated Balance Sheets.

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 TCJA was enacted.

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 condensed 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 condensed consolidated financial statements.

8


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

Accounting standards issued but not yet adopted
 
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 condensed 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 condensed consolidated financial statements.


2. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following as of the dates set forth below (amounts in thousands):
 
September 30,
2019
 
December 31,
2018
Accounts receivable
$
224,451

 
$
245,236

Allowance for doubtful accounts
(3,223
)
 
(3,404
)
Accounts receivable, net
$
221,228

 
$
241,832
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,
2019
 
December 31,
2018
Raw material
$
92,468

 
$
110,806

Work-in-process
53,218

 
55,543

Finished goods
206,185

 
229,386

 
$
351,871

 
$
395,735
 
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.



9


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,
2019
 
December 31,
2018
Land and improvements
$
44,658

 
$
43,562

Buildings and improvements
256,251

 
255,451

Machinery and equipment
592,450

 
592,932

Tools, dies and molds
110,302

 
109,537

Construction-in-process
19,839

 
18,867

 
1,023,500

 
1,020,349

Less accumulated depreciation
(657,379