TITAN INTERNATIONAL INC - FORM 10-Q - May 4, 2016

Attached files

file filename
EX-10.1 - EXHIBIT 10.1 - TITAN INTERNATIONAL INCtwi03312016ex101.htm
EX-31.2 - EXHIBIT 31.2 - TITAN INTERNATIONAL INCtwi03312016ex312.htm
EX-10.2 - EXHIBIT 10.2 - TITAN INTERNATIONAL INCtwi03312016ex102.htm
EX-32 - EXHIBIT 32 - TITAN INTERNATIONAL INCtwi03312016ex32.htm
EX-31.1 - EXHIBIT 31.1 - TITAN INTERNATIONAL INCtwi03312016ex311.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended: March 31, 2016
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12936

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ  No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
Accelerated filer þ
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o  No þ

Indicate the number of shares of Titan International, Inc. outstanding: 53,984,344 shares common stock, $0.0001 par value, as of April 20, 2016.



TITAN INTERNATIONAL, INC.

TABLE OF CONTENTS

 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(All amounts in thousands, except per share data)
 
 
Three months ended
 
March 31,
 
2016

2015
 
 
 
 
Net sales
$
321,794

 
$
402,059

Cost of sales
289,906

 
359,265

Gross profit
31,888

 
42,794

Selling, general and administrative expenses
35,062

 
35,674

Research and development expenses
2,479

 
3,086

Royalty expense
2,294

 
3,225

Income (loss) from operations
(7,947
)
 
809

Interest expense
(8,512
)
 
(8,756
)
Foreign exchange gain
4,823

 
5,966

Other income
3,905

 
2,317

Income (loss) before income taxes
(7,731
)
 
336

Provision for income taxes
1,004

 
1,396

Net loss
(8,735
)
 
(1,060
)
Net income (loss) attributable to noncontrolling interests
417

 
(1,292
)
Net income (loss) attributable to Titan
$
(9,152
)
 
$
232

   Redemption value adjustment
(5,208
)
 
(2,930
)
Net loss applicable to common shareholders
(14,360
)
 
(2,698
)
 
 
 
 
Earnings per common share:
 

 
 

Basic
$
(.27
)
 
$
(.05
)
Diluted
$
(.27
)
 
$
(.05
)
Average common shares and equivalents outstanding:
 
 
 

Basic
53,854

 
53,663

Diluted
53,854

 
53,663

 
 
 
 
Dividends declared per common share:
$
.005

 
$
.005

 
 







See accompanying Notes to Consolidated Financial Statements.

1


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

 
Three months ended
 
March 31,
 
2016
 
2015
Net loss
$
(8,735
)
 
$
(1,060
)
Currency translation adjustment, net
17,584

 
(45,386
)
Pension liability adjustments, net of tax of $(171) and $(100), respectively
287

 
9

Comprehensive income (loss)
9,136

 
(46,437
)
Net comprehensive income (loss) attributable to redeemable and noncontrolling interests
5,400

 
(3,013
)
Comprehensive income (loss) attributable to Titan
$
3,736

 
$
(43,424
)


 
 
 
 




































See accompanying Notes to Consolidated Financial Statements.

2


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

 
March 31,
 
December 31,
 
2016
 
2015
 
(unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
191,097

 
$
200,188

  Accounts receivable, net
216,423

 
177,389

Inventories
265,173

 
269,791

Prepaid and other current assets
60,759

 
62,633

Total current assets
733,452

 
710,001

Property, plant and equipment, net
458,005

 
450,020

Deferred income taxes
6,864

 
5,967

Other assets
109,644

 
109,203

Total assets
$
1,307,965

 
$
1,275,191

 
 
 
 
Liabilities
 

 
 

Current liabilities
 

 
 

Short-term debt
$
88,783

 
$
31,222

Accounts payable
138,126

 
123,154

Other current liabilities
125,034

 
115,721

Total current liabilities
351,943

 
270,097

Long-term debt
419,509

 
480,404

Deferred income taxes
15,505

 
14,509

Other long-term liabilities
89,781

 
88,324

Total liabilities
876,738

 
853,334

 
 
 
 
Redeemable noncontrolling interest
96,774

 
77,174

 
 
 
 
Equity
 

 
 

Titan stockholders' equity


 


  Common stock ($0.0001 par value, 120,000,000 shares authorized, 55,253,092 issued, 53,957,160 outstanding)
—

 
—

Additional paid-in capital
483,366

 
497,008

Retained earnings
39,915

 
49,297

Treasury stock (at cost, 1,295,932 and 1,339,583 shares, respectively)
(12,028
)
 
(12,420
)
Treasury stock reserved for deferred compensation
(1,075
)
 
(1,075
)
Accumulated other comprehensive loss
(174,863
)
 
(187,751
)
Total Titan stockholders’ equity
335,315

 
345,059

Noncontrolling interests
(862
)
 
(376
)
Total equity
334,453

 
344,683

Total liabilities and equity
$
1,307,965

 
$
1,275,191

 

See accompanying Notes to Consolidated Financial Statements.

3


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


 
 Number of
common shares
 
Additional
paid-in
capital
 
Retained earnings
 
Treasury stock
 
Treasury stock
 reserved for
deferred compensation
 
Accumulated other comprehensive income (loss)
 
Total Titan Equity
 
 Noncontrolling interest
 
Total Equity
Balance January 1, 2016
53,913,509

 
$
497,008

 
$
49,297

 
$
(12,420
)
 
$
(1,075
)
 
$
(187,751
)
 
$
345,059

 
$
(376
)
 
$
344,683

Net loss *


 


 
(9,152
)
 


 


 


 
(9,152
)
 
(163
)
 
(9,315
)
Currency translation adjustment, net of tax *
 
 
 
 
 
 
 
 
 
 
16,092

 
16,092

 
(283
)
 
15,809

Pension liability adjustments, net of tax


 


 


 


 


 
287

 
287

 
 
 
287

Dividends on common stock


 


 
(270
)
 


 


 


 
(270
)
 
 
 
(270
)
Restricted stock awards
8,750

 
(79
)
 
 
 
79

 
 
 
 
 
—

 
 
 
—

Acquisition of additional interest


 
(8,548
)
 
40

 


 


 
(3,491
)
 
(11,999
)
 
(40
)
 
(12,039
)
Redemption value adjustment


 
(5,208
)
 
 
 


 
 
 
 
 
(5,208
)
 
 
 
(5,208
)
Stock-based compensation


 
370

 


 


 


 


 
370

 
 
 
370

Issuance of treasury stock under 401(k) plan
34,901

 
(177
)
 


 
313

 


 


 
136

 
 
 
136

Balance March 31, 2016
53,957,160

 
$
483,366

 
$
39,915

 
$
(12,028
)
 
$
(1,075
)
 
$
(174,863
)
 
$
335,315

 
$
(862
)
 
$
334,453

 
* Net loss excludes $580 of net gain attributable to redeemable noncontrolling interest. Currency translation adjustments excludes $1,775 of currency translation related to redeemable noncontrolling interest.

















See accompanying Notes to Consolidated Financial Statements.

4


TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(All amounts in thousands)
 
Three months ended
March 31,
Cash flows from operating activities:
2016
 
2015
Net loss
$
(8,735
)
 
$
(1,060
)
Adjustments to reconcile net loss to net cash
provided by operating activities:
 

 
 

Depreciation and amortization
15,249

 
18,480

Deferred income tax provision
(278
)
 
(3,901
)
Stock-based compensation
370

 
312

Excess tax benefit from stock-based compensation
—

 
388

Issuance of treasury stock under 401(k) plan
136

 
151

Foreign currency translation (gain) loss
(4,000
)
 
4,346

(Increase) decrease in assets:
 

 
 

Accounts receivable
(32,150
)
 
(56,153
)
Inventories
12,019

 
5,958

Prepaid and other current assets
3,335

 
4,374

Other assets
(1,119
)
 
2,516

Increase (decrease) in liabilities:
 

 
 

Accounts payable
9,747

 
24,066

Other current liabilities
7,796

 
5,736

Other liabilities
(37
)
 
(12,180
)
Net cash provided by operating activities
2,333

 
(6,967
)
Cash flows from investing activities:
 

 
 

Capital expenditures
(7,149
)
 
(11,419
)
Other
771

 
2,334

Net cash used for investing activities
(6,378
)
 
(9,085
)
Cash flows from financing activities:
 

 
 

Proceeds from borrowings
110

 
11,102

Payment on debt
(7,288
)
 
(1,456
)
Excess tax benefit from stock-based compensation
—

 
(388
)
Dividends paid
(270
)
 
(269
)
Net cash provided by (used for) financing activities
(7,448
)
 
8,989

Effect of exchange rate changes on cash
2,402

 
(3,837
)
Net decrease in cash and cash equivalents
(9,091
)
 
(10,900
)
Cash and cash equivalents, beginning of period
200,188

 
201,451

Cash and cash equivalents, end of period
$
191,097

 
$
190,551

 
 
 
 
Supplemental information:
 
 
 
Interest paid
$
2,179

 
$
4,589

Income taxes paid, net of refunds received
$
1,137

 
$
(3,763
)















See accompanying Notes to Consolidated Financial Statements.

5


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


1.
ACCOUNTING POLICIES

In the opinion of Titan International, Inc. (Titan or the Company), the accompanying unaudited consolidated condensed financial statements contain all adjustments, which are normal and recurring in nature and necessary for a fair statement of the Company's financial position as of March 31, 2016, and the results of operations and cash flows for the three months ended March 31, 2016 and 2015.

Accounting policies have continued without significant change and are described in the Description of Business and Significant Accounting Policies contained in the Company's 2015 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 2015 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, and other accruals at cost, which approximates fair value due to their short term or stated rates.  Investments in marketable equity securities are recorded at fair value.  The 6.875% senior secured notes due 2020 (senior secured notes due 2020) and 5.625% convertible senior subordinated notes due 2017 (convertible notes) are carried at cost of $400.0 million and $60.2 million at March 31, 2016, respectively. The fair value of the senior secured notes due 2020 at March 31, 2016, as obtained through an independent pricing source, was approximately $324.0 million.

Cash dividends
The Company declared cash dividends of $.005 per share of common stock for each of the three months ended March 31, 2016 and 2015. The first quarter 2016 cash dividend of $.005 per share of common stock was paid April 15, 2016, to stockholders of record on March 31, 2016.

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.

Recently issued accounting standards
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." This update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. The core principle of this guidance is 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. This guidance also requires disclosure about the nature, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this update were deferred by ASU No. 2015-14, "Revenue form Contracts with Customers (Topic 606) Deferral of Effective Date", and are now effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The Company will adopt the guidance in the year beginning on January 1, 2018, and is currently assessing the impact that adopting this new accounting guidance will have on the Company's consolidated financial statements.





6


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

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." This update was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently assessing the impact that adopting this new accounting guidance will have on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-07, "Simplifying the Transition to Equity Method of Accounting." This update eliminates the requirement to retroactively adopt the equity method of accounting when an investment qualifies for use of the equity method as a result of the increase in the level of ownership. The amendments in this update are effective for fiscal years, including interim periods within those years, beginning after December 15, 2016. Early application is permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on the Company's consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting." This update involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. The Company is currently assessing the impact that adopting this new accounting guidance will have on the Company's consolidated financial statements.

Reclassification
Certain amounts from prior years have been reclassified to conform to the current year's presentation. The Company has implemented new technology resources which allow for more accurate segregation of sales and profit by segment. The previous year segment information has been updated to be consistent.

2. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following (amounts in thousands):
 
March 31,
2016
 
December 31,
2015
Accounts receivable
$
221,334

 
$
181,916

Allowance for doubtful accounts
(4,911
)
 
(4,527
)
Accounts receivable, net
$
216,423

 
$
177,389

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

3. INVENTORIES
 
Inventories consisted of the following (amounts in thousands):
 
March 31,
2016
 
December 31,
2015
Raw material
$
72,172

 
$
85,490

Work-in-process
33,334

 
31,866

Finished goods
162,639

 
158,997

 
268,145

 
276,353

Adjustment to LIFO
(2,972
)
 
(6,562
)
 
$
265,173

 
$
269,791

 
Inventories are valued at lower of cost or market. The majority of inventories are valued under the first-in, first-out (FIFO) method or average cost method. At March 31, 2016, and December 31, 2015, approximately 8% of the Company's inventories were valued under the last-in, first-out (LIFO) method.

7


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

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consisted of the following (amounts in thousands):
 
March 31,
2016
 
December 31,
2015
Land and improvements
$
49,162

 
$
46,776

Buildings and improvements
249,055

 
241,666

Machinery and equipment
555,424

 
540,549

Tools, dies and molds
105,725

 
102,723

Construction-in-process
39,700

 
36,500

 
999,066

 
968,214

Less accumulated depreciation
(541,061
)
 
(518,194
)
 
$
458,005

 
$
450,020

 
Depreciation on fixed assets for the three months ended March 31, 2016 and 2015, totaled $14.2 million and $17.2 million, respectively.
 
Included in the total building and improvements are capital leases of $3.8 million and $3.7 million at March 31, 2016, and December 31, 2015, respectively. Included in the total of machinery and equipment are capital leases of $34.4 million and $33.0 million at March 31, 2016, and December 31, 2015, respectively.

5. INTANGIBLE ASSETS

The components of intangible assets consisted of the following (amounts in thousands):
 
Weighted Average Useful Lives (in Years)
 
March 31,
2016
 
December 31,
2015
Amortizable intangible assets:
 
 
 
 
 
     Customer relationships
11.4
 
14,080

 
13,413

     Patents, trademarks and other
8.6
 
13,968

 
13,237

          Total at cost
 
 
28,048

 
26,650

     Less accumulated amortization
 
 
(9,838
)
 
(8,852
)
 
 
 
18,210

 
17,798

   
Amortization related to intangible assets for the three months ended March 31, 2016 and 2015, totaled $0.7 million and $0.8 million, respectively. Intangible assets are included as a component of other assets in the Consolidated Condensed Balance Sheet.

The estimated aggregate amortization expense at March 31, 2016, is as follows (amounts in thousands):
April 1 - December 31, 2016
$
1,748

2017
2,096

2018
2,096

2019
2,096

2020
2,096

Thereafter
8,078

 
$
18,210



8


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

6. WARRANTY

Changes in the warranty liability consisted of the following (amounts in thousands):
 
2016
 
2015
Warranty liability, January 1
$
23,120

 
$
28,144

Provision for warranty liabilities
1,813

 
2,526

Warranty payments made
(2,790
)
 
(3,914
)
Warranty liability, March 31
$
22,143

 
$
26,756


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


7. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT
 
Long-term debt consisted of the following (amounts in thousands):
 
March 31,
2016
 
December 31,
2015
6.875% senior secured notes due 2020
$
400,000

 
$
400,000

5.625% convertible senior subordinated notes due 2017
60,161

 
60,161

Titan Europe credit facilities
39,533

 
38,059

Other debt
6,899

 
11,531

Capital leases
1,699

 
1,875

 
508,292

 
511,626

Less amounts due within one year
88,783

 
31,222

 
$
419,509

 
$
480,404

 
Aggregate maturities of long-term debt at March 31, 2016, were as follows (amounts in thousands):
April 1 - December 31, 2016
$
28,300

2017
74,410

2018
2,822

2019
1,106

2020
401,537

Thereafter
117

 
$
508,292

 
6.875% senior secured notes due 2020
The Company’s 6.875% senior secured notes (senior secured notes due 2020) are due October 2020. These notes are secured by the land and buildings of the following subsidiaries of the Company:  Titan Tire Corporation, Titan Tire Corporation of Bryan, Titan Tire Corporation of Freeport, and Titan Wheel Corporation of Illinois. The Company's senior secured notes due 2020 outstanding balance was $400.0 million at March 31, 2016.


9


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

5.625% convertible senior subordinated notes due 2017
The Company’s 5.625% convertible senior subordinated notes (convertible notes) are due January 2017.   The initial base conversion rate for the convertible notes is 93.0016 shares of Titan common stock per $1,000 principal amount of convertible notes, equivalent to an initial base conversion price of approximately $10.75 per share of Titan common stock.  If the price of Titan common stock at the time of determination exceeds the base conversion price, the base conversion rate will be increased by an additional number of shares (up to 9.3002 shares of Titan common stock per $1,000 principal amount of convertible notes) as determined pursuant to a formula described in the indenture.  The base conversion rate will be subject to adjustment in certain events.  See the indenture incorporated by reference to the Company's most recent Form 10-K for additional information. The Company’s convertible notes balance was $60.2 million at March 31, 2016.

Titan Europe credit facilities
The Titan Europe credit facilities contain borrowings from various institutions totaling $39.5 million at March 31, 2016. Maturity dates on this debt range from less than one year to nine years and interest rates range from 5% to 6.9%. The Titan Europe facilities are secured by the assets of its subsidiaries in Italy, Spain, Germany and Brazil.

Revolving credit facility
The Company’s $150 million revolving credit facility (credit facility) with agent Bank of America, N.A. has a December 2017 termination date and is collateralized by the accounts receivable and inventory of certain Titan domestic subsidiaries.  Titan's availability under this domestic facility may be less than $150 million as a result of eligible accounts receivable and inventory balances at certain of its domestic subsidiaries. At March 31, 2016, the amount available was $53.4 million as a result of the outstanding letters of credit and the Company's decrease in sales, which impacted both accounts receivable and inventory balances. During the first three months of 2016 and at March 31, 2016, there were no borrowings under the credit facility.

Other debt
Titan Brazil has working capital loans for the Sao Paulo, Brazil manufacturing facility totaling $6.9 million at March 31, 2016. Maturity dates on this debt range from less than one year to two years and interest rates range from 5.5% to 8%.


8. DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses financial derivatives to mitigate its exposure to volatility in foreign currency exchange rates. These derivative financial instruments are recognized at fair value. The Company has not designated these financial instruments as hedging instruments. Any gain or loss on the re-measurement of the fair value is recorded as an offset to currency exchange gain/loss. For the three months ended March 31, 2016, the Company recorded currency exchange gain of $0.1 million related to these derivatives.


9. REDEEMABLE NONCONTROLLING INTEREST

The Company has a shareholders’ agreement with One Equity Partners (OEP) and the Russian Direct Investment Fund (RDIF) which was used for the acquisition of Voltyre-Prom, a leading producer of agricultural and industrial tires in Volgograd, Russia. The agreement contains a settlement put option which is exercisable beginning in July of 2018 and may require Titan to purchase the shares of OEP and RDIF at a value set by the agreement.
The redemption features of the settlement put option are not solely within the Company’s control and the noncontrolling interest is presented as redeemable noncontrolling interest separately from total equity in the Consolidated Balance Sheet at the redemption value of the settlement put option. If the redemption value is greater than the carrying value of the noncontrolling interest, the increase is adjusted directly to retained earnings of the affected entity, or additional paid-in capital if there are no available retained earnings applicable to the redeemable noncontrolling interest.
In the first quarter of 2016, the Company acquired $25 million of additional shares in the consortium owning Voltyre-Prom, increasing Titan's ownership to 43% from 30%. The acquisition of shares was transacted through the conversion of an intercompany note previously held by Titan. As a result of the ownership change, the balance of the redeemable noncontrolling interest increased by $12 million which is comprised of a $3.5 million reclassification of currency translation and an $8.5 million reclassification of other equity.

10


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

The following is a reconciliation of redeemable noncontrolling interest as of March 31, 2016 and 2015 (amounts in thousands):
 
2016
 
2015
Balance at January 1
$
77,174

 
$
71,192

   Reclassification as a result of ownership change
12,039

 
—

   Income attributable to redeemable noncontrolling interest
580

 
149

   Currency translation
1,773

 
(1,641
)
   Redemption value adjustment
5,208

 
2,930

Balance at March 31
$
96,774

 
$
72,630


This obligation approximates the cost if all remaining shares were purchased by the Company on March 31, 2016, and is presented in the Consolidated Condensed Balance Sheet in redeemable noncontrolling interest, which is treated as mezzanine equity.

10. LEASE COMMITMENTS

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

At March 31, 2016, future minimum rental commitments under noncancellable operating leases with initial terms of at least one year were as follows (amounts in thousands):
April 1 - December 31, 2016
$
1,637

2017
3,315

2018
1,897

2019
1,452

2020
996

Thereafter
520

Total future minimum lease payments
$
9,817


At March 31, 2016, the Company had assets held as capital leases with a net book value of $8.0 million included in property, plant and equipment. Total future capital lease obligations relating to these leases are as follows (amounts in thousands):
April 1 - December 31, 2016
$
785

2017
496

2018
217

2019
151

2020
18

Thereafter
32

Total future capital lease obligation payments
1,699

Less amount representing interest
(32
)
Present value of future capital lease obligation payments
$
1,667








11


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

11. EMPLOYEE BENEFIT PLANS
 
The Company has three frozen defined benefit pension plans covering certain employees or former employees of three U.S. subsidiaries. The Company also has pension plans covering certain employees of several foreign subsidiaries. The Company also sponsors a number of defined contribution plans in the U.S. and at foreign subsidiaries. The Company contributed approximately $0.9 million to the pension plans during the three months ended March 31, 2016, and expects to contribute approximately $3.7 million to the pension plans during the remainder of 2016.
 
The components of net periodic pension cost consisted of the following (amounts in thousands):
 
Three months ended
 
March 31,
 
2016
 
2015
Service cost
$
106

 
$
172

Interest cost
1,237

 
1,224

Expected return on assets
(1,393
)
 
(1,519
)
Amortization of unrecognized prior service cost
34

 
34

Amortization of net unrecognized loss
765

 
729

      Net periodic pension cost
$
749

 
$
640



12. VARIABLE INTEREST ENTITIES
 
The Company holds a variable interest in three joint ventures for which the Company is the primary beneficiary. Two of the joint ventures operate distribution facilities which primarily distribute mining products. One of these facilities is located in Canada and the other is located in Australia. The Company’s variable interest in these joint ventures relates to sales of Titan product to these entities, consigned inventory and working capital loans. The third joint venture is the consortium which owns Voltyre-Prom, a leading producer of agricultural and industrial tires in Volgograd, Russia. Titan is acting as operating partner with responsibility for Voltyre-Prom’s daily operations. The Company has also provided working capital loans to Voltyre-Prom.
 
As the primary beneficiary of these variable interest entities (VIEs), the entities’ assets, liabilities and results of operations are included in the Company’s consolidated financial statements. The other equity holders’ interests are reflected in “Net loss attributable to noncontrolling interests” in the Consolidated Condensed Statements of Operations and “Noncontrolling interests” in the Consolidated Condensed Balance Sheets.
 

12


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

The following table summarizes the carrying amount of the entities’ assets and liabilities included in the Company’s Consolidated Condensed Balance Sheets at March 31, 2016 and December 31, 2015 (amounts in thousands):
 
March 31,
2016
 
December 31, 2015
Cash and cash equivalents
$
7,712

 
$
9,245

Inventory
7,854

 
7,993

Other current assets
19,919

 
13,763

Property, plant and equipment, net
26,642

 
25,181

Other noncurrent assets
5,331

 
5,179

   Total assets
$
67,458

 
$
61,361

 
 
 
 
Current liabilities
$
13,939

 
$
12,850

Noncurrent liabilities
3,618

 
2,865

  Total liabilities
$
17,557

 
$
15,715

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


13. ROYALTY EXPENSE

The Company has trademark license agreements with Goodyear to manufacture and sell certain farm tires under the Goodyear name. These agreements cover sales in North America, Latin America, Europe, the Middle East, Africa, Russia and other Commonwealth of Independent States countries. The North American and Latin American farm tire royalties were prepaid through March 2018 as a part of the 2011 Goodyear Latin American farm tire acquisition. The Company also has a trademark license agreement with Goodyear to manufacture and sell certain non-farm tire products in Latin America. Royalty expenses were $2.3 million and $3.2 million for the three months ended March 31, 2016 and 2015, respectively.


14. OTHER INCOME

Other income consisted of the following (amounts in thousands):
 
Three months ended
 
March 31,
 
2016
 
2015
Gain on sale of assets
2,342

 
—

Wheels India Limited equity income (loss)
497

 
(7
)
Discount amortization on prepaid royalty
459

 
611

Interest income
411

 
608

Building rental income
362

 
240

Other income (expense)
(166
)
 
865

 
$
3,905

 
$
2,317




13


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

15. INCOME TAXES

The Company recorded income tax expense of $1.0 million and $1.4 million for the quarters ended March 31, 2016 and 2015, respectively. The Company's effective income tax rate was (13%) and 415% for the three months ended March 31, 2016 and 2015, respectively.

The Company’s 2016 income tax expense and rate differs from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of U.S. and certain foreign jurisdictions that incurred a full valuation allowance on deferred tax assets created by current year projected losses. In addition, certain profitable foreign jurisdictions have lower statutory tax rates as compared to the U.S. tax rate.

The Company's 2015 income tax expense and rate differs from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of certain foreign jurisdictions that incurred a full valuation allowance on deferred tax assets created by current year projected losses and foreign income taxed in the U.S. offset by net discrete benefits related to a U.S. check the box election and tax law enactments. In addition, the Company’s high effective tax rate is driven by a modest or almost break even consolidated pre-tax accounting income for the period.

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


16. EARNINGS PER SHARE

Earnings per share (EPS) were as follows (amounts in thousands, except per share data):
 
Three months ended
 
March 31,
 
2016
 
2015
 
 
 
 
Net loss attributable to Titan
$
(9,152
)
 
$
232

   Redemption value adjustment
(5,208
)
 
(2,930
)
Net loss applicable to common shareholders
$
(14,360
)
 
$
(2,698
)
Determination of Shares:
 
 
 
   Weighted average shares outstanding (basic and diluted)
53,854

 
53,663

Earnings per share:
 
 
 
   Basic and diluted
(0.27
)
 
(0.05
)

The effect of stock options/trusts has been excluded for the three months ended March 31, 2016 and 2015, as the effect would have been antidilutive. The weighted average share amount excluded was 0.2 million for each of the three months ended March 31, 2016 and 2015.

The effect of convertible notes has been excluded for the three months ended March 31, 2016 and 2015, as the effect would have been antidilutive. The weighted average share amount excluded for convertible notes totaled 5.6 million shares for the three months ended March 31, 2016 and 2015.



14


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

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


18. SEGMENT INFORMATION

The table below presents information about certain operating results of segments for the three months ended March 31, 2016 and 2015 (amounts in thousands):

Three months ended

March 31,
 
2016
 
2015
Revenues from external customers
 
 
 
Agricultural
$
152,825

 
$
193,728

Earthmoving/construction
131,704

 
158,526

Consumer
37,265

 
49,805

 
$
321,794

 
$
402,059

Gross profit
 

 
 

Agricultural
$
19,277

 
$
22,808

Earthmoving/construction
9,778

 
12,957

Consumer
2,833

 
7,029

 
$
31,888

 
$
42,794

Income (loss) from operations
 

 
 

Agricultural
$
11,357

 
$
13,168

Earthmoving/construction
(667
)
 
717

Consumer
(745
)
 
3,446

Corporate
(17,892
)
 
(16,522
)
      Income (loss) from operations
(7,947
)
 
809

 
 
 
 
Interest expense
(8,512
)
 
(8,756
)
Foreign exchange gain
4,823

 
5,966

Other income, net
3,905

 
2,317

      Income (loss) before income taxes
$
(7,731
)
 
$
336


Assets by segment were as follows (amounts in thousands):
 
March 31,
2016
 
December 31,
2015
Total assets
 

 
 

Agricultural
$
432,178

 
$
426,498

Earthmoving/construction
458,175

 
432,616

Consumer
147,971

 
137,227

Unallocated corporate
269,641

 
278,850

 
$
1,307,965

 
$
1,275,191

 


15


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

19. FAIR VALUE MEASUREMENTS
 
Accounting standards for fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers are defined as:
 
Level 1 – Quoted prices in active markets for identical instruments.
Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
 
Assets and liabilities measured at fair value on a recurring basis consisted of the following (amounts in thousands):
 
March 31, 2016
 
December 31, 2015
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
Contractual obligation investments
$
9,262


$
9,262


$
—


$
—

 
$
9,480

 
$
9,480

 
$
—

 
$
—

Derivative financial instruments asset
210

 
—

 
210

 
—

 
66

 
—

 
66

 
—

Preferred stock
250

 
—

 
—

 
250

 
250

 
—

 
—

 
250

Derivative financial instruments liability
(7
)
 
—

 
(7
)
 
—

 
(8
)
 
—

 
(8
)
 
—

Total
$
9,715

 
$
9,262

 
$
203

 
$
250

 
$
9,788

 
$
9,480

 
$
58

 
$
250

 
The following table presents the changes during the periods presented in Titan's Level 3 investments that are measured at fair value on a recurring basis (amounts in thousands):
 
Preferred stock
Balance at December 31, 2015
$
250

  Total realized and unrealized gains and losses
—

Balance as of March 31, 2016
$
250


20. RELATED PARTY TRANSACTIONS
 
The Company sells products and pays commissions to companies controlled by persons related to the chief executive officer of the Company.  The related party is Mr. Fred Taylor, Mr. Maurice Taylor’s brother.  The companies which Mr. Fred Taylor is associated with that do business with Titan include the following:  Blackstone OTR, LLC; FBT Enterprises; and OTR Wheel Engineering.  Sales of Titan products to these companies were approximately $0.3 million for the three months ended March 31, 2016, as compared to $0.7 million for the three months ended March 31, 2015. Titan had trade receivables due from these companies of approximately $0.0 million at March 31, 2016, and approximately $0.4 million at December 31, 2015.  Sales commissions paid to above companies were approximately $0.6 million for each of the three months ended March 31, 2016 and 2015.
 
Mr. Fred Taylor is also associated with Green Carbon, Inc. Titan owns 60% and Green Carbon, Inc. owns 10% in Titan Tire Reclamation Corporation, which is located in Alberta Canada.
 
In July 2013, the Company entered into a Shareholders’ Agreement between One Equity Partners (OEP) and the Russian Direct Investment Fund (RDIF) to acquire Voltyre-Prom, a leading producer of agricultural and industrial tires located in Volgograd, Russia.  Mr. Richard M. Cashin, a director of the Company, is President of OEP which owns 21.4% of the joint venture.  The Shareholder’s agreement contains a settlement put option which may require the Company to purchase shares from OEP and RDIF at a value set by the agreement.  See Note 9 for additional information.
 
The Company has a 34.2% equity stake in Wheels India Limited, a company incorporated in India and listed on the National Stock Exchange in India.

16


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



21. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss consisted of the following (amounts in thousands):
 
Currency
Translation
Adjustments
 
Unrecognized
Losses and
Prior Service
Cost
 
 
 
Total
Balance at January 1, 2016
$
(161,030
)
 
$
(26,721
)
 
$
(187,751
)
Currency translation adjustments
16,092

 
—

 
16,092

Defined benefit pension plan entries:
 

 
 

 
 

Amortization of unrecognized losses and prior
 
 
 
 
 
service cost, net of tax of $(0)
 
 
287

 
287

Reclassification as a result of ownership change
(3,491
)
 
 
 
(3,491
)
Balance at March 31, 2016
$
(148,429
)
 
$
(26,434
)
 
$
(174,863
)
 
 
 
 
 
 


22. SUBSIDIARY GUARANTOR FINANCIAL INFORMATION

The Company's 6.875% senior secured notes due 2020 and 5.625% convertible senior subordinated notes are guaranteed by the following 100% owned subsidiaries of the Company: Titan Tire Corporation, Titan Tire Corporation of Bryan, Titan Tire Corporation of Freeport, and Titan Wheel Corporation of Illinois. The note guarantees are full and unconditional, joint and several obligations of the guarantors. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. See the indenture incorporated by reference to the Company's most recent Form 10-K for additional information. The following condensed consolidating financial statements are presented using the equity method of accounting. Certain sales and marketing expenses recorded by non-guarantor subsidiaries have not been allocated to the guarantor subsidiaries.


17


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

(Amounts in thousands)
Consolidating Condensed Statements of Operations
For the Three Months Ended March 31, 2016
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
144,034

 
$
177,760

 
$
—

 
$
321,794

Cost of sales
494

 
125,146

 
164,266

 
—

 
289,906

Gross profit (loss)
(494
)
 
18,888

 
13,494

 
—

 
31,888

Selling, general and administrative expenses
2,382

 
16,685

 
15,995

 
—

 
35,062

Research and development expenses
—

 
768

 
1,711

 
—

 
2,479

Royalty expense
292

 
1,196

 
806

 
—

 
2,294

Income (loss) from operations
(3,168
)
 
239

 
(5,018
)
 
—

 
(7,947
)
Interest expense
(8,283
)
 
—

 
(229
)
 
—

 
(8,512
)
Intercompany interest income (expense)
290

 
—

 
(290
)
 
—

 
—

Foreign exchange gain (loss)
—

 
(2
)
 
4,825

 
—

 
4,823

Other income
362

 
85

 
3,458

 
—

 
3,905

Income (loss) before income taxes
(10,799
)
 
322

 
2,746

 
—

 
(7,731
)
Provision for income taxes
379

 
191

 
434

 
—

 
1,004

Equity in earnings of subsidiaries
2,443

 
—

 
(2,005
)
 
(438
)
 
—

Net income (loss)
(8,735
)
 
131

 
307

 
(438
)
 
(8,735
)
Net income noncontrolling interests
—

 
—

 
417

 
—

 
417

Net income (loss) attributable to Titan
$
(8,735
)
 
$
131

 
$
(110
)
 
$
(438
)
 
$
(9,152
)


(Amounts in thousands)
Consolidating Condensed Statements of Operations
For the Three Months Ended March 31, 2015
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
193,973

 
$
208,086

 
$
—

 
$
402,059

Cost of sales
231

 
167,951

 
191,083

 
—

 
359,265

Gross profit (loss)
(231
)
 
26,022

 
17,003

 
—

 
42,794

Selling, general and administrative expenses
2,634

 
15,379

 
17,661

 
—

 
35,674

Research and development expenses
—

 
1,000

 
2,086

 
—

 
3,086

Royalty expense
—

 
1,924

 
1,301

 
—

 
3,225

Income (loss) from operations
(2,865
)
 
7,719

 
(4,045
)
 
—

 
809

Interest expense
(8,115
)
 
—

 
(641
)
 
—

 
(8,756
)
Intercompany interest income (expense)
142

 
—

 
(142
)
 
—

 
—

Foreign exchange gain (loss)
4,515

 
(341
)
 
1,792

 


 
5,966

Other income (expense)
882

 
(38
)
 
1,473

 
—

 
2,317

Income (loss) before income taxes
(5,441
)
 
7,340

 
(1,563
)
 
—

 
336

Provision (benefit) for income taxes
2,389

 
2,693

 
(3,686
)
 
—

 
1,396

Equity in earnings of subsidiaries
6,770

 
—

 
(163
)
 
(6,607
)
 
—

Net income (loss)
(1,060
)
 
4,647

 
1,960

 
(6,607
)
 
(1,060
)
Net loss noncontrolling interests
—

 
—

 
(1,292
)
 
—

 
(1,292
)
Net income (loss) attributable to Titan
$
(1,060
)
 
$
4,647

 
$
3,252

 
$
(6,607
)
 
$
232

 
 
 
 
 
 
 
 
 
 


18


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

 
 
 
 
 
 
 
 
 
 
(Amounts in thousands)
Consolidating Condensed Statements of Comprehensive Income (Loss)
For the Three Months Ended March 31, 2016
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income (loss)
$
(8,735
)
 
$
131

 
$
307

 
$
(438
)
 
$
(8,735
)
Currency translation adjustment, net
17,584

 
—

 
17,584

 
(17,584
)
 
17,584

Pension liability adjustments, net of tax
287

 
265

 
22

 
(287
)
 
287

Comprehensive income (loss)
9,136

 
396

 
17,913

 
(18,309
)
 
9,136

Net comprehensive income attributable to redeemable and noncontrolling interests
—

 
—

 
5,400

 
—

 
5,400

Comprehensive income (loss) attributable to Titan
$
9,136

 
$
396

 
$
12,513

 
$
(18,309
)
 
$
3,736



(Amounts in thousands)
Consolidating Condensed Statements of Comprehensive Income (Loss)
For the Three Months Ended March 31, 2015
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income (loss)
$
(1,060
)
 
$
4,647

 
$
1,960

 
$
(6,607
)
 
$
(1,060
)
Currency translation adjustment, net
(45,386
)
 
—

 
(45,386
)
 
45,386

 
(45,386
)
Pension liability adjustments, net of tax
9

 
427

 
(418
)
 
(9
)
 
9

Comprehensive income (loss)
(46,437
)
 
5,074

 
(43,844
)
 
38,770

 
(46,437
)
Net comprehensive loss attributable to redeemable and noncontrolling interests
—

 
—

 
(3,013
)
 
—

 
(3,013
)
Comprehensive income (loss) attributable to Titan
$
(46,437
)
 
$
5,074

 
$
(40,831
)
 
$
38,770

 
$
(43,424
)


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


19


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

(Amounts in thousands)
Consolidating Condensed Balance Sheets
March 31, 2016
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
131,314

 
$
4

 
$
59,779

 
$
—

 
$
191,097

Accounts receivable, net
—

 
75,272

 
141,151

 
—

 
216,423

Inventories
—

 
75,053

 
190,120

 
—

 
265,173

Prepaid and other current assets
9,592

 
21,180

 
29,987

 
—

 
60,759

Total current assets
140,906

 
171,509

 
421,037

 
—

 
733,452

Property, plant and equipment, net
7,085

 
134,139

 
316,781

 
—

 
458,005

Investment in subsidiaries
731,081

 
—

 
97,202

 
(828,283
)
 
—

Other assets
31,364

 
1,172

 
83,972

 
—

 
116,508

Total assets
$
910,436

 
$
306,820

 
$
918,992

 
$
(828,283
)
 
$
1,307,965

Liabilities and Stockholders’ Equity
 

 
 

 
 

 
 

 
 

Short-term debt
$
60,161

 
$
—

 
$
28,622

 
$
—

 
$
88,783

Accounts payable
3,416

 
16,168

 
118,542

 
—

 
138,126

Other current liabilities
35,382

 
40,016

 
49,636

 
—

 
125,034

Total current liabilities
98,959

 
56,184

 
196,800

 
—

 
351,943

Long-term debt
400,000

 
—

 
19,509

 
—

 
419,509

Other long-term liabilities
30,031

 
19,706

 
55,549

 
—

 
105,286

Intercompany accounts
46,132

 
(269,628
)
 
223,496

 
—

 
—

Redeemable noncontrolling interest
—

 
—

 
96,774

 
—

 
96,774

Titan stockholders' equity
335,314

 
500,558

 
327,726

 
(828,283
)
 
335,315

Noncontrolling interests
—

 
—

 
(862
)
 
—

 
(862
)
Total liabilities and stockholders’ equity
$
910,436

 
$
306,820

 
$
918,992

 
$
(828,283
)
 
$
1,307,965


20


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

(Amounts in thousands)
Consolidating Condensed Balance Sheets
December 31, 2015
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
142,401

 
$
4

 
$
57,783

 
$
—

 
$
200,188

Accounts receivable, net
—

 
59,933

 
117,456

 
—

 
177,389

Inventories
—

 
81,993

 
187,798

 
—

 
269,791

Prepaid and other current assets
11,101

 
21,133

 
30,399

 
—

 
62,633

Total current assets
153,502

 
163,063

 
393,436

 
—

 
710,001

Property, plant and equipment, net
8,015

 
138,351

 
303,654

 
—

 
450,020

Investment in subsidiaries
724,676

 
—

 
98,660

 
(823,336
)
 
—

Other assets
34,141

 
1,181

 
79,848

 
—

 
115,170

Total assets
$
920,334

 
$
302,595

 
$
875,598

 
$
(823,336
)
 
$
1,275,191

Liabilities and Stockholders’ Equity
 

 
 

 
 

 
 

 
 

Short-term debt
$
—

 
$
—

 
$
31,222

 
$
—

 
$
31,222

Accounts payable
2,215

 
12,386

 
108,553

 
—

 
123,154

Other current liabilities
30,466

 
41,818

 
43,437

 
—

 
115,721

Total current liabilities
32,681

 
54,204

 
183,212

 
—

 
270,097

Long-term debt
460,161

 
—

 
20,243

 
—

 
480,404

Other long-term liabilities
29,881

 
20,628

 
52,324

 
—

 
102,833

Intercompany accounts
52,552

 
(271,930
)
 
219,378

 
—

 
—

Redeemable noncontrolling interest
—

 
—

 
77,174

 
—

 
77,174

Titan stockholders' equity
345,059

 
499,693

 
323,643

 
(823,336
)
 
345,059

Noncontrolling interests
—

 
—

 
(376
)
 
—

 
(376
)
Total liabilities and stockholders’ equity
$
920,334

 
$
302,595

 
$
875,598

 
$
(823,336
)
 
$
1,275,191





21


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

(Amounts in thousands)
Consolidating Condensed Statements of Cash Flows
For the Three Months Ended March 31, 2016
 
Titan
 Intl., Inc. (Parent)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Consolidated
Net cash provided by (used for) operating activities
$
(11,182
)
 
$
1,969

 
$
11,546

 
$
2,333

Cash flows from investing activities:
 

 
 

 
 

 
 

Capital expenditures
365

 
(1,969
)
 
(5,545
)
 
(7,149
)
Other, net
—

 
—

 
771

 
771

Net cash provided by (used for) investing activities
365

 
(1,969
)