<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-NO. 1
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
FISCAL PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 1-12936
TITAN WHEEL INTERNATIONAL, INC.
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(EXACT NAME OF REGISTRANTS SPECIFIED IN ITS CHARTER)
ILLINOIS 36-3228472
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2701 SPRUCE STREET, QUINCY, ILLINOIS 62301
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 217-228-6011
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------- -----------------------------------------
COMMON STOCK, NO PAR VALUE NEW YORK STOCK EXCHANGE
4 3/4% CONVERTIBLE SUBORDINATED
NOTES DUE 2000 NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
- --------------------------------------------------------------------------------
(TITLE OF CLASS)
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 FOR 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 X NO
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INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED,
TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
AS OF MARCH 15, 1996, 20,573,664 SHARES OF COMMON STOCK OF THE
REGISTRANT WERE OUTSTANDING; THE AGGREGATE MARKET VALUE OF THE SHARES OF COMMON
STOCK OF THE REGISTRANT HELD BY NON-AFFILIATES WAS APPROXIMATELY $334,322,040
BASED UPON THE CLOSING PRICE OF THE COMMON STOCK ON THE NEW YORK STOCK EXCHANGE
ON MARCH 15, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
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ITEM 1. BUSINESS
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GENERAL
Titan Wheel International, Inc. ("Titan", or the "Company") is a
leading global manufacturer of steel wheel and tire assemblies for off-highway
vehicles used in agricultural, consumer products (including recreational
trailers, golf cars and grounds care vehicles), earthmoving/construction and
military markets and conducts its business in a single segment. The Company
generally manufactures both the wheels and tires for these vehicles and provides
the value-added service of assembling the completed system. In addition to
serving the off-highway wheel and tire industries, the Company manufactures
certain consumer and specialty-engineered products including automotive
specialty wheels, braking systems, traction-enhancing differential systems, and
automation machinery. Titan offers a broad range of thousands of different
products that are manufactured in relatively short production runs and must also
meet stringent original equipment manufacturers ("OEM") specifications.
BUSINESS HISTORY
The Company was incorporated in 1983, grew during the 1980's through
acquiring, revitalizing and amalgamating the operations of several of the
largest wheel manufacturers serving the agricultural and off-highway
construction equipment markets. In 1990, Titan was acquired in a management led
leveraged buyout by investors, including Maurice M. Taylor, Jr., the Company's
President and Chief Executive Officer, and MascoTech, Inc. ("MascoTech").
In May 1993, the Company filed its first public offering and today is
traded on the New York Stock Exchange under the trading symbol TWI.
In 1993, the Company made three acquisitions: Automotive Wheels,
Inc.("Automotive Wheels"); Dyneer Corporation ("Dyneer"), and TD Wheels of
Virginia, Inc. ("TD Wheels"). Automotive Wheels manufactures steel and aluminum
wheels and rims for the automotive and light truck OEM and aftermarket. Dyneer
manufactures wheels and tires for consumer markets and traction-enhancing
differential systems for the construction and specialty truck markets. TD Wheels
acquired certain assets of Dotson Wheel and Hubs & Wheels, manufacturers of
earthmoving and construction wheels.
During the last two years, through a series of five strategic
acquisitions, the Company has broadened its basic steel wheel manufacturing
business into tire manufacturing, tire and wheel assemblies and has expanded
geographically into Europe. The following is a summary of these acquisitions:
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<TABLE>
<CAPTION>
DATE OF ACQUISITION NAME AND PRINCIPAL BUSINESS OF ACQUIRED COMPANY
- ------------------- -----------------------------------------------
<S> <C>
January 13, 1994 Nieman's Ltd. ("Nieman's"), a national distributor of tires, wheels and axle
assemblies and component parts to recreational and industrial trailer OEMs.
July 16, 1994 Titan Tire Corporation ("Titan Tire"), a manufacturer of tires for agricultural,
construction and light truck vehicles.
November 22, 1994 Sirmac Officine Meccaniche SpA ("Sirmac"), and Siria Officine Meccaniche
SpA ("Siria") (together the "Sirmac Group"), a major European manufacturer
of specialty wheels and other products for the agricultural and construction
markets.
February 10, 1995 Steel Wheels Ltd. ("Steel Wheels"), formerly Lemmerz UK Limited, a
Kidderminster, England manufacturer of steel wheels principally for the
earthmoving/construction market.
December 28, 1995 Grasdorf Titan GmbH ("Titan GmbH"), a German manufacturer of wheels
and rims for the earthmoving and agricultural equipment markets.
</TABLE>
In late 1994, the Company commenced construction of a new wheel-making
facility in Greenwood, South Carolina for the manufacture of small diameter
rolled rims for golf cars, lawn and garden vehicles, all-terrain
vehicles("ATVs") and agricultural vehicles. Management is currently testing
wheels and expects the plant to be in production in early 1996.
BUSINESS STRATEGY
The Company's business strategy is to continue to broaden its product,
market and geographic base by developing opportunities worldwide. This will
enable Titan to capitalize on its ability to produce and market complete wheel
and tire assemblies. Titan also intends to continue to capitalize on its
expertise in the machining, forming and welding of steel and in producing, on a
cost-effective basis, limited-run custom designed products. The Company intends
to pursue this strategy through internal growth and possibly through additional
strategic acquisitions and joint ventures. Titan has increased its penetration
of the after-market for wheel and tire assemblies and intends to continue its
focus on the after-market, where sales tend to be less cyclical than is the case
with sales to OEMs.
European Expansion. The Company currently manufactures wheels for sale
to European OEMs in the agricultural and the earthmoving/construction markets. A
primary motivation for Titan's entry into European markets is its desire to
serve the worldwide needs of its major United States OEM customers, many of
which have substantial business in Europe. The Company believes that, due to the
removal of trade barriers in the European Union and political changes in Eastern
Europe, the average size of farms in Europe is likely to increase, which would
cause farm vehicles
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used in Europe to increase. Because larger farm vehicles utilize larger and a
greater number of wheels and tires similar to those produced in the United
States, the Company believes that there will be opportunities to expand sales of
its agricultural wheel and tire products to European OEMs and to Titan's
existing North American OEM customers for export to Europe and for their
European operations.
After-market Wheel and Tire Business. The Company has concentrated on
increasing its penetration of the wheel and tire after-markets. These
after-markets offer higher profit margins, are larger and are somewhat less
cyclical than OEM markets. Titan will devote its resources to future growth in
the wheel and tire after-markets.
Strategic Acquisitions. The Company believes that its expertise in the
manufacture of steel wheels has permitted it to take advantage of opportunities
to acquire businesses that complement this product line, including companies
engaged in the tire market and ultimately companies with wheel and tire assembly
capabilities. The broadening of Titan's business may permit it to make
additional strategic acquisitions in the future. In the past two years, Titan
has completed five acquisitions that have led to the broadening of its products,
markets and geographic base, including the following:
<TABLE>
<CAPTION>
ACQUIRED COMPANY STRATEGIC REASONS FOR ACQUISITION
- ---------------- ---------------------------------
<S> <C>
Nieman's Complemented and expanded the Company's ability to
distribute products and services in the wheel and
tire assembly area for agricultural and consumer
markets.
Titan Tire Enabled the Company to offer tires to customers
in the agricultural and earthmoving/construction
markets and to provide the value-added service of
wheel and tire assemblies.
Sirmac Group Investment in the Sirmac Group enabled the
Company to enter the European agricultural and
earthmoving/construction wheel markets, and further
Titan's presence in the global markets.
Steel Wheels Further expanded the Company's reach into
European markets with the manufacturer of
earthmoving/construction wheels and increase market
efficiencies through synergies with the Sirmac Group.
Grasdorf Expanded the Company's interest in agricultural and
Titan GmbH earthmoving products for the German and European
market.
</TABLE>
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Generally, the Company's acquisitions have allowed it to: (i) expand
its market and geographic reach; (ii) enter the market for assembled wheels and
tires, a market in which margins are greater than markets for wheels and rims
alone; (iii) substantially increase its penetration of the after-market for
wheels and tires, a market larger and less cyclical than the OEM market; and
(iv) significantly improve the operating efficiencies of its acquired assets and
its manufacturing facilities, and improve its ability to service its customers'
needs on a timely basis.
Improve Operating Efficiencies. The Company continually works to
improve the operating efficiency of its acquired assets and its manufacturing
facilities. With each acquisition, Titan integrates each facility's strengths,
often transferring equipment and business to the facilities that are best
equipped to handle the work and therefore providing for the capacity to increase
utilization and spread operating costs over a greater volume of products. Titan
is continuing a comprehensive program to refurbish, modernize and computerize
its equipment. Titan has also centralized and streamlined its inventory
controls, instituting a "just-in-time" system of providing raw materials to its
manufacturing units. These efforts have lead to improved management of order
backlog and substantially improved the Company's ability to respond to customer
orders on a timely basis.
Design Capacity and New Product Development. Equipment manufacturers
constantly face changing industry dynamics. The Company directs its business and
marketing strategy to understanding all of its markets, addressing the needs of
its customers, and demonstrating the advantages of its products. In particular,
Titan often participates with its customers in the design of new and upgraded
products. The Company will from time to time recommend modified products to its
customers based on Titan's own market information and research and development.
Titan's engineering and research and development staffs test new designs and
technologies, developing new methods of manufacturing to improve product quality
and performance. These value-added services enhance the Company's relationship
with its customers. The Company believes that their performance orientation
provides it with a competitive advantage in the global marketplace.
PRODUCTS AND MARKETS
The Company's product line includes a wide range of steel wheels and
rims; agricultural, industrial and specialty tires; braking systems and
differentials; and rebuilt automation machinery. The Company's sales are
comprised of five major markets: Agricultural, Consumer,
Earthmoving/Construction, Engineered Products and Military. The following table
sets forth, for the periods indicated, the approximate relative contribution to
Titan's net sales of the markets noted below.
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<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Agricultural 50% 38% 44%
Consumer 16 34 27
Earthmoving/Construction 22 19 22
Engineered Products 4 6 6
Military 8 3 1
---- ---- ----
TOTAL 100% 100% 100%
==== ==== ====
</TABLE>
Agricultural Market - Wheels. Agricultural wheels and rims are
manufactured by the Company for installation on various agricultural and
forestry equipment, such as tractors, combines, skidders, plows, planters and
irrigation equipment. These wheels and rims range in diameter from 4" to 54"
(with the 54" diameter being the largest manufactured in North America), in
width from 2-1/2" to 44", and in weight from 4 lbs. to 465 lbs. Basic
configurations are combined with other features (such as different centers and a
wide range of material thicknesses) allowing Titan to offer the broadest line of
different product models to meet customer specifications. A substantial majority
of agricultural wheels and rims are sold to OEMs. The balance of the Company's
agricultural wheel products are sold primarily to distributors, which then
resell these products to end-users, such as farmers.
Agricultural Market - Tires. Agricultural tires are an additional
product line for the Company. These tires range in diameter from 8" to 46", in
width from 4.80" to 30.5", and in weight from 9 lbs to 653 lbs. Titan's
agricultural tires are mounted on its agricultural wheels, creating the added
value of a wheel and tire assembly.
Consumer Markets. The Company's consumer products division manufactures
a variety of products. Titan held a significant share of the boat/marine trailer
market in the United States in 1995, supplying wheel and tire assemblies, brakes
and actuators. The Company also supplied a large share of the wheel and tire
assemblies for the utility and camping trailer markets sold in the United States
in 1995. Titan anticipates future growth in these markets with the focus on
value-added wheel and tire assemblies. Additionally, the Company believes it
will increase its market share through the introduction of new products in 1996.
Other markets served by the Company within the consumer products
division include the lawn and garden, ATV and golf car markets. In addition,
Titan currently produces specialty automotive wheels and light truck tires. In
1995, the Company introduced its new line of rolled rims to complement the
existing wheel and tire products for the lawn and garden, ATV and golf car
markets. Titan will produce a new line of smaller diameter rolled rims for the
lawn and garden market at its new wheel-making facility in Greenwood, South
Carolina. The Company also plans to introduce the stylized center and low
profile tire for the golf car market.
The Earthmoving/Construction Market. The Company manufactures wheels and
rims for various types of earthmoving, mining, and construction equipment,
including cranes, graders and
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<PAGE> 7
levelers, scrapers, self-propelled shovel loaders, load transporters and haul
trucks and back-hoe loaders. These wheels and rims range in diameter from 20" to
57" (with the 57" diameter being the largest manufactured in North America), in
width from 8" to 44", and in weight from 125 lbs. to 6,300 lbs. The Company
believes that it provides its customers with the broadest range of
earthmoving/construction wheels and rims available in the world, manufacturing a
significant variety of wheels, rims and components for earthmoving/construction
application. The majority of the earthmoving/construction products produced by
Titan are sold directly to OEMs. The Earthmoving/Construction tire market is an
area of expansion for the Company and will create the added value of a wheel and
tire assembly.
Engineered Products Market. The Company's engineered products include
traction differentials, clutches, brakes, welding equipment, and rebuilt
automation machinery. Sales of these products tend to be cyclical and fluctuate
with general economic cycles. In 1995, sales of engineered products were
relatively strong, primarily because of the strength of the European economy.
The improvement in the European economy resulted in increased demand for
products supplied by the Tractech division of Dyneer coupled with new contracts
for Automation International.
Military Market. The Company also manufactures various wheels and rims
for the United States Government, principally for certain military vehicles
(such as trucks, tanks and personnel carriers). This business is cyclical
depending on defense spending which has been cut drastically in the last few
years. The current administration's policy to downsize government spending
caused a marked reduction in purchasing requirements for spare parts as well as
new programs. The Company believes that this trend will affect its sales in the
military market for 1996 and beyond. The Military tire market is an area of
expansion for the Company and will create the added value of a wheel and tire
assembly.
CUSTOMERS
Titan signed several long term contracts with OEMs in 1995. This
resulted in Titan's ten largest customers accounting for approximately 42% of
net sales for the year ended December 31, 1995 compared to 38% for the year
ended December 31, 1994. For the year ended December 31, 1995, Deere & Company
accounted for 12% of Titan's net sales. Titan strives for long-term supply
contracts with its customers.
MARKETING
The Company has its own sales & marketing force consisting of
approximately fifty individuals. Titan also utilizes several manufacturing
representatives. The years of experience of this group in the market place,
particularly with customer relations, have contributed to Titan's sales growth.
Titan has seen a substantial increase in customer satisfaction as a result of
increased representation in the field. Sales calls have increased and service
and technical assistance are attaining the levels required by major OEMs. During
1995, the Company's marketing and sales group concentrated on expanding the
wheel and tire assemblies for the markets they serve.
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<PAGE> 8
OPERATIONS
Wheel Manufacturing Process. Most agricultural steel wheels are
produced using a rim and a wheel center. A rim is produced by first cutting
large steel sheets to required width and length specifications. These steel
sheets are rolled and welded to form a circular rim, which is flared and formed
in the roll-form operation. The majority of wheel centers are manufactured using
presses that both blank and form the center to specifications in multiple stage
operations. The Company has the capability in each facility to paint the wheels
using an electrostatic process prior to the final top coating.
Earthmoving/Construction steel wheels are manufactured principally from
hot rolled steel sections. This process is used because the high load bearing
capacity of these wheels requires rim thicknesses which are beyond the
capability of cold-rolling. Rims are built-up from a series of hoops which are
welded together to form a rim base. The complete rim is made from either three
or five separate parts which then lock together after the rubber tire has been
fitted to the wheel and inflated.
Smaller wheels (usually 12" or less in diameter), of which the majority
are manufactured for consumer markets are manufactured by a process in which
half-wheels are press-formed, then two of these half-wheel stampings are welded
together to form a complete wheel. The wheel assembly is then painted, generally
on automated electrostatic painting equipment. Generally, for larger wheels (12"
or more in diameter) manufactured for consumer markets, Titan manufactures rims
and centers, welds the rims to the centers and paints the assembled product.
Due to the wide variation of applications for the Company's products,
engineering requirements often specify wheels having as many as five separate
components. Titan manufactures each of the components specified and then
assembles them into a finished product.
Tire Manufacturing Process. Tires are produced by mixing rubber and
other raw materials and chemicals to form a rubber compound. The compound is
extruded into tread and sidewall stock, mixed with wire strands to make the
bead, and mixed with steel or fabric to produce the ply. The tread, sidewall,
bead and plies are assembled into a green tire (uncured). The green tire is put
into a press which molds the tire under temperature and pressure into a finished
cured tire.
Quality Control. During the entire production process, inspections are
performed continuously by production employees to ensure high quality product.
The Company has extensive quality control testing capabilities, such as radial
fatigue testing, metallurgical analysis, physical property analysis, salt spray
testing and other related testing. Titan's manufacturing employees are trained
in Statistical Process Control, the periodic testing of products.
Engineering/Research & Development. Supported by computer-aided design
("CAD"), computer-aided manufacturing ("CAM"), and finite element techniques,
the Company's engineering and research and development staff continually
investigates and tests new designs and technologies, and develops new methods of
manufacturing to improve product quality and performance.
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<PAGE> 9
Materials. The primary raw materials used by the Company are steel and
rubber. Due to demand/capacity issues in the steel industry, steel procurement
planning and execution are paramount. To assure a consistent steel supply, Titan
purchases from key steel mills on basic steel and is developing relationships
with steel processors for steel preparation. Rubber and raw materials for tire
manufacture compose the Company's second largest commodity. Titan buys rubber on
the spot markets where there are numerous sources of supply. As the Company
continues to grow, additional commodities/services are being contracted to
secure better pricing on purchased items. In addition to the development of key
suppliers domestically, Titan's strategic procurement plan includes
international sourcing to assure competitive price and quality in the global
marketplace.
Distribution. The Company's distribution network consists of twelve
facilities which are strategically located throughout North America and Europe.
Sales made directly to OEMs represent approximately 60% of total sales, with the
balance made to after-market distributors for sale to end-users. Titan maintains
a sufficient level of work-in-process inventory to enhance its ability to
respond to customer needs in a timely manner.
Backlog/Firm Orders. As of February 29, 1996, the Company believes that
it had $149 million in firm orders compared to $85 million dollars at February
28, 1995. Firm order backlog has increased due to recent acquisitions.
COMPETITION
The Company's wheel and tire businesses compete with several
international and domestic competitors, some of whom are larger and have greater
financial resources than Titan. Such competition, however, is more limited in
certain parts of the agricultural braking system, traction differential and
industrial clutch markets. In the wheel and tire business, Titan competes
primarily on the basis of price, quality, customer service, design capability
and delivery time.
The Company believes that it is the primary source of steel wheels and
rims to the majority of its North American customers in the agricultural and
earthmoving/construction markets. The Company believes that the wheel
competition from foreign manufacturers is increasing because they are developing
new facilities and partnerships in North America.
In the tire business, the Company competes primarily on the basis of
price, quality, customer service, and the added value of wheel and tire assembly
distribution. The agricultural smaller diameter tire market has become more
competitive over the last few years with more foreign competitors moving into
the North American market.
While the consumer products market is price sensitive, this sensitivity
is offset by the demand for quality products. The Company continues to increase
its product base in the consumer products market which has increased the
competitiveness of its products. The consumer small diameter tire market in
North America is highly competitive due to numerous foreign competitors.
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EMPLOYEES
As of December 31, 1995, the Company employed approximately 4,500
people, including 3,300 employees in the United States. There are collective
bargaining agreements for approximately 30% of Titan's United States employees.
The majority of employees at Titan's foreign facilities are also represented by
collective bargaining agreements. The Company believes that all relations with
employees are good.
PATENTS AND TRADEMARKS
The Company owns numerous United States and foreign patents and
continues to apply for patent protection for many of its new products. While the
Company considers that its patents are significant to the operations of its
business, Titan does not consider any one of them to be of such importance that
its expiration could materially affect its business.
ITEM 2. PROPERTIES
- ------- ----------
The Company, its subsidiaries and its affiliate, the Sirmac Group,
maintain thirty-four facilities located in the United States, England, Italy,
Ireland and Germany for manufacturing and warehousing/distribution. The
facilities in the aggregate contain over 7 million square feet, 5.1 million
square feet of which are used for manufacturing, 1.9 million square feet for
warehousing and distribution and the balance for administrative and sales
offices. Nineteen of the facilities are leased and fifteen are owned.
Approximately 270,000 square feet of warehouse space in the United States is
subleased by Titan to unrelated third parties.
ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------
Dico, Inc. EPA Matters. Dico, Inc. ("Dico"), a subsidiary of Dyneer,
and five major oil and chemical companies were named as potentially responsible
parties ("PRPs") in connection with contaminants found at Dico's Des Moines,
Iowa site (the "Site"). The contaminants were found in the groundwater and
certain buildings located on the Site. Dico has constructed a groundwater
extraction and treatment system to restore use of affected groundwater. The
company and the EPA are in the process of negotiations regarding all matters
pertaining to the Site. The EPA has informally agreed that it will pursue PRP's
other than Dico for future costs of remediation.
General. The Company is also a party to several routine legal
proceedings arising out of the ordinary course of its business. The Company
believes that none of these actions, individually or in the aggregate, will have
a material adverse affect on the financial condition or its results of
operations.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
Not Applicable
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<PAGE> 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
- ------- -----------------------------------------------------
STOCKHOLDER MATTERS
-------------------
The Company's common stock was traded on the National Market System
("NASDAQ") from the date of its initial public offering on May 19, 1993, until
March 23, 1994 when the common stock commenced trading on the New York Stock
Exchange ("NYSE"). Prior thereto, there was no market for the common stock. The
following table sets forth, for periods indicated, the high and low sales prices
per share on a post-stock split basis of the common stock as reported on the
NASDAQ and the NYSE, and information concerning per share dividends declared.
<TABLE>
<CAPTION>
Dividends
1994* High Low Declared
----- ---- --- --------
<S> <C> <C> <C>
First Quarter...................................... $13 5/8 $11 1/8 $0.007
Second Quarter..................................... $13 3/8 $ 9 5/8 $0.007
Third Quarter...................................... $12 3/4 $10 1/4 $0.007
Fourth Quarter..................................... $13 1/4 $11 1/4 $0.007
1995*
-----
First Quarter ..................................... $16 $11 5/8 $0.010
Second Quarter..................................... $18 3/4 $14 1/4 $0.010
Third Quarter...................................... $21 $16 1/4 $0.015
Fourth Quarter..................................... $18 1/8 $13 $0.015
</TABLE>
On December 31, 1995, there were approximately 626 holders of record of Titan
common stock.
*Amounts in 1994 and 1995 have been adjusted for the two 3-for-2 stock splits
that occurred March 15 and August 31, 1995.
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<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------
The selected financial data presented below, as of and for the years
ended December 31, 1991, 1992, 1993, 1994 and 1995, are derived from the
Company's financial statements, audited by Price Waterhouse LLP, independent
accountants, and should be read in conjunction with the Company's audited
financial statements and notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
(In thousands except per share data)
1991 1992 1993 1994(3) 1995(3)
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Net sales............................................ $100,054 $113,170 $150,441 $407,000 $623,183
Gross profit......................................... 11,501 (1) 17,437 25,269 68,432 115,726
Income (loss) from
operations......................................... (911)(2) 8,798 13,142 37,996 73,055
Income (loss) before income taxes, extraordinary
loss and cumulative effect of change in
accounting principle............................... (3,528) 6,468 10,114 30,107 63,280
Income (loss) before extraordinary loss and
cumulative effect of change in accounting
principle.......................................... (3,616) 4,072 6,361 18,480 37,983
Per share.......................................... (.19) .24 .46 1.14 1.91
Extraordinary loss related to early retirement
of debt............................................ -0- (258) -0- -0- -0-
Cumulative effect of change in accounting
principle.......................................... -0- (275) -0- -0- -0-
Net income (loss).................................... (3,616) 3,539 6,361 18,480 37,983
Net income (loss) per share (primary)................ (.19) .21 .46 1.14 1.91
Net income (loss) per share(fully diluted)........... (.19) .21 .46 .89 1.50
Current assets....................................... $ 41,978 $ 40,663 $141,682 $192,358 $264,900
Total assets......................................... 66,994 69,313 261,266 400,460 512,135
Long-term debt....................................... 36,950 35,785 123,646 178,341 142,305
Dividends declared per common share.................. $0.00 $0.00 $0.02 $0.03 $0.05
- --------------------
<FN>
(1) Effective January 1, 1991, the Company changed its estimates of the useful
lives of certain depreciable assets. This change had the effect of reducing
depreciation expense by $3.2 million for the year-ended December 31, 1991.
(2) In December 1991, the Company recorded a provision of $4.2 million for the
estimated costs associated with the closure of the Company's Toronto,
Ontario, facility, including costs related to employee severance, inventory
obsolescence, rent and property taxes, asset disposal and other
miscellaneous costs. This facility was closed in October 1992.
</TABLE>
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<PAGE> 14
(3) See Note 1 of the Notes to the Company's Consolidated Financial Statements
for a description of significant acquisitions.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ------- -----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the Company's
statement of operations expressed as a percentage of sales. This table and
subsequent discussions should be read in conjunction with the Company's
Consolidated Financial Statements and related Notes.
<TABLE>
<CAPTION>
As a Percentage of Sales
------------------------
December 31,
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 83.2 83.2 81.4
------ ------ ------
Gross profit 16.8 16.8 18.6
Selling, general, administrative expenses 7.1 7.0 6.6
Research and development expenses 0.9 0.5 0.3
------ ------ ------
Income from operations 8.8 9.3 11.7
Other (income) expense:
Interest expense 2.2 2.1 1.9
Minority interest 0.0 0.0 0.2
Other (0.1) (0.2) (0.6)
------ ------ -------
Income before income taxes 6.7 7.4 10.2
Provision for income taxes 2.5 2.9 4.1
------ ------ ------
Net income 4.2% 4.5% 6.1%
====== ====== ======
</TABLE>
In addition, the following table sets forth, for periods indicated,
components of the Company's net sales classified by major markets (in
thousands):
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Agricultural $ 74,901 $156,015 $275,976
Consumer 23,703 140,073 170,717
Earthmoving/Construction 32,792 75,555 133,523
Engineered Products 6,172 22,511 38,920
Military 12,873 12,846 4,047
-------- ------- --------
Total $150,441 $407,000 $623,183
======== ========= ========
</TABLE>
-14-
<PAGE> 15
FISCAL YEAR ENDED DECEMBER 31, 1995, COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1994
Net sales for the year ended December 31, 1995, were $623.2 million, an
increase of 53% compared to 1994 sales of $407 million. The increase was
primarily due to the acquisitions by the Company of Steel Wheels in February
1995, Titan Tire in July 1994, and to the consolidation of the Sirmac Group in
the second half of 1995. Sales in the Agricultural market, the Company's
largest, were $276 million compared to 1994 sales of $156 million. Agricultural
sales accounted for 44% of the Company's total sales in 1995. Sales increased
primarily due to the acquisition of Titan Tire and the Sirmac Group. Sales in
the Company's second largest market, Consumer, increased $30.6 million compared
to 1994, and represented 27% of total sales. The increase was due primarily to
the acquisitions noted above. Earthmoving/Construction sales, the Company's
third largest market in 1995, at 22% of total sales, increased $58 million over
1994, primarily due to the acquisition of Steel Wheels.
Gross profit was $115.7 million, or 18.6% of net sales in 1995,
compared to $68.4 million, or 16.8% of net sales in 1994. The gross profit
margin was positively affected by strong margins from the Titan Tire acquisition
as well as strength in the Company's traditional markets.
Selling, general and administrative ("SG&A") expenses were $40.6
million, or 6.5% of net sales in 1995, compared to $28.3 million, or 7.0% of
sales in 1994. The dollar increase was principally due to the acquisitions noted
above as well as increases in operations and administrative personnel to enhance
systems and controls. Research and development expenses were consistent from
year to year at $2.1 million.
Interest expense for 1995 was $12 million, or 1.9 % of net sales, which
compares to $8.5 million or 2.1% of net sales in 1994. The increased interest
expense was primarily due to an increase of approximately $57 million in the
average debt outstanding in 1995 compared to 1994, coupled with slightly higher
average borrowing rates. The acquisitions of Steel Wheels and the consolidation
of the Sirmac Group accounted for the majority of the increase in the average
debt outstanding.
FISCAL YEAR ENDED DECEMBER 31, 1994, COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1993
Net sales for the year ended December 31, 1994, were $407 million, an
increase of 171% compared to 1993 sales of $150.4 million. The increase was
primarily due to the acquisitions of Dyneer and TD Wheel in November 1993,
Nieman's Ltd. in January 1994, and Titan Tire in July 1994, as well as strong
growth in the Agricultural and Earthmoving/Construction markets in 1994. Sales
in the Company's largest market, Agricultural Products, at 38% of sales,
increased $81.1 million compared to 1993. This was primarily due to the
acquisitions noted above as well as strong growth in existing markets. Sales in
the Consumer market, the Company's second largest category in 1994 at 34% of
sales, increased $116.4 million compared to 1993, primarily due to the Dyneer
acquisition. Earthmoving/Construction Product sales, the Company's third largest
market at 19% of sales, increased $42.8 million over 1993, primarily due to
recent acquisitions and growth in existing
-15-
<PAGE> 16
markets. Excluding the effect of the recent acquisitions noted above, sales
increased by 10% compared to 1993.
Gross profit was $68.4 million, or 16.8% of net sales in 1994, compared
to $25.3 million, or 16.8% of net sales in 1993. The gross profit margin was
positively affected by strong growth in the Company's traditional markets and
strong margins from the Titan Tire acquisition, but was adversely impacted by
lower historical margins from Dyneer and Nieman's in the Consumer Products
market. The Company's gross margin percentage increased in 1995 as it received
the benefit of a full year's sales from Titan Tire.
Selling, general & administrative expenses were $28.3 million, or 7.0%
of sales in 1994, compared to $10.7 million, or 7.1% of sales in 1993. The
dollar increases were principally due to the acquisitions noted above as well as
an increase in operations and administrative personnel to improve systems and
controls. The Company was successful in reducing Dyneer's SG&A from 9.7% in 1993
to the corporate average in 1994 as part of Titan's corporate restructuring.
Interest expense for 1994 was $8.5 million or 2.1% of net sales, which
compares to $3.2 million and 2.2% of net sales in 1993. The increased interest
expense was primarily due to an increase of $79 million in the average debt
outstanding in 1994 compared to 1993, but was partially offset by lower average
borrowing rates in 1994. The issuance of $103.5 million of 4 3/4% subordinated
convertible notes in November 1993 increased the average debt outstanding by $88
million, but lowered the average interest rate for 1994 since the net proceeds
were used to repay higher interest debt. Also positively affecting the rate was
the new $100 million credit facility that provides borrowing rates approximately
one and one-half percentage points lower than the previous Titan and Dyneer
credit facilities, which were repaid in July, 1994.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased $7 million from the prior year as
increases in net income and depreciation, and the decrease in inventory more
than offset decreases in the accounts payable and other current liabilities
resulting in cash from operations of approximately $37.5 million.
The Company used its credit facility to fund the acquisition of Steel
Wheels in February 1995, in the amount of $15.2 million. Through its resources,
the Company also acquired a portion of Metallbau Grasdorf GmbH of Germany in
December 1995, paying $2.3 million for the plant and machinery of the
manufacturing segment of the business.
Capital expenditures for property, plant and equipment totaled $20.2
million in 1995 compared to $15.2 million in 1994. The Company is continuing its
program of capital expansion to modernize and improve production efficiencies.
The Company invested an additional $5 million during the year for its Greenwood,
South Carolina facility.
-16-
<PAGE> 17
The Company received $64.9 million from the issuance of 4,312,500
shares of common stock in June 1995, before related offering costs of $300,000.
The proceeds were used to reduce revolving debt and repurchase $17.5 million of
the preferred stock and stock warrants issued to Pirelli Armstrong Tire
Corporation in the acquisition of Titan Tire.
The Company received $58.1 million in proceeds from long-term debt in
1995 including $37 million under the revolving credit facility. Other proceeds
included $9.5 million from the issuance of an Industrial Revenue Bond for the
Greenwood facility and approximately $8 million from the Royal Bank of Scotland
in the form of a term loan for the Steel Wheels location. The Company repaid
debt totaling $97.5 million, which includes the payoff of the revolving credit
balance during the year of $74.5 million, as well as various other borrowings.
At December 31, 1995, the Company had cash and cash equivalents of
$14.2 million. Cash on hand, anticipated internal cash flows and utilization of
available borrowing under the Company's credit facilities are expected to
provide sufficient liquidity for working capital needs, capital expenditures and
acquisitions for the foreseeable future.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical information contained herein, the matters
discussed in this annual report are forward-looking statements which involve
risks and uncertainties, including but not limited to economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, services, products, prices, and other factors discussed in the
Company's prior filings with the Securities and Exchange Commission.
NEW ACCOUNTING STANDARDS
The following accounting standards will be applicable to the Company for 1996:
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," effective for Titan for the year ending
December 31, 1996, establishes standards for the impairment of long-lived
assets, certain identifiable intangibles and goodwill related to those assets to
be held and used and those to be disposed of. SFAS 121 is not expected to have a
material impact on Titan's financial condition or results of operations.
SFAS 123, "Accounting for Stock-based Compensation" which defines the
fair value based method of accounting for stock option, purchase and awards
plans. SFAS 123 allows companies to use the fair value method defined in the
Statement or to continue use of the intrinsic value method as outlined in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25). SFAS 123 is not expected to have an impact on the Company's
financial position or results of operations.
-17-
<PAGE> 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
Reference is made to Item 14.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
- ------- ----------------------------------------------------
Not applicable.
-18-
<PAGE> 19
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
The names, ages and positions of all directors, nominees for director
and executive officers of the Company, as of December 31, 1995, are listed
below, followed by a brief account of their business experience during the past
five years. Officers are normally appointed annually by the Board of Directors
at a meeting of the directors immediately following the Annual Meeting of
Stockholders. There is a family relationship between the President and
Secretary who are brother and sister. There is no arrangement or understanding
between any officer and any other person pursuant to which an officer was
selected.
MAURICE M. TAYLOR, JR., age 51, has served as President and Chief
Executive Officer of the Company since January 1990, when Titan was acquired in
a management-led leveraged buy out by investors, including Mr. Taylor. Prior
thereto, Mr. Taylor had a significant role in the development of the Company.
Mr. Taylor has served as a director of the Company since 1990.
RICHARD M. CASHIN, JR., age 43, has been a director of the Company
since 1994. Mr. Cashin is the President of Citicorp Venture Capital, Ltd., and
has been employed by Citicorp Venture Capital since 1980. Mr. Cashin is also a
director of Levitz Furniture Co., the Hoover Group, Cable Systems
International, and Delco Remy America.
ALBERT J. FEBBO, age 57, has been a director of the Company since
1992. Mr. Febbo is the Vice President of Automotive Marketing and Sales for the
General Electric Company and has held that position since March 1987.
ERWIN H. BILLIG, age 68, has been a director of the Company since
1992. Mr. Billig has been Vice Chairman of MascoTech since October, 1992, and
served as the President and Chief Operating Officer of MascoTech, Inc. from
1986 to September, 1992. Mr. Billig is also a director of MascoTech.
ANTHONY L. SOAVE, age 56, has been a director of the Company since
1994. Mr. Soave is the President, Chief Executive Officer and founder of
Detroit based City Management Corporation, a totally-integrated environmental
service company operating nationwide.
EDWARD J. CAMPBELL, age 68, has been a director of the Company since
1995. Mr. Campbell was employed for 27 years by Tenneco. He spent 13 of those
years as President of Newport News Shipbuilding Company and 14 years at JI
Case, three of those (1992-94) as President.
MICHAEL R. SAMIDE, age 51, joined the Company as Vice President and
Chief Operating Officer in November of 1993, following Titan's acquisition of
Dyneer Corporation in 1993. Mr. Samide served as the President and Chief
Executive Officer of Dico, Inc., a division of Dyneer. Prior to his work with
Dico, he was President and CEO of the New Hampshire Ball Bearing Corporation for
a number of years.
KENT W. HACKAMACK, age 37, has served as Corporate Controller since May
1994, and was appointed as Treasurer in November 1994. Prior to joining the
Company, Mr. Hackamack served from 1990 to 1994 as the International Audit
Manager for Pool Energy Services Co. of Houston, Texas, addressing foreign
operations accounting and auditing issues. Mr. Hackamack holds two degrees from
Northeast Missouri State University in accounting and computer science, and is a
Certified Public Accountant.
CHERI T. HOLLEY, age 48, joined the Company in March 1994 as General
Counsel. In November 1994 she was named Secretary of the Company. Before joining
the Company, she was in private practice specializing in corporate and
environmental law for a number of years. Prior to private practice, Ms. Holley
had fifteen years of management experience. She received her law degree from
Detroit College of Law and a B.S. in Business Administration from Wayne State
University.
STEVEN A. ROOT, age 41, has served as Vice President of Sales &
Marketing since 1993. Mr. Root joined Titan in 1992 as the Company's director of
Sales and Marketing. Prior to joining Titan, he served 18 years in various
management positions at Deere & Company. Mr. Root holds a degree in marketing
from the University of Northern Iowa.
Under the secutities laws of the United States, the directors and
executive officers of the Company and the persons who own more than 10% of the
Company's common stock are required to report their initial ownership of the
Company's common stock and any subsequent changes in that ownership to the
Securities and Exchange Commission and to the New York Stock Exchange. Specific
due dates for these reports have been established, and the Company is required
to disclose in this annual report any late filings during 1995. To the
Company's knowledge, based solely on its review of the copies of such reports
required to be furnished to the Company during 1995, all of these reports were
timely filed.
-19-
<PAGE> 20
ITEM 11. EXECUTIVE COMPENSATION
- -------- ----------------------
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the compensation
received by the Company's Chief Executive Officer and other executive officers
whose aggregate annual salary and bonuses exceeded $100,000 during 1995.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
- ----------------------------------------------------------------------------------------------------------------
NAME AND PRINCIPAL ALL
POSITION AS OF OTHER
DECEMBER 31, 1995 YEAR SALARY BONUS COMPENSATION
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maurice M. Taylor, Jr. 1995 $ 300,000 $ -0- $ 1,844 (1)
President and Chief 1994 $ 300,000 $ 210,000 $ 1,500 (1)
Executive Officer (3) 1993 $ -0- $ -0- $ 572,000 (4)
- ----------------------------------------------------------------------------------------------------------------
Michael R. Samide, 1995 $ 225,000 $ -0- $ 9,495 (2)
Vice President & Chief 1994 $ 225,000 $ 100,000 $ 7,012 (2)
Operating Officer
- ----------------------------------------------------------------------------------------------------------------
Steven A. Root 1995 $ 100,000 $ 25,000 $ 7,586 (2)
Vice President of 1994 $ 93,808 $ 22,452 $ 5,125 (2)
Sales & Marketing 1993 $ 83,340 $ 21,000 $ -0-
- ----------------------------------------------------------------------------------------------------------------
Cheri T. Holley (3) 1995 $ 100,000 $ 25,000 $ 7,586 (2)
Secretary and General 1994 $ 70,833 $ 21,250 $ 425 (1)
Counsel
- ----------------------------------------------------------------------------------------------------------------
Kent W. Hackamack 1995 $ 89,025 $ 25,000 $ 6,475 (2)
Treasurer and 1994 $ 40,000 $ 10,000 $ 400 (1)
Controller
- ----------------------------------------------------------------------------------------------------------------
<FN>
NOTES:
------
1) Includes Employer 401(k) matching contribution.
2) Includes Employer 401(k) matching contribution and car allowance.
3) The President and Secretary are brother and sister.
4) For the year ended December 31, 1993, Mr. Taylor received no direct salary or
compensation from Titan; however, Wheel and Disk Steel Sales, Inc., an affiliate
of Mr. Taylor, received sales commissions from Titan in the aggregate
</TABLE>
-20-
<PAGE> 21
amount of $572,000 for the year ended December 31, 1993, pursuant to the terms
of a sales representative agreement. Such sales representative agreement was
terminated as of May 26, 1993.
OPTIONS GRANTED IN 1995:
------------------------
The following table summarizes options granted during 1995, and the
values of options outstanding on December 31, 1995, for the executive
officers named above.
OPTION GRANTS IN LAST FISCAL YEAR
- ---------------------------------
<TABLE>
<CAPTION>
NUMBER OF SECURITIES % OF TOTAL OPTIONS EXERCISE EXP. POTENTIAL REALIZABLE VALUE
NAME UNDERLYING OPTIONS GRANTED TO EMPLOYEES PRICE DATE AT ASSUMED ANNUAL RATE OF
(1) STOCK PRICE APPRECIATION FOR
OPTION TERM (2)
- -----------------------------------------------------------------------------------------------------------------------------------
5% 10%
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Maurice M. Taylor, Jr. 54,000 32.6 % $11.11 Aug., 2005 $ 984,129 $ 1,926,217
Michael R. Samide 20,250 12.2 % $11.11 Aug., 2005 $ 369,048 $ 722,331
Steven A. Root 4,050 2.4 % $11.11 Aug., 2005 $ 73,810 $ 144,466
Cheri T. Holley 3,200 1.9 % $11.11 Aug., 2005 $ 58,319 $ 114,146
Kent W. Hackamack 2,420 1.5 % $11.11 Aug., 2005 $ 44,104 $ 86,323
- -----------------------------------------------------------------------------------------------------------------------------------
All Shares Outstanding (3) $659,379,176 $1,051,515,894
<FN>
(1) All options were granted on December 12, 1995 and become exercisable at
40% on December 31, 1996 and an additional 20% on each of December 31,
1997, 1998 and 1999, respectfully.
(2) Potential realizable value is based on the assumption that the common
stock price appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the ten-year option term. The
numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission. The actual value, if any, an
executive may realize will depend on the excess of the stock price over
the exercise price on the date the option is exercised (if the
executive were to sell the shares on the date of exercise) so there is
no assurance that the value realized will be at or near the potential
realizable value as calculated in this table.
(3) All shares outstanding represent the increase in total Company
shareholder value if the stock price and assumed rates used in the
stock option assumptions are achieved multiplied by the number of
shares outstanding at the end of fiscal 1995 (22,477,086) on a
pre-stock split basis.
</TABLE>
-21-
<PAGE> 22
AGGREGATED OPTION/SAR EXERCISES IN CURRENT FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexexercised in-the-Money Options
Shares Value Option/SARs at Fiscal Year SARs/ Fiscal Year ($)
Name Acquired Realized End (#) Exercisable /Unexercisable Exercisable/Unexercisable
- ---- -------- -------- ---------------------------------- -------------------------
<S> <C> <C> <C> <C>
Maurice M. Taylor, Jr. 0 N/A $ 21,600/86,400 $ 111,024/444,096
Michael R. Samide 0 N/A $ 6,300/29,700 $ 32,382/152,658
Steven A. Root 0 N/A $ 3,060/ 8,640 $ 15,728/44,410
Cheri T. Holley 0 N/A $ 0/ 3,200 $ 0/16,448
Kent W. Hackamack 0 N/A $ 0/ 2,420 $ 0/12,439
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Billig, Cashin, Febbo, Soave and Campbell served as members of
the Compensation Committee in 1995.
REPORT OF COMPENSATION COMMITTEE
The Compensation and Employee Benefits Committee of the Board of
Directors (the "Committee"), composed of four independent non-employee
directors, administers the executive compensation program. None of such members
is or has been an officer or employee of the Company. The Committee passes on
all material issues relating to executive compensation.
The philosophy of the Committee as it relates to executive compensation
is that the Chief Executive Officer (CEO) and other executive offices should be
compensated at competitive levels sufficient to attract, motivate and retain
talented executives who are capable of leading the Company in achieving their
business objectives in an industry facing increasing competition and change.
Annual compensation for the Company's senior management consists of
base salary and, when appropriate, bonus compensation. Salary levels of Company
executives are reviewed, and are normally adjusted annually and any bonuses are
normally awarded annually. In determining appropriate salaries, the Committee
considers: (1) The CEO's recommendations as to compensation for all other
executive officers; (2) the scope of responsibility, experience, time and
position and individual performance of each officer, including the CEO; and (3)
compensation levels of other companies in the industry. The Committee's analysis
is a subjective process which utilizes no specific weighing or formula of the
aforementioned factors in determining executive's base salaries.
The Committee considers bonus compensation to be its primary
motivational method for encouraging and rewarding outstanding individual
performance, especially for the Company's senior
-22-
<PAGE> 23
management and overall performance by the Company. Awards under the Company's
bonus plan are granted by the Committee based primarily upon: (1) performance of
the Company, (2) performance of the individual and (3) recommendation of the
CEO. The purpose of the bonus plan is to provide a special incentive to maximize
his or her individual performance and the overall performance of the Company.
In determining the total compensation package for the CEO for 1995, the
Committee considered all of the factors discussed above. Additionally, the
Committee considered the Company's profitability, the success of the Company's
facilities in surpassing their objectives, the extent and timing of the
additions to the Company during the year, the quality and efficiency of the
Company's staff, and certain other factors relating to the Company's
performance.
MEMBERS OF THE COMPENSATION COMMITTEE
Erwin H. Billig
Richard M. Cashin, Jr.
Albert J. Febbo
Anthony L. Soave
Edward J. Campbell
-23-
<PAGE> 24
STOCKHOLDER
PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative total stockholder return on Common Stock as quoted on the NASDAQ
National Market System beginning with May 19, 1993 (the date of Titan's initial
public offering) and by the New York Stock Exchange beginning March 23, 1994,
with the cumulative total return, assuming reinvestment of dividends, of (i) the
Standard & Poor's Machinery Diversified Industrials Index and (ii) The Standard
& Poor's 500 Stock Index. As of March 23, 1994 the common stock began trading on
the New York Stock Exchange.
TITAN WHEEL INTERNATIONAL, INC.
Cumulative Total Return Since Initial Public Offering(1)
05/19/93 - 12/29/95
--------------------
<TABLE>
<CAPTION>
S&P MA-
CHINERY DI-
TITAN WHEEL VERSIFIED STANDARD &
MEASUREMENT PERIOD INTERNATIONAL, INDUSTRIALS POOR'S 500
(FISCAL YEAR COVERED) INC. INDEX STOCK INDEX
<S> <C> <C> <C>
5/19/93 100.0 100.0 100.0
6/30/93 120.3 100.7 106.9
12/31/93 165.9 104.2 122.7
6/30/94 156.9 99.3 115.9
12/30/94 180.5 102.6 114.9
6/30/95 251.2 121.7 139.6
12/29/95 237.8 137.6 140.1
<FN>
(1) The Common Stock was sold to the public in the Company's initial public
offering on May 19, 1993 and trading commenced immediately on the NASDAQ
National Market System. The starting point of the graph is based on the
initial public offering price of $6.67 per share.
</TABLE>
-24-
<PAGE> 25
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of March 15, 1996 by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Stock, (ii) each director and nominee for director, (iii) each
of the named executive officers and (iv) all directors and executive officers
as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned
-------------------------
Name and Address of Beneficial Owner Number(1) Percent
------------------------------------ --------- -------
<S> <C> <C>
FMR Corp.................................................. 3,475,075 (3) 15.4%
82 Devonshire St.
Boston, MA 02109
Masco Tech, Inc. ......................................... 3,315,852 14.7%
21001 Van Born Road
Taylor, MI 48180
399 Venture Partners, Inc................................. 2,031,112 9.0%
399 Park Avenue
New York, New York 10043
Maurice M. Taylor, Jr..................................... 1,834,178 (2) 8.1%
2701 Spruce Street
Quincy, Illinois 62301
Erwin H. Billig........................................... 45,225 *
Anthony L. Soave ......................................... 45,000 *
Richard M. Cashin, Jr..................................... 40,429 *
Edward J. Campbell ....................................... 2,250 *
Albert J. Febbo .......................................... -0- *
Michael R. Samide ....................................... -0- *
Steven A. Root ........................................... 1,350 *
Cheri T. Holley........................................... -0- *
Kent W. Hackamack ........................................ -0- *
</TABLE>
-25-
<PAGE> 26
<TABLE>
<S> <C> <C>
All Executive Officers and Directors as a Group
(10 persons) 1,968,432 (4) 8.7%
<FN>
* Less than one percent.
(1) Except for voting powers held jointly with a person's spouse,
represents sole voting and investment power unless otherwise indicated.
(2) Includes 1,798,000 shares held jointly by Mr. Taylor and his wife as to
which they share voting and dispositive power. Also includes 36,178
shares held by Mr. Taylor as to which he has sole voting and
dispositive power.
(3) Based on information contained in Schedule 13G of FMR Corp. dated
February 26, 1996.
(4) Reference is made to note (2) above.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
During 1995, Titan has maintained business relationships and
engaged in certain transactions as described below.
The Company sells products to companies controlled by persons
related to the Chief Executive Officer of the Company. During 1993, 1994 and
1995, combined sales approximated $2,597,000, $3,355,000 and $4,370,000,
respectively. At December 31, 1994 and 1995, Titan had approximately $2,170,000
and $1,998,000, respectively of accounts receivable outstanding from those
sales. Commissions paid to companies controlled by persons related to the Chief
Executive Officer of the Company approximated $252,000, $470,000 and $920,000
respectively, for 1993, 1994 and 1995. These sales and commissions were made on
terms no less favorable to Titan then comparable sales and commissions to
unaffiliated third parties.
-26-
<PAGE> 27
PART IV
<TABLE>
<CAPTION>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
- -------- -------------------------------------------------------
FORM 8-K
--------
<S> <C> <C>
(a) 1. Financial Statements.
Report of Price Waterhouse LLP F-1
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidated Statements of Changes
in Stockholders' Equity F-4,5
Consolidated Statements of Cash
Flows F-6
Notes to Consolidated Financial
Statements F-7 through F-29
2. Financial Statement Schedule.
Schedule IX - Valuation Reserves
3. Exhibits.
</TABLE>
The accompanying Exhibit Index is incorporated herein
by reference.
-27-
<PAGE> 28
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
July 12, 1996 TITAN WHEEL INTERNATIONAL, INC.
By: /s/ MAURICE M. TAYLOR, JR.
----------------------------------
Maurice M. Taylor, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 28, 1996.
Signatures Capacity
---------- --------
/s/ MAURICE M. TAYLOR, JR. President, Chief Executive Officer
- ----------------------------- and Director
Maurice M. Taylor, Jr. (Principal Executive Officer)
/s/ KENT W. HACKAMACK Controller and Treasurer
- ----------------------------- (Principal Financial Officer and
Kent W. Hackamack Principal Accounting Officer)
/s/ ERWIN H. BILLIG
- ----------------------------- Director
Erwin H. Billig
/s/ EDWARD J. CAMPBELL
- ----------------------------- Director
Edward J. Campbell
/s/ RICHARD M. CASHIN, JR.
- ----------------------------- Director
Richard M. Cashin, Jr.
/s/ ALBERT J. FEBBO
- ----------------------------- Director
Albert J. Febbo
/s/ ANTHONY L. SOAVE
- ----------------------------- Director
Anthony L. Soave
-28-
<PAGE> 29
TITAN WHEEL INTERNATIONAL, INC.
Exhibit Index
Form 10-K
1995
<TABLE>
<CAPTION>
Exhibit
No. DESCRIPTION
- ------- -----------
<S> <C>
3(a)(3) Restated Articles of Incorporation of Titan
3(b)(4) Bylaws of Titan
4(a)(6) Registration Rights Agreement dated November 12, 1993, between the Company and 399 Venture
Partners, Inc.
4(b)(5) Indenture for 4 3/4% Bonds
10(a)(1) Promissory Note dated July 12, 1991 between Automation International, Inc. and Danville Area
Economic Development Corporation
10(b)(3) Loan Agreement dated October 8, 1991 between City of Danville, Illinois and Automation
International, Inc.
10(c)(1) Wheel and Component Purchase Agreement dated April 1, 1992 between Titan and Deere &
Company
10(d)(1) Manufacturing/Marketing Agreement dated March 1, 1991 between Titan and Komatsu-Dresser
Company
10(e)(2) Sublease dated June 20, 1988 between Titan and Kelsey-Hayes Company
10(f)(1) Lease dated April 1, 1973 between Kelsey-Hayes Company and the Town of Walcott, Iowa
10(g)(2) Indenture dated as of April 1, 1973 between Town of Walcott, Iowa and First Trust and Savings
Bank, as Trustee
10(h)(1) Lease dated February 28, 1993 by and between NI Industries, Inc. and Automotive Wheels, Inc.
10(i)(2) Agreement dated February 27, 1991 between Titan and U.S. Marines
10(j)(5)# 1994 Non-Employee Director Stock Option Plan
10(k)(3)# 1993 Stock Incentive Plan
10(l)(3) Wheel and Component Purchase Agreement dated January 15, 1992 between Titan and Steiger
Tractor relating to Case Products
10(m)(3) Letter Agreement dated August 23, 1991 between the Company and Valmont Industries, Inc.
10(n)(3)# Form of Indemnification Agreement among Titan, MascoTech, Inc. and Maurice M. Taylor, Jr.
10(o)(3) Form of Amended and Restated Credit Agreement between Titan and Harris Bank
10(p)(3) Service Agreement dated January 26, 1990 between Titan and MascoTech
10(q)(4) Form of Agreement between Dyneer, Titan and each of James R. Gerrity and Harlan W. Smith
10(r)(6) Amendment to Agreement between Titan and the U.S. Marines dated December 15, 1993
</TABLE>
-29-
<PAGE> 30
<TABLE>
<CAPTION>
Exhibit
No. DESCRIPTION
- ------- -----------
<S> <C>
10(s)(6) Amendment to Agreement between Titan and the U.S. Marines dated December 21, 1993
10(t)(7) Asset Purchase Agreement between Titan Tire Corporation and Pirelli Armstrong Tire
Corporation dated August 11, 1994
10(u)(8) Loan Agreement between Titan and the SIRMAC Group of Companies dated November 21, 1994
11* Computation of Earnings per Common Share
21* Subsidiaries of the Registrant
23.1* Consent of Price Waterhouse
27* Financial Data Schedule
- --------------------
<FN>
*Filed herewith.
#Management Contract or Compensatory Plan
(1)Incorporated by reference to the same numbered exhibit contained in the
Company's Registration Statement on Form S-1 (No. 33-60518).
(2)Incorporated by reference to the same numbered exhibit contained in Amendment
No. 1 to the Company's Registration Statement on Form S-1 (No. 33-60518).
(3)Incorporated by reference to the same numbered exhibit contained in Amendment
No. 2 to the Company's Registration Statement on Form S-1 (No. 33-60518).
(4)Incorporated by reference to the same numbered exhibit contained in the
Company's Registration Statement on Form S-4 (No. 33-69228).
(5)Incorporated by reference to the same numbered exhibit contained in the
Company's Registration Statement on Form S-1 (No. 33-70140).
(6)Incorporated by reference to the same numbered exhibit contained in the
Company's' Annual Report on Form 10-K for its year ended December 31, 1994.
(7)Incorporated by reference to the exhibit 2 contained in the Company's special
report on Form 8-K dated August 25, 1994.
(8)Incorporated by reference to the exhibit 2.2 contained in the Company's
special report on Form 8-K dated December 5, 1994.
</TABLE>
-30-
<PAGE> 31
TITAN WHEEL INTERNATIONAL, INC.
SCHEDULE IX -- VALUATION RESERVES
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS OF YEAR
----------- ------- -------- ---------- -------
<S> <C> <C> <C> <C>
Year ended December 31, 1993
Reserve deducted in the balance
sheet from the assets to which
it applies
Allowance for doubtful accounts................. $ 643,000 $ 542,000 $ (38,000) $1,147,000
========== ========== ============ ==========
Reserve for plant closure....................... $2,417,000 $ -0- $(2,022,000)(1) $ 395,000
========== ========== ============ ==========
Year ended December 31, 1994
Reserve deducted in the balance
sheet from the assets to which
it applies
Allowance for doubtful accounts................. $1,147,000 $1,449,000 $ (383,000)(2) $2,213,000
========== ========== ============ ==========
Reserve for plant closure....................... $ 395,000 $ -0- $ (395,000)(1) $ -0-
========== ========== ============ ==========
Year ended December 31, 1995
Reserve deducted in the balance
sheet from the assets to which
it applies
Allowance for doubtful accounts................. $2,213,000 $3,154,000 $ (397,000)(3) $4,970,000
========== ========== ============ ==========
- -----------------------
<FN>
(1) Represents utilization of the reserve established in 1991
(2) Net of recoveries of $84,000
(3) Net of recoveries of $28,000
</TABLE>
S-1
<PAGE> 32
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Titan Wheel International, Inc.
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) and (2) on page 19 present fairly, in all
material respects, the financial position of Titan Wheel International, Inc. and
its subsidiaries at December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
St. Louis, Missouri
February 13, 1996
F-1
<PAGE> 33
TITAN WHEEL INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
ASSETS 1994 1995
---- ----
<S> <C> <C>
Current assets
Cash and cash equivalents $ 7,241 $ 14,211
Marketable securities 31 32
Accounts receivable (net of allowance of $2,213 and
$4,970, respectively) 70,179 107,137
Inventories (Note 3) 106,963 124,928
Prepaid and other current assets 7,944 18,592
-------- ---------
Total current assets 192,358 264,900
Property, plant and equipment, net (Note 4) 143,323 178,286
Other assets (Note 6) 28,429 17,701
Goodwill (Note 5) 36,350 51,248
-------- ---------
Total assets $400,460 $ 512,135
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt (Note 7) $ 3,195 $ 26,419
Accounts payable 35,989 58,592
Other current liabilities (Note 8) 33,212 28,631
-------- ---------
Total current liabilities 72,396 113,642
Deferred income taxes (Note 11) 10,778 15,704
Other long-term liabilities (Note 9) 31,209 24,612
Long-term debt (Note 7) 178,341 142,305
-------- ---------
Total liabilities 292,724 296,263
-------- ---------
Contingencies (Notes 18 and 19)
Stockholders' equity (Note 17)
Preferred stock, Class A, no par, $7.50 stated value, 4,000,000 shares
authorized, 1,000,000 and 0 issued
and outstanding, respectively 7,500 -0-
Common stock, no par, 60,000,000 shares authorized,
16,275,294 and 22,477,086 issued and outstanding, respectively 16 23
Additional paid-in capital 62,587 152,283
Common stock warrants 10,000 -0-
Retained earnings 27,220 64,142
Cumulative translation adjustment 413 8
Treasury stock at cost: 0 and 78,817 shares, respectively -0- (584)
-------- ---------
Total stockholders' equity 107,736 215,872
-------- ---------
Total liabilities and stockholders' equity $400,460 $ 512,135
======== =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-2
<PAGE> 34
TITAN WHEEL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1994 1995
---- ---- ----
<S> <C> <C> <C> <C>
Net sales (Note 10) $ 150,441 $ 407,000 $ 623,183
Cost of sales 125,172 338,568 507,457
--------- --------- ---------
Gross profit 25,269 68,432 115,726
Selling, general and administrative expenses 10,722 28,343 40,615
Research and development expenses 1,405 2,093 2,056
--------- --------- ---------
Income from operations 13,142 37,996 73,055
Other (income) expense
Interest expense 3,242 8,503 12,045
Minority interest -0- -0- 1,210
Other (214) (614) (3,480)
--------- --------- ---------
Income before income taxes 10,114 30,107 63,280
Provision for income taxes (Note 11) 3,753 11,627 25,297
--------- --------- ---------
Net income $ 6,361 $ 18,480 $ 37,983
========= ========= =========
Earnings per common share (Note 16):
Primary $ .46 $ 1.14 $ 1.91
Fully diluted .46 .89 1.50
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE> 35
TITAN WHEEL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF ADDITIONAL COMMON CUMULATIVE
PREFERRED PREFERRED COMMON COMMON PAID-IN STOCK RETAINED TRANSLATION TREASURY
SHARES STOCK SHARES STOCK CAPITAL WARRANTS EARNINGS ADJUSTMENT STOCK
------ ----- ------ ----- ------- -------- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 1993 0 $ 0 13,688,116 $ 14 $ 3,588 $ 0 $ 3,036 $ 2 $ 0
Net income 6,361
Dividends paid on common stock (195)
Cancellation of pledged shares held in
escrow (5,475,616)
Shares issued in initial public offering 5,287,500 32,206
Shares issued in Dyneer transaction 2,317,664 2 21,994
Foreign currency translation adjustment (280)
--------- ------ ---------- ----- -------- -------- -------- -------- ------
BALANCE DECEMBER 31, 1993 0 0 15,817,664 16 57,788 0 9,202 (278) 0
Net income 18,480
Dividends paid on common stock (432)
Exercise of Dyneer options 441,392 4,602
Issuance of stock under 401(k) Plan 16,238 197
Preferred stock issued 1,000,000 7,500
Dividends on preferred stock (30)
Common stock warrants issued 10,000
Foreign currency translation adjustment 691
--------- ------ ---------- ----- -------- -------- -------- -------- ------
Balance December 31, 1994 1,000,000 $7,500 16,275,294 $ 16 $ 62,587 $ 10,000 $ 27,220 $ 413 $ 0
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F-4
<PAGE> 36
TITAN WHEEL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF ADDITIONAL COMMON CUMULATIVE
PREFERRED PREFERRED COMMON COMMON PAID-IN STOCK RETAINED TRANSLATION TREASURY
SHARES STOCK SHARES STOCK CAPITAL WARRANTS EARNINGS ADJUSTMENT STOCK
------ ----- ------ ----- ------- -------- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1994 1,000,000 $ 7,500 16,275,294 $ 16 $ 62,587 $ 10,000 $ 27,220 $ 413 $ 0
Net income 37,983
Dividends paid on common stock (1,031)
Shares issued in public offering 4,312,500 5 64,560
Conversion of subordinated notes 1,405,120 2 17,414
Dyneer contingent consideration 426,688 4,717
Exercise of Dyneer options 48,391 600
Issuance of stock under 401(k) plan 87,910 1,353
Repurchase of preferred stock (1,000,000) (7,500)
Dividends on preferred stock (30)
Repurchase of common stock warrants (10,000)
Foreign currency translation adjustment (405)
Treasury stock transactions (78,817) 1,052 (584)
------------ -------- ---------- ------ -------- --------- -------- ------ -------
BALANCE DECEMBER 31, 1995 0 $ 0 22,477,086 $ 23 $152,283 $ 0 $ 64,142 $ 8 $ (584)
============ ======== ========== ====== ======== ========= ======== ====== =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F-5
<PAGE> 37
TITAN WHEEL INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(ALL AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,361 $ 18,480 $ 37,983
Adjustments to reconcile net income to net cash provided
by (used for) operating activities
Depreciation and amortization 5,333 17,428 23,428
(Increase) decrease in current assets, excluding the effects
of acquisitions:
Accounts receivable 1,603 (24,845) 38
Inventories (10,306) (25,493) 7,161
Prepaid and other current assets 3,765 (6,423) (7,314)
Increase (decrease) in current liabilities, excluding the effects of
acquisitions:
Accounts payable (8,019) 5,830 (4,624)
Other current liabilities 290 8,251 (16,124)
Other (5,804) (1,598) (3,057)
--------- -------- --------
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES (6,777) (8,370) 37,491
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (Note 2) (3,992) (41,904) (17,143)
Capital expenditures (5,427) (15,249) (20,191)
(Purchase) sale of marketable securities (3,500) 3,469 -0-
Other 98 -0- -0-
--------- -------- --------
NET CASH (USED FOR) INVESTING ACTIVITIES (12,821) (53,684) (37,334)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock & warrants -0- 17,500 -0-
Repurchase of preferred stock & warrants -0- -0- (17,500)
Proceeds from long-term borrowings 1,000 54,144 58,120
Repayments on long-term debt (87,936) (27,524) (97,529)
Proceeds from stock offerings 32,206 -0- 64,860
Proceeds from convertible note offering 103,500 -0- -0-
Payments of financing fees (3,448) (344) (102)
Dividends paid (90) (462) (1,061)
Other -0- 137 25
--------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 45,232 43,451 6,813
Net increase (decrease) in cash and cash equivalents 25,634 (18,603) 6,970
Cash and cash equivalents, beginning of year 210 25,844 7,241
--------- -------- --------
Cash and cash equivalents, end of year $ 25,844 $ 7,241 $ 14,211
========= ======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F-6
<PAGE> 38
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACQUISITIONS OF THE COMPANY
Titan Wheel International, Inc. ("Titan" or the "Company"), which was
incorporated in 1983, grew during the 1980's through acquiring,
revitalizing and amalgamating the operations of several of the largest
wheel manufacturers serving the agricultural and off-highway
construction equipment markets. In 1990, Titan was acquired in a
management led buyout by investors which included Maurice M. Taylor,
Jr., the Company's Chief Executive Officer and MascoTech, Inc.
("MascoTech"). The Company completed its initial public offering in
May 1993, resulting in issuance of 5,287,500 shares and net proceeds
of $32.2 million. A portion of these proceeds was used to re-pay $9
million of subordinated debt to Runnymede Development Corporation and
shares pledged to secure the debt were returned.
ACQUISITIONS
Each of the following acquisitions was accounted for under the
purchase method of accounting.
AUTOMOTIVE WHEELS ACQUISITION
Effective February 28, 1993, the Company acquired all of the
outstanding capital stock of Automotive Wheels, Inc. ("Automotive
Wheels") from MascoTech for $8.8 million. Automotive Wheels assembles
steel wheels for sale to original equipment manufacturers ("OEMs") in
the North American automobile industry. It also manufactures steel and
aluminum rims which are sold to manufacturers of wheels for the
automobile and light truck after-market. Operating results of
Automotive Wheels from February 28, 1993, have been included in the
Consolidated Statement of Operations.
DYNEER CORPORATION ACQUISITION
During November 1993, the Company completed its acquisition of Dyneer
Corporation ("Dyneer"), a company engaged in the manufacturing of
wheels and tires for lawn and garden equipment, golf cars, recreation
and industrial trailers, traction enhancing differential systems,
mechanical transmission components and systems used in transportation
vehicles and mobile equipment. Operating results of Dyneer from
November 12, 1993, have been included in the Consolidated Statement of
Operations.
The Company exchanged 2,317,664 shares of its common stock and options
to purchase an additional 441,392 shares of its common stock for all
of Dyneer's outstanding common stock and all options and warrants to
purchase Dyneer common stock. The exchange was preliminarily valued at
approximately $28.4 million and resulted in the recording of goodwill
in the amount of $23.1 million, which is being amortized on a
straight-line basis over 40 years. In 1994, goodwill was increased by
$11.2 million resulting from the reallocation of preliminary estimates
and adjustment of certain pre-acquisition contingencies, the most
significant of which related to environmental liabilities.
F-7
<PAGE> 39
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACQUISITION OF THE COMPANY (CONTINUED)
The purchase agreement provided for an earnout based upon the
performance of Tractech, a division of Dyneer, and an earnout based
upon the extent of environmental remediation costs incurred by Dyneer.
During 1994, the Company reached an agreement to settle both earnouts
for a total of 426,688 shares of Titan's common stock and options to
purchase 82,791 shares of the Company's common stock at an exercise
price of $.31 per share. The shares of Titan common stock and options
were issued on February 1, 1995. The consideration was recorded as a
purchase price accounting adjustment based on the fair value of the
shares and options on the issuance date. The transaction discussed
above resulted in additional goodwill of $4.4 million in 1995, which
is being amortized over its remaining life.
DOTSON WHEEL ACQUISITION
During November 1993, the Company completed the purchase of certain
assets of Dotson Wheel, a producer of steel wheels and rims for
earthmoving/construction equipment, for a purchase price of
approximately $5.1 million. The transaction was effected through TD
Wheels of Virginia, Inc. ("TD Wheels"), a wholly-owned subsidiary of
the Company. Operating results of TD Wheels have been included from
the date of acquisition of November 24, 1993.
NIEMAN'S LIMITED ACQUISITION
On January 27, 1994, the Company purchased all of the outstanding
stock of Nieman's Limited ("Nieman's") for approximately $1.2 million
and repaid $5.3 million of Nieman's debt. The purchase agreement also
includes certain earnout provisions. No purchase price adjustments
were recorded during 1994 or 1995 as a result of such earnout
provisions. Nieman's is a distributor of tires, wheels, axle
assemblies and component parts to OEMs. Operating results have been
included from the date of acquisition of January 27, 1994.
TITAN TIRE ACQUISITION
Effective July 16, 1994, Titan Tire Corporation ("Titan Tire")
acquired the agricultural tire business of Pirelli Armstrong Tire
Corporation ("PATC"). In the purchase, Titan Tire acquired certain
assets, primarily inventory and equipment and assumed certain
liabilities. Titan Tire is engaged in engineering and manufacturing
tires for the agricultural market. Operating results of Titan Tire
have been included in the Consolidated Statement of Operations from
July 16, 1994, the effective date of acquisition.
The total purchase price consisted of: (i) $10 million obtained
through the issuance to PATC of warrants to purchase 2,250,000 shares
of the Company's common stock at an exercise price of $24.44 per share
(see Note 17); (ii) $7.5 million obtained through the issuance to PATC
of one million shares of the Titan's Series A preferred stock
convertible into 281,250 shares of the Company's common stock (see
Note 17); (iii) $5 million obtained through the
F-8
<PAGE> 40
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACQUISITION OF THE COMPANY (CONTINUED)
Company's regular line of credit. In addition, Titan Tire issued a
subordinated note due February 11, 2000, to PATC for approximately
$19.7 million with a 7% fixed interest rate (see Note 7). At the time
of the purchase, Titan Tire also recorded a purchase price adjustment
for a $16.8 million liability which had been recorded by PATC for
employee related benefits which were not assumed by Titan. The
purchase price was assigned to the net assets acquired based on their
fair value at the date of acquisition. The fair value of net assets
acquired initially exceeded the purchase price by approximately $11
million and the excess was allocated to reduce the value assigned to
machinery and equipment. At December 31, 1995, the $16.8 million
liability was reversed. However, the Company estimates that its
ultimate liability for matters unrelated to this liability will not
exceed $6.5 million and has accrued that amount at December 31, 1995.
The net reduction in purchase price resulted in an additional
reduction in the value assigned to machinery and equipment.
SIRMAC GROUP ACQUISITION
On November 21, 1994, the Company acquired 50 percent of the common
stock of the Sirmac SpA and Siria SpA of Italy (the "Sirmac Group", or
"Sirmac"). Under certain conditions, Titan has the option to buy the
remaining stock of the Sirmac Group from the other shareholders. The
Sirmac Group is a major European manufacturer of specialty wheels and
other products for the agricultural and earthmoving/construction
markets. Titan paid cash of approximately $9.5 million for the common
stock. In addition, Titan loaned $9.5 million to the Sirmac Group as
part of the purchase. The note receivable from the Sirmac Group bears
interest at the Italian prime rate and is payable on December 31,
1997.
The Company accounted for the investment under the equity method from
the date of acquisition until June 30, 1995. Effective July 1, 1995,
Titan was able to exert control over the Sirmac Group by making day to
day operational decisions; therefore, the Company began consolidating
the Sirmac Group in its financial statements. If Sirmac had been
consolidated for the entire year, net income and earnings per share
would not have been affected.
STEEL WHEELS ACQUISITION
On February 10, 1995, the Company acquired Lemmerz UK Limited ("Steel
Wheels"), a division of Lemmerz Holding GmbH. Steel Wheels is a
Kidderminster, England-based manufacturer of steel wheels for off-road
and specialty vehicles. The purchase price was approximately $15.2
million, obtained through Titan's revolving credit facility. Results
of operations have been included from the date of acquisition of
February 10, 1995.
F-9
<PAGE> 41
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACQUISITION OF THE COMPANY (CONTINUED)
GRASDORF TITAN GMBH ACQUISITION
On December 28, 1995, the Company purchased a portion of Metallbau
Grasdorf GmbH of Germany. Metallbau Grasdorf GmbH, located near
Hannover, Germany, is a manufacturer of wheels and rims for the
earthmoving and agricultural equipment markets. Titan purchased the
manufacturing segment of the business for $2.3 million, and renamed it
Grasdorf Titan GmbH ("Titan GmbH").
PRO FORMA RESULTS (UNAUDITED)
Assuming the above acquisitions occurred on January 1, 1994, unaudited
pro forma net sales, net income and earnings per share for 1994 would
have been $534 million, $23 million and $1.06, respectively. Such pro
forma results are not necessarily indicative of future results of
operations or the results of operations that would have been reported
had the acquisitions been completed as of January 1, 1994. Net sales,
net income and earnings per share for 1995 would not have been
significantly different.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The policies utilized by the Company in the preparation of the
financial statements conform to generally accepted accounting
principles and require management to make estimates and assumptions
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.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its wholly and majority-owned subsidiaries. All
significant intercompany accounts and transactions have been
eliminated.
REVENUE RECOGNITION
Sales revenue and cost of sales are recorded by the Company when
products are shipped to customers.
INVENTORIES
Inventories are valued at the lower of cost or market, cost determined
using the last-in, first-out method ("LIFO"), except for 61% of
inventories, which are valued using the first-in, first-out ("FIFO")
method. Inventory at foreign divisions is valued using the FIFO
method.
F-10
<PAGE> 42
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY TRANSLATION
Gains and losses arising from the settlement of foreign currency
transactions are charged to the related period's Consolidated
Statement of Operations. Translation adjustments arising from the
translation of foreign subsidiary financial statements are recorded as
a separate component of stockholders' equity.
CUSTOMER PALLETS
Returnable pallets are billed to customers and upon return, credit
memos are issued. The Company records a liability for the estimated
pallets to be returned.
FIXED ASSETS
Property, plant and equipment have been recorded at cost. Depreciation
is provided using the straight-line method over the following
estimated useful lives of the related assets:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and improvements 25
Machinery and equipment 10
Tools, dies and molds 5
</TABLE>
Maintenance and repairs are expensed as incurred. When property, plant
and equipment are retired or otherwise disposed of, the related cost
and accumulated depreciation are eliminated and any gain or loss on
disposition is included in other income.
DEFERRED FINANCING COSTS
Deferred financing costs are primarily costs incurred in connection
with the Company's convertible note issuance and credit facilities. The
costs associated with the convertible note issuance are being amortized
over a period of seven years, the term of the notes. The costs
associated with the credit facilities are being amortized over their
respective terms.
START UP COSTS
The Company capitalizes pre-operating costs that are directly related
to the construction of new plant and production facilities until the
facility is operational. Such costs are amortized over five years.
GOODWILL
Goodwill for domestic and foreign divisions are amortized over 40 and
25 years respectively, on a straight-line basis. At each balance sheet
date, management reviews the carrying value of goodwill compared to
undiscounted annual cash flows to assess recoverability from future
operations.
F-11
<PAGE> 43
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standard No. 109 (SFAS 109). Under SFAS 109, the
deferred income tax provision is determined using the liability method
whereby deferred tax assets and liabilities are recognized based upon
temporary differences between the financial statement and income tax
basis of assets and liabilities.
STATEMENT OF CASH FLOWS
For purposes of the Consolidated Statement of Cash Flows, the Company
considers financial investments with an original maturity of three
months or less to be cash equivalents.
Investing activities during 1993, including certain noncash
transactions, related to the Company's business acquisitions involved
the following (in thousands):
<TABLE>
<CAPTION>
AUTOMOTIVE DOTSON
WHEELS DYNEER WHEEL
------ ------ -----
<S> <C> <C> <C>
Fair value of assets acquired, other than cash and
cash equivalents:
Current assets $ 6,157 $ 55,921 $ 5,208
Property, plant and equipment 4,276 53,439 2,719
Other assets 800 24,121 -0-
Liabilities assumed (2,560) (107,630) (2,958)
Notes issued (8,688) -0- -0-
Common stock and options issued -0- (26,813) -0-
------- --------- --------
Cash (acquired) paid $ (15) $ (962) $ 4,969
======= ========= ========
</TABLE>
In addition, the Company issued a $1,263,000 note payable related to
the purchase of a building adjacent to its Quincy, Illinois facility.
F-12
<PAGE> 44
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investing activities during 1994, including certain noncash
transactions, related to the Company's business acquisitions involved
the following (in thousands):
<TABLE>
<CAPTION>
THE
NIEMAN'S SIRMAC TITAN
DYNEER LTD. GROUP TIRE
------ ---- ----- ----
<S> <C> <C> <C> <C> <C>
Fair value of assets acquired, other than cash
and cash equivalents:
Current assets $ (4,092) $ 7,318 $ -0- $ 15,170
Property, plant and equipment (1,860) 1,344 -0- 52,866
Other assets 11,152 3,612 19,000 4,000
Liabilities assumed (5,830) (11,240) -0- (29,793)
Notes issued -0- -0- -0- (19,743)
-------- -------- --------- --------
Cash (acquired) paid $ (630) $ 1,034 $ 19,000 $ 22,500
======== ======== ========= ========
</TABLE>
Investing activities during 1995, including certain noncash
transactions, related to the Company's business acquisitions involved
the following (in thousands):
<TABLE>
<CAPTION>
THE
STEEL SIRMAC TITAN TITAN
DYNEER WHEELS GROUP TIRE GMBH
------ ------ ----- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Fair value of assets acquired, other than
cash and cash equivalents:
Current assets $ 311 $ 17,029 $ 54,117 $ (6,000) $ -0-
Property, plant and equipment -0- 18,746 25,225 (9,500) 2,268
Other assets 4,395 4,898 (3,440) 6,000 -0-
Liabilities assumed 611 (25,473) (76,227) 9,500 -0-
Common stock and options issued (5,317) -0- -0- -0- -0-
-------- -------- -------- --------- ----------
Cash (acquired) paid $ -0- $ 15,200 $ (325) $ -0- $ 2,268
======== ======== ======== ========= ==========
</TABLE>
The Company paid $5,074,000, $8,373,000 and $11,817,000 for interest
and $2,004,000, $8,357,000 and $27,141,000 for income taxes in 1993,
1994 and 1995, respectively.
F-13
<PAGE> 45
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company records all financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable, other accruals, and
notes payable at cost which approximates fair value. The convertible
subordinated notes are the only significant financial instrument of the
Company with a fair value different than the recorded value. At
December 31, 1994 and 1995, the fair value of the convertible
subordinated notes, based on quoted market values, was approximately
$109.5 million and $112.6 million respectively, compared to a recorded
value of $103.5 million and $85.9 million, respectively.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Sirmac Group has debt with a principal balance of approximately $6
million at December 31, 1995, which is denominated in French francs.
The debt is subject to currency fluctuations between the Italian lire
and the French franc. Foreign currency losses incurred for the year
ended December 31, 1995, were immaterial to Titan's consolidated net
income. The Company's activity with derivative financial instruments in
1995 was minimal and the impact on 1995 operations was insignificant.
ENVIRONMENTAL LIABILITIES
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to an
existing condition caused by past operations, and that do not
contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments and/or remedial
efforts are probable and the costs are reasonably estimable.
STOCK-BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-based Compensation" (SFAS 123) which defines the fair value based
method of accounting for stock option, purchase and awards plans. SFAS
123 allows companies to use the fair value method defined in the
Statement or to continue use of the intrinsic value method as outlined
in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" (APB 25). The Company currently utilizes and plans
to continue its use of APB 25 for accounting for employee stock options
and related instruments. In 1996, however, the Company will provide the
fair value disclosures required by SFAS 123. SFAS 123 is not expected
to have an impact on the Company's financial position or results of
operations.
F-14
<PAGE> 46
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EQUITY INVESTMENT IN AFFILIATE
From November 21, 1994, through June 30, 1995, the Company recorded its
investment in the Sirmac Group at equity, adjusting its cost to
recognize Titan's share of the gain or loss of the Sirmac Group
subsequent to the date of investment and amortizing the differences
between the Company's cost and the underlying equity in net assets of
the Sirmac Group at the date of investment. Equity earnings for the six
months ended June 30, 1995 approximating $1 million have been included
in other income in the Consolidated Statement of Operations. As
discussed in Note 1, Titan began consolidating Sirmac in its financial
statements, effective July 1, 1995.
RECLASSIFICATION
Certain amounts from prior years have been reclassified to conform with
the current year presentation.
3. INVENTORIES
Inventories at December 31, 1994 and 1995 comprised the following (in
thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Raw material $ 34,735 $ 37,273
Work-in-process 13,497 19,904
Finished goods 56,086 68,947
-------- ---------
104,318 126,124
LIFO reserve 2,645 (1,196)
-------- ---------
$106,963 $ 124,928
======== =========
</TABLE>
F-15
<PAGE> 47
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1994 and 1995 comprised
the following (in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Land and improvements $ 4,326 $ 4,974
Buildings and improvements 25,790 39,809
Machinery and equipment 101,612 142,579
Tools, dies and molds 33,871 36,489
Construction in process 9,750 8,428
--------- ---------
175,349 232,279
Less: Accumulated depreciation (32,026) (53,993)
--------- ---------
$ 143,323 $ 178,286
========= =========
</TABLE>
5 GOODWILL (in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Goodwill $ 37,352 $ 53,554
Less: Accumulated amortization (1,002) (2,306)
--------- ---------
$ 36,350 $ 51,248
========= =========
</TABLE>
Amortization of goodwill for the years 1993, 1994 and 1995 totaled
$72,000, $930,000 and $1,304,000 respectively. Of the total $16.2
million increase in goodwill in 1995, $4.7 million is from the
acquisition of Steel Wheels, $7.1 million is from the acquisition of
the Sirmac Group and the remaining $4.4 million is the result of
additional contingent consideration paid to former Dyneer shareholders
as discussed in Note 1.
6. OTHER ASSETS
Other assets at December 31, 1994 and 1995 comprised the following (in
thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
PATC receivables $ 4,000 $ 9,935
Deferred financing costs 3,315 2,933
Start-up costs (Note 2) -0- 2,174
Notes receivable from Sirmac (Note 1) 9,656 -0-
Investment in Sirmac (Note 2) 9,350 -0-
Other 2,108 2,659
------- -------
$28,429 $17,701
======= =======
</TABLE>
F-16
<PAGE> 48
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
7. LONG-TERM DEBT
Long-term debt at December 31, 1994 and 1995 comprised the following
(in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Bank borrowings:
Revolving credit - Titan $ 37,500 $ -0-
Revolving credit - Sirmac -0- 28,677
Term loan - Titan Tire 14,464 12,322
Term loan - Steel Wheels -0- 7,299
Industrial revenue bond - Greenwood -0- 9,500
Note payable to PATC 19,743 19,743
Subordinated convertible notes 103,500 85,936
Other 6,329 5,247
-------- --------
181,536 168,724
Less: Amounts due within one year 3,195 26,419
-------- --------
$178,341 $142,305
======== ========
</TABLE>
In July 1994, the Company entered into a credit facility ("Facility")
with a group of banks which terminates in July 1999. The Facility
provides for unsecured revolving credit of up to $100 million, which is
also available for documentary trade and/or standby letters of credit.
Debt outstanding for this facility totalled $37.5 million and $0
respectively, at December 31, 1994 and 1995. The Facility allows Titan
to borrow funds under four interest options. Titan paid rates ranging
from 5 1/2% to 9% in 1995. The Facility is subject to dividend
limitations, under which Titan may not declare dividends in the event
the declaration would cause the Company to be in default of certain
financial covenants. The Facility also contains certain financial and
other less restrictive covenants.
Included in bank borrowings at December 31, 1995, is $22.5 million of
short-term and $6.2 million of long-term debt of the Sirmac Group. The
borrowings have been financed primarily through lines of credit, for
which Sirmac Group accounts receivable are pledged to the banks as
collateral. The current rate of interest on such lines is approximately
11%.
On September 15, 1994, Titan Tire entered into a credit facility which
provides for a term loan of $15 million and a revolving line of credit
of up to $20 million. The term loan bears interest at the London
Interbank Rate ("LIBOR") plus 2 1/4% and the revolving line of credit
bears interest at LIBOR plus 2%. These rates were adjusted downward
based upon an amendment to the credit facility in 1995. The LIBOR rate
was 6% and 5 3/4%, respectively, at December 31, 1994 and 1995.
Payments on the term loan are due quarterly through
F-17
<PAGE> 49
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
7. LONG-TERM DEBT (CONTINUED)
September 30, 1999. There were minimal borrowings under the line of
credit agreement in 1994 or 1995. Substantially all assets of Titan
Tire are pledged as collateral for the credit facility. The credit
facility restricts Titan Tire, including limits on additional
borrowings, operating and capital leases and contains certain financial
covenants.
In May 1995, the Company established a $14.4 million credit facility in
conjunction with the purchase of Steel Wheels (see Note 1). The
facility consists of an $8 million variable interest rate term loan and
a $6.4 million revolving line of credit. Interest rates for the term
loan averaged 8 1/2% for 1995. At December 31, 1995, the line of credit
balance is zero. The credit facility contains several financial
covenants.
In March 1995, the Company issued $9.5 million of industrial revenue
bonds ("IRB") to finance the construction of a facility in Greenwood,
South Carolina. The bonds carry tax exempt variable interest rates
based upon corresponding tax-exempt IRB issues in the state of South
Carolina. Rates for 1995 ranged from 3 1/4% to 5 1/2%. The bonds are
secured by a letter of credit established by the Company and are due in
February 2010.
As discussed in Note 1, on August 11, 1994, Titan Tire issued a
subordinated note for $19.7 million with a fixed interest rate of 7% to
PATC in conjunction with the Titan Tire purchase. The note matures on
February 11, 2000.
On November 18, 1993, the Company issued $103.5 million principal
amount of 4 3/4% subordinated convertible notes ("Notes"). The Notes
are due December 1, 2000. Each Note is convertible into common stock at
a price of $12.50 per share after January 24, 1994. See Note 17 for
discussion of 1995 note conversions. The Notes are redeemable at any
time on or after December 10, 1996, at the option of the Company in
whole or in part, at certain redemption prices, together with accrued
interest.
Other debt primarily consists of loans from local and state entities,
industrial revenue bonds and various other long-term notes.
Aggregate maturities of long-term debt are as follows (in thousands):
<TABLE>
<S> <C> <C>
1996 $ 26,419
1997 10,275
1998 4,266
1999 7,652
2000 and thereafter 120,112
---------
$ 168,724
=========
</TABLE>
F-18
<PAGE> 50
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. OTHER CURRENT LIABILITIES
Other current liabilities at December 31, 1994 and 1995 comprised the
following (in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Accrued wages and commissions $ 6,998 $ 9,585
Warranty reserves 4,309 2,828
Workers' compensation reserve 975 2,535
Customer deposits/pallet reserves 4,009 2,324
Accrued property and other taxes 2,289 1,930
Accrued health care benefits 2,502 1,740
Income taxes 5,961 -0-
Other 6,169 7,689
------- -------
$33,212 $28,631
======= =======
</TABLE>
9. OTHER LONG-TERM LIABILITIES
Other long-term liabilities at December 31, 1994 and 1995 comprised the
following (in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
PATC reserve (Note 1) $16,830 $ 6,500
Environmental liability (Note 20) 5,251 4,919
Employee benefits - Sirmac -0- 4,907
Supplemental retirement liability (Note 13) 2,418 2,434
Long-term warranty reserve 3,000 2,262
Other 3,710 3,590
------- -------
$31,209 $24,612
======= =======
</TABLE>
F-19
<PAGE> 51
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
10. SALES TO MAJOR MARKETS AND CUSTOMERS
The Company's operations are conducted within one business segment, the
production, manufacture and sale primarily of a full line of wheels,
rims, tires and components for the agricultural, consumer,
earthmoving/construction, engineered products, and military equipment
markets. Sales to major markets in 1993, 1994 and 1995 comprised the
following (in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Agricultural $ 74,901 $156,015 $275,976
Consumer 23,703 140,073 170,717
Earthmoving/Construction 32,792 75,555 133,523
Engineered Products 6,172 22,511 38,920
Military 12,873 12,846 4,047
-------- -------- --------
$150,441 $407,000 $623,183
======== ======== ========
</TABLE>
Export sales from the United States represent less than ten percent of
total sales. Sales to Deere & Company represented 19%, 15% and 12% of
total sales in 1993, 1994 and 1995, respectively.
Although the Company is directly affected by the economic well-being of
the above markets and significant customers, management does not
believe significant credit risk exists at December 31, 1995. The
Company performs ongoing credit evaluations of its customers' financial
condition and does not require collateral. Historically, the Company
has not experienced significant losses related to receivables from
individual customers or groups of customers in any particular industry.
11. INCOME TAXES
Income before income taxes consists of the following (in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Domestic $ 10,410 $28,203 $54,074
Foreign (296) 1,904 9,206
-------- ------- -------
$ 10,114 $30,107 $63,280
======== ======= =======
</TABLE>
F-20
<PAGE> 52
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
11. INCOME TAXES (CONTINUED)
The provision for income taxes was as follows (in thousands):
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Current
Federal $ 2,530 $ 9,789 $14,397
State 647 2,187 3,406
Foreign 2 265 1,613
-------- -------- -------
3,179 12,241 19,416
-------- -------- -------
Deferred
Federal 454 (367) 4,840
State 120 (247) 1,041
-------- -------- -------
574 (614) 5,881
-------- -------- -------
Provision for income taxes $ 3,753 $ 11,627 $25,297
======== ======== =======
</TABLE>
Deferred tax assets (liabilities) at December 31, 1994 and 1995,
respectively, are comprised of the following (in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Returnable pallets $ 1,231 $ 673
Employee benefits and related costs 2,560 3,558
EPA reserve 2,991 2,329
Postretirement benefits 5,069 730
Other 4,735 3,827
-------- --------
Gross deferred tax assets $ 16,586 $ 11,117
======== ========
Fixed assets $(20,042) $(20,739)
Inventory (630) (1,227)
Other (1,325) (369)
-------- --------
Gross deferred tax liabilities (21,997) (22,335)
-------- --------
Net deferred tax liabilities $ (5,411) $(11,218)
======== ========
</TABLE>
The tax benefits from any future recognition of deductible temporary
differences relative to recent acquisitions, present at the date of
such acquisition, will adjust the related purchase accounting and be
applied to reduce noncurrent assets.
F-21
<PAGE> 53
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
11. INCOME TAXES (CONTINUED)
The provision for income taxes differs from the amount of income tax
determined by applying the statutory U.S. federal income tax rate to
pre-tax income as a result of the following:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal tax rate 34.0% 35.0% 35.0%
State taxes (net) 5.0 4.2 4.6
Other (net) (1.9) (0.6) 0.4
------ ------ ------
Effective tax rate 37.1% 38.6% 40.0%
====== ====== ======
</TABLE>
Federal income taxes are provided on earnings of foreign subsidiaries
except to the extent that such earnings are expected to be indefinitely
reinvested abroad.
12. RELATED PARTY TRANSACTIONS
The Company sells products to companies controlled by persons related
to the Chief Executive Officer of the Company. During 1993, 1994 and
1995, combined sales approximated $2,597,000, $3,355,000 and
$4,370,000, respectively. At December 31, 1994 and 1995, Titan had
approximately $2,170,000 and $1,998,000, respectively, of accounts
receivable outstanding from those sales. Commissions paid to companies
controlled by persons related to the Chief Executive Officer of the
Company approximated $252,000, $470,000 and $920,000 respectively, for
1993, 1994 and 1995. These sales and commissions were made on terms no
less favorable to Titan than comparable sales and commissions to
unaffiliated third parties.
13. EMPLOYEE BENEFIT PLANS
PENSION PLANS
The Company has a contributory defined benefits pension plan covering
certain hourly employees of its French & Hecht division ("F&H"). The
plan was frozen in July 1993. The Company also sponsors a contributory
defined benefits plan covering all eligible bargaining employees of the
Des Moines, Iowa location of Dico, Inc. ("Dico"), a wholly-owned
subsidiary of Dyneer. The Dico plan was frozen July 1995. The Company's
policy is to fund pension costs as accrued, which is consistent with
the funding requirements of federal laws and regulations.
F-22
<PAGE> 54
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
13. EMPLOYEE BENEFIT PLANS (CONTINUED)
The components of net periodic pension cost and the reconciliation of
the funded status of the Dico, Inc. and F&H plans, in aggregate, at
December 31, 1994 and 1995, are as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Components of net periodic pension cost
Service cost $ 126 $ 199
Interest cost 501 572
Actual return on assets (327) (1,182)
Net amortization and deferral (744) 792
---------- ----------
Net periodic pension cost (income) $ (444) $ 381
========== ==========
Reconciliation of funded status
Actuarial present value of benefit obligations
Vested benefit obligation $ 6,543 $ 6,148
Non-vested benefit obligation 376 29
---------- ----------
Accumulated benefit obligation $ 6,919 $ 6,177
========== ==========
Projected benefit obligation $ 7,333 $ 6,484
Actual plan assets at fair value 5,423 5,177
---------- ----------
Plan assets greater (less) than
projected benefit obligation (1,910) (1,307)
Unrecognized net loss 1376 761
Unrecognized transition liability (59) (52)
Minimum liability adjustment (904) (403)
---------- ----------
Accrued pension cost recognized in the
balance sheet $ (1,497) $ (1,001)
========== ==========
Major assumptions:
Discount rate 7 1/4-8 1/2% 7 1/4%
Rate of return on plan assets 8 1/2% 8 1/2%
</TABLE>
The Company also has an obligation to provide supplemental benefits to
five former officers/shareholders of Dyneer. The present value of the
unfunded benefit obligation accrued at December 31, 1994 and 1995, of
$2,418,000 and $2,434,000, respectively, is actuarially determined and
is discounted at an annual interest rate of 8 1/2% and 7 1/4%,
respectively. Expense for the year ended December 31, 1994 and 1995 was
$163,000 and $183,000, respectively.
F-23
<PAGE> 55
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
13. EMPLOYEE BENEFIT PLANS (CONTINUED)
401(K)
The Company sponsors two 401(k) retirement savings plans (the "401(k)
Plan"), one plan for the benefit of all employees who are not covered
by a collective bargaining arrangement, and a second plan for the
employees covered by a collective bargaining arrangement. Plan
participants may contribute up to 17% of their annual compensation, up
to a maximum of $9,240 in 1995. Employees are fully vested with respect
to their contributions. In 1993 and the first six months of 1994, Titan
provided a 25% matching cash contribution on the employee's
contribution. Beginning on July 1, 1994, Titan amended its 401(k) Plan
to provide a 50% match in the form of the Company's common stock on the
first 6% of the employee's contribution. Titan issued 87,910 shares of
common stock in connection with the 401(k) Plan during 1995. Expenses
related to the 401(k) Plan were $120,000, $917,000 and $1,468,000 for
1993, 1994 and 1995, respectively.
14. STOCK OPTION PLAN
During 1993, the Company adopted the 1993 Stock Incentive Plan (the
"Plan"). A total of 1,125,000 shares of common stock are reserved under
the Plan. Under the Plan, stock options (both incentive and
non-qualified), restricted stock awards and performance awards may be
granted to key employees or consultants at the market price at date of
grant. Options granted under the Plan were for 0, 178,625 and 165,780
shares during 1993, 1994 and 1995, respectively. There were 0, 26,865
and 17,460 shares cancelled in 1993, 1994 and 1995, respectively,
leaving an outstanding balance of 300,080 shares at December 31, 1995.
No options were exercised under the plan for 1993, 1994 and 1995.
Options under the plan vest and become exercisable at a rate of 40% on
December 31 of the year following the date of grant, and an additional
20% each year thereafter. The options are exercisable at a price of
$11.11 per share and expire ten years from date of grant.
In 1994, the Company adopted a Non-Employee Director Stock Option Plan
("Director Plan") as of March 31, 1994, to provide for grants of stock
options as a means of attracting and retaining highly qualified
independent directors for the Company. No more than 225,000 shares of
Titan's common stock may be issued under the Director's Plan. Options
granted under the Director Plan were 27,000 and 36,000 during 1994 and
1995, respectively, and were issued at approximately the market price
at the date of grant. No options have been cancelled or exercised
through December 31, 1995. Such options vest and become exercisable
immediately. The options are exercisable at a prices ranging from
$11.11 to $11.70 per share, and expire 10 years from date of grant.
F-24
<PAGE> 56
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
15. GEOGRAPHIC SEGMENT INFORMATION
The Company's foreign operations are conducted primarily in Italy, the
United Kingdom and Ireland. A summary of Titan's operations by
geographical area for the three years ended December 31, 1995, follows
(in thousands):
<TABLE>
<CAPTION>
UNITED
STATES FOREIGN ELIMINATIONS CONSOLIDATED
<S> <C> <C> <C> <C>
1993
Revenues
Customers $147,841 $ 2,600 $ -0- $150,441
Intercompany 13,108 -0- (13,108) -0-
-------- --------- --------- --------
Total revenues $160,949 $ 2,600 $ (13,108) $150,441
======== ========= ========= ========
Income (loss) from operations $ 13,273 $ (131) $ -0- $ 13,142
======== ========= ========= ========
Identifiable assets $255,925 $ 5,341 $ -0- $261,266
======== ========= ========= ========
1994
Revenues
Customers $386,142 $ 20,858 $ -0- $407,000
Intercompany 77,834 2,661 (80,495) -0-
-------- --------- --------- --------
Total revenues $463,976 $ 23,519 $ (80,495) $407,000
======== ========= ========= ========
Income (loss) from operations $ 36,170 $ 2,278 $ (452) $ 37,996
======== ========= ========= ========
Identifiable assets $390,289 $ 10,171 $ -0- $400,460
======== ========= ========= ========
1995
Revenues
Customers $524,233 $ 98,950 $ -0- $623,183
Intercompany 85,619 3,559 (89,178) -0-
-------- --------- --------- --------
Total revenues $609,852 $ 102,509 $ (89,178) $623,183
======== ========= ========= ========
Income (loss) from operations $ 62,978 $ 10,087 $ (10) $ 73,055
======== ========= ========= ========
Identifiable assets $395,593 $ 117,682 $ (1,140) $512,135
======== ========= ========= ========
</TABLE>
F-25
<PAGE> 57
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
16. EARNINGS PER SHARE
Earnings per share for 1993, 1994 and 1995 are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Primary earnings per share $ .46 $ 1.14 $ 1.91
======== ======== ========
Fully diluted earnings per share $ .46 $ .89 $ 1.50
======== ======== ========
</TABLE>
Earnings per share are based on the weighted average common shares
outstanding after giving retroactive effect to an approximately
858-for-1 stock split approved by the Board of Directors on March 29,
1993. As discussed in Note 17, during 1995 the Board of Directors
declared two 3-for-2 stock splits, which were paid March 15 and August
31, 1995. All share and per share data for the periods presented in the
consolidated financial statements and notes thereto have been adjusted
to reflect the splits.
Weighted average common shares used in the computation of earnings per
share for the respective years are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Primary 13,946,101 16,255,942 19,933,034
Fully diluted 14,935,102 24,646,099 27,459,606
</TABLE>
Primary and fully diluted earnings per share of common stock for 1993,
1994 and 1995 assumes the exercise of common stock options for each
year as they are common stock equivalents with a dilutive effect.
Fully diluted earnings per share of common stock for 1994 and 1995
assumes the conversion of the Company's $103.5 million and $85.9
million convertible subordinated notes due December 1, 2000, and the
elimination of the related after-tax interest expense and amortization
of deferred financing fees. The subordinated convertible notes did not
have a dilutive effect on earnings in 1993. Additionally, fully diluted
earnings per share of common stock for 1994 and 1995 assumed the
conversion of the Company's Class A noncumulative convertible preferred
stock. The convertible preferred stock was repurchased in June 1995.
Conversion of the common stock warrants issued in the Titan Tire
acquisition was not assumed in 1994 or 1995, as the effect was
anti-dilutive.
F-26
<PAGE> 58
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
17. STOCKHOLDERS' EQUITY
The following discusses significant transactions which occurred during
1995. Significant equity transactions which occurred during 1993 and
1994 are discussed in Note 1.
On June 7, 1995, the Company issued 4,312,500 shares of common stock at
a price of $15.83 per share. Excluding fees, Titan received $64.9
million, before related offering costs of $300,000. With $17.5 million
of the proceeds from the June 1995 stock offering, Titan repurchased
the convertible preferred stock and common stock warrants issued to
PATC in the Titan Tire acquisition.
During the year $17.6 million of the Company's 4 3/4% subordinated
convertible notes were converted into the Company's common stock. At a
conversion price per share of $12.50, these conversions resulted in the
issuance of 1.4 million additional common shares.
As discussed in Note 1, during 1995, the Company issued 426,688 shares
of Titan common stock and options to purchase 82,791 shares. The
issuance of stock increased additional paid-in capital by $4.7 million.
Former Dyneer shareholders exercised options to purchase a total of
48,391 shares of the Company's common stock resulting in an increase of
approximately $600,000 in additional paid-in capital including a tax
benefit of approximately $52,000.
During 1995, the Company repurchased 150,000 shares of Titan common
stock from the Chief Executive Officer of the Company. Subsequently,
71,183 of these shares were issued as compensation to a former
employee, resulting in an increase of approximately $1,052,000 in
additional paid-in capital, including a tax benefit of $348,000. A
portion of the remaining treasury shares were withheld for payment of
payroll taxes, the accrual of which represents the cost basis of the
treasury stock remaining at December 31, 1995.
On January 24, 1995, the Board of Directors declared a 3-for-2 stock
split, payable as a stock dividend on March 15, 1995, to shareholders
of record at the close of business on February 15, 1995. On July 14,
1995, the Board of Directors declared a second 3-for-2 stock split
payable as a stock dividend on August 31, 1995, to shareholders of
record at the close of business on July 31, 1995. All share and per
share data for the periods presented in the consolidated financial
statements and notes thereto have been adjusted to reflect the splits.
In conjunction with the related stock splits noted above, the Board of
Directors authorized an increase in the annual cash dividend from $.03
to $.06 per share. The Company paid cash dividends of $.02, $.03 and
$.05 per share of common stock during 1993, 1994 and 1995,
respectively.
F-27
<PAGE> 59
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
18. LEASE COMMITMENTS
The Company leases buildings, machinery, equipment and airplanes under
operating leases. Certain lease agreements provide for renewal options
and require payment of property taxes, maintenance and insurance. Total
rental expense approximated $602,000, $1,467,000 and $1,547,000 for the
years ended December 31, 1993, 1994 and 1995, respectively.
At December 31, 1995, future minimum rental commitments under
noncancelable operating leases with initial or remaining terms in
excess of one year are as follows: $1,630,000 in 1996; $1,155,000 in
1997; $924,000 in 1998; $718,000 in 1999; and $423,000 in 2000.
19. LITIGATION
GENERAL
The Company is party to several routine legal proceedings arising out
of the normal course of business. Titan believes that none of these
actions, individually or in the aggregate, will have a material adverse
effect on the financial condition or results of operations of the
Company.
In December 1995, PATC commenced litigation against the Company on
contractual matters relating to the purchase of Titan Tire. The
Company, in December 1995, also commenced litigation against PATC on
contractual matters related to such acquisition. Titan believes that
these actions will not have a material adverse effect on the financial
condition or results of operations of the Company.
20. ENVIRONMENTAL MATTERS
Dico, one of the Company's subsidiaries, and five major oil and
chemical companies were named as potentially responsible parties in
connection with contaminants found at one of Dico's facilities ("the
Site"). The contaminants were found in the ground water and certain
buildings located on the Site. Dico has constructed a groundwater
extraction and treatment system to restore use of affected groundwater.
During 1994, the Company adjusted the purchase price allocation for the
Dyneer (Dico's parent company) acquisition with respect to the EPA
matter. Of the total estimate of $10.7 million of costs to be incurred
in connection with the clean up of the Site, $4.8 million was paid in
1994, and $600,000 in 1995. Management believes that the remaining
accrual of $5.3 million at December 31, 1995 is adequate for remaining
costs to be incurred related to the environmental matter. Dico is
attempting to recover its costs from certain of its insurers and other
potentially responsible parties.
F-28
<PAGE> 60
TITAN WHEEL INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
21. SUPPLEMENTARY DATA - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
QUARTER ENDED: MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 DECEMBER 31
-------- ------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
1994
Net sales $ 91,873 $102,671 $ 97,827 $114,629 $407,000
Gross profit 14,603 16,514 16,723 20,592 68,432
Net income 3,819 5,055 4,281 5,325 18,480
Per share amounts:
Primary $ .24 $ .31 $ .26 $ .33 $ 1.14
Fully diluted .19 .24 .21 .25 .89
1995
Net sales $157,732 $157,640 $149,528 $158,283 $623,183
Gross profit 28,763 28,157 27,753 31,053 115,726
Net income 9,298 10,033 8,906 9,746 37,983
Per share amounts:
Primary $ .56 $ .55 $ .40 $ .43 $ 1.91
Fully diluted .40 .42 .33 .35 1.50
<FN>
NOTE: THE ANNUAL EARNINGS PER SHARE AMOUNTS DO NOT NECESSARILY AGREE TO THE
SUM OF THE QUARTERS AS A RESULT OF CHANGES IN THE MARKET PRICES OF
THE COMPANY'S COMMON STOCK AND THE APPLICATION OF THE TREASURY STOCK
METHOD.
</TABLE>
F-29
<PAGE> 1
Exhibit 11
----------
TITAN WHEEL INTERNATIONAL, INC.
COMPUTATION OF EARNINGS OF COMPANY PER COMMON SHARE
(All amounts in thousands, except share data)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1993 1994 1995
---- ----- ----
<S> <C> <C> <C>
Primary
Net income $ 6,361 $ 18,840 $ 37,983
========== ========== ==========
Shares
Weighted average number of common shares outstanding 13,887,783 16,173,396 19,889,320
Assuming exercise of options reduced by the number of
shares which could have been purchased with the proceeds
from the exercise of such options 58,318 82,546 43,714
---------- ---------- ----------
Weighted average number of common shares
outstanding as adjusted 13,946,101 16,255,942 19,933,034
========== ========== ==========
Net income $ .46 $1.14 $1.91
====== ===== =====
Assuming full dilution
Earnings
Net income $ 6,361 $ 18,480 $ 37,983
Add after tax interest expense applicable to 4 3/4%
convertible notes and amortization of deferred financing 419 3,409 2,918
---------- ---------- ----------
Net income as adjusted $ 6,780 $ 21,889 $ 40,901
========== ========== ==========
Shares
Weighted average number of common shares outstanding 13,946,101 16,255,942 19,933,034
Assuming conversion of convertible preferred stock -0- 110,157 69,350
Assuming conversion of 4 3/4% convertible notes 989,001 8,280,000 7,457,222
---------- ---------- ----------
Weighted average number of common shares outstanding as
adjusted 14,935,102 24,646,099 27,459,606
========== ========== ==========
Earnings per common share assuming full dilution
Net income $ .46 $ .89 $1.50
====== ====== =====
</TABLE>
E-1
<PAGE> 1
Exhibit 21
----------
TITAN WHEEL INTERNATIONAL, INC.
SUBSIDIARIES
<TABLE>
<CAPTION>
JURISDICTION OF
NAME INCORPORATION
---- -------------
<S> <C>
Automation International, Inc. Illinois
Automotive Wheels, Inc. California
Dico, Inc. Delaware
Dico Tire, Inc. Delaware
Dyneer Corporation Delaware
Dyneer Foreign Sales Corporation U.S. Virgin Islands
Grasdorf Titan GmbH Germany
Nieman's Ltd. Iowa
Sirmac Group Italy
Steel Wheels, Ltd. United Kingdom
T.D. Holding Company, Inc. Virginia
T.D. Wheel Company Virginia
of Virginia, Inc.
T.D. Wheel, Inc. Nevada
Titan Distribution, Inc. Illinois
Titan Investment Corporation Illinois
Titan Tire Corporation Illinois
Titan Wheel International, United Kingdom
Limited
Titan Wheel International, Ltd. Ontario, Canada
Tractech Holdings, Ltd. Republic of Ireland
Tractech Limited Republic of Ireland
</TABLE>
E-2
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (No. 33-71788 and No. 33-80306) of Titan Wheel
International, Inc. of our report dated February 13, 1996 appearing on page F-1
of this Annual Report on Form 10-K. We also consent to the reference to us under
the heading "Selected Financial Data" in such Form 10-K. However, it should be
noted that Price Waterhouse LLP has not prepared or certified such "Selected
Financial Data."
PRICE WATERHOUSE LLP
St. Louis, Missouri
March 28, 1996
E-3
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 14,211
<SECURITIES> 32
<RECEIVABLES> 112,107
<ALLOWANCES> 4,970
<INVENTORY> 124,928
<CURRENT-ASSETS> 264,900
<PP&E> 232,279
<DEPRECIATION> 53,993
<TOTAL-ASSETS> 512,135
<CURRENT-LIABILITIES> 113,642
<BONDS> 142,305
<COMMON> 23
0
0
<OTHER-SE> 215,849
<TOTAL-LIABILITY-AND-EQUITY> 512,135
<SALES> 623,183
<TOTAL-REVENUES> 623,183
<CGS> 507,457
<TOTAL-COSTS> 507,457
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,045
<INCOME-PRETAX> 63,280
<INCOME-TAX> 25,297
<INCOME-CONTINUING> 37,983
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,983
<EPS-PRIMARY> 1.91
<EPS-DILUTED> 1.50
</TABLE>
