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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
FOR QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1999
Commission File Number: 1-12936
TITAN INTERNATIONAL, INC.
(Exact name of Registrant as specified in its Charter)
ILLINOIS 36-3228472
(State of Incorporation) (I.R.S. Employer Identification No.)
2701 SPRUCE STREET, QUINCY, IL 62301
(Address of principal executive offices, including Zip Code)
(217) 228-6011
(Telephone Number)
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, and (2) has been subject to such filing requirements
for the past 90 days. YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
SHARES OUTSTANDING AT
CLASS OCTOBER 29, 1999
----- ----------------
COMMON STOCK, NO PAR VALUE PER SHARE 20,671,580
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TITAN INTERNATIONAL, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Number
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<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets as of
September 30, 1999 and December 31, 1998 1
Consolidated Condensed Statements of Operations
for the Three and Nine Months Ended
September 30, 1999 and 1998 2
Consolidated Condensed Statements of Cash Flows
for the Nine Months Ended September 30, 1999 and 1998 3
Notes to Consolidated Condensed Financial Statements 4-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-14
Part II. Other Information and Signature 15-16
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
---- ----
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 12,827 $ 14,116
Accounts receivable (net of allowance of
$6,272 and $6,200, respectively) 104,075 108,194
Inventories 138,481 154,045
Prepaid and other current assets 34,310 35,840
--------- ---------
Total current assets 289,693 312,195
Property, plant and equipment, net 288,561 284,407
Other assets 48,673 40,896
Goodwill, net 39,684 40,776
--------- ---------
Total assets $ 666,611 $ 678,274
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 31,491 $ 7,902
Accounts payable 57,420 66,522
Other current liabilities 53,506 67,306
--------- ---------
Total current liabilities 142,417 141,730
Deferred income taxes 23,073 23,396
Other long-term liabilities 17,121 18,527
Long-term debt 249,914 247,584
--------- ---------
Total liabilities 432,525 431,237
--------- ---------
Stockholders' equity
Common stock, no par, 60,000,000 shares authorized,
27,555,081 and 27,520,139, respectively 27 27
Additional paid-in capital 215,143 214,807
Retained earnings 122,214 128,801
Accumulated other comprehensive loss (8,481) (4,294)
Treasury stock at cost: 6,908,526 and 6,591,484 shares,
respectively (94,817) (92,304)
--------- ---------
Total stockholders' equity 234,086 247,037
--------- ---------
Total liabilities and stockholders' equity $ 666,611 $ 678,274
========= =========
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
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TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands, except earnings per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 135,983 $ 149,186 $ 453,638 $ 517,830
Cost of sales 125,824 130,166 401,022 439,086
--------- --------- --------- ---------
Gross profit 10,159 19,020 52,616 78,744
Selling, general & administrative expenses 12,541 12,538 39,493 38,845
Research and development expenses 1,563 1,465 4,816 5,431
--------- --------- --------- ---------
Income (loss) from operations (3,945) 5,017 8,307 34,468
Interest expense 5,951 4,678 17,575 13,397
Other income (437) (334) (443) (683)
--------- --------- --------- ---------
Income (loss) before income taxes (9,459) 673 (8,825) 21,754
Provision (benefit) for income taxes (3,595) 256 (3,354) 8,267
--------- --------- --------- ---------
Net income (loss) $ (5,864) $ 417 $ (5,471) $ 13,487
========= ========= ========= =========
Earnings (loss) per share:
Basic $ (.28) $ .02 $ (.26) $ .62
Diluted $ (.28) $ .02 $ (.26) $ .62
Average shares outstanding:
Basic 20,647 21,657 20,859 21,687
Diluted 20,735 21,725 20,859 21,856
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
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TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (5,471) $ 13,487
Depreciation and amortization 28,684 25,322
Decrease in receivables 1,680 6,387
(Increase)/decrease in inventories 13,750 (18,860)
(Increase)/decrease in other current assets 2,170 (1,176)
Decrease in accounts payable (6,944) (6,878)
Increase/(decrease) in other accrued liabilities (16,227) 6,769
Other, net (367) (512)
-------- --------
Net cash provided by operating activities 17,275 24,539
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (28,920) (28,462)
Acquisitions, net of cash acquired (11,853) (14,686)
Other 0 (7,143)
-------- --------
Net cash used for investing activities (40,773) (50,291)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 26,526 30,000
Payment of debt (593) (954)
Repurchase of common stock (3,177) (5,850)
Dividends paid (937) (977)
Other, net 816 723
-------- --------
Net cash provided by financing activities 22,635 22,942
Effect of exchange rate changes on cash (426) 0
Net decrease in cash and cash equivalents (1,289) (2,810)
Cash and cash equivalents at beginning of period 14,116 21,207
-------- --------
Cash and cash equivalents at end of period $ 12,827 $ 18,397
======== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
3
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TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
A. ACCOUNTING POLICIES
In the opinion of Titan International, Inc. ("Titan" or the "Company"),
the accompanying unaudited consolidated condensed financial statements
contain all adjustments, which are normal and recurring in nature,
necessary to present fairly its financial position as of September 30,
1999, the results of operations for the three and nine months ended
September 30, 1999 and 1998, and cash flows for the nine months ended
September 30, 1999 and 1998.
Accounting policies have continued without change and are described in
the Summary of Significant Accounting Policies contained in the
Company's 1998 Annual Report on Form 10-K. For additional information
regarding the Company's financial condition, refer to the footnotes
accompanying the financial statements as of and for the year ended
December 31, 1998 filed in conjunction with the Company's 1998 Annual
Report on Form 10-K. Details in those notes have not changed
significantly except as a result of normal interim transactions and
certain matters discussed below.
B. INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Raw materials $ 39,535 $ 49,970
Work-in-process 17,237 17,831
Finished goods 76,462 82,579
-------- --------
133,234 150,380
LIFO reserve 5,247 3,665
-------- --------
$138,481 $154,045
======== ========
</TABLE>
C. FIXED ASSETS
Property, plant and equipment, net reflects accumulated depreciation of
$148.4 million and $124.2 million at September 30, 1999, and December
31, 1998, respectively.
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TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
D. GOODWILL
Goodwill, net reflects accumulated amortization of $6.8 million and
$5.8 million at September 30, 1999, and December 31, 1998,
respectively.
E. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Senior subordinated notes $150,000 $150,000
Credit facility 75,000 55,000
Notes payable to Pirelli Armstrong Tire Corp. 29,743 29,743
Industrial revenue bonds and other 26,662 20,743
-------- --------
281,405 255,486
Less: Amounts due within one year 31,491 7,902
-------- --------
$249,914 $247,584
======== ========
</TABLE>
Aggregate maturities of long-term debt at September 30, 1999 are as
follows (in thousands):
<TABLE>
<S> <C>
October 1 - December 31, 1999 $ 3,014
2000 28,805
2001 6,528
2002 441
2003 and thereafter 242,617
---------
$ 281,405
=========
</TABLE>
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TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
F. SEGMENT INFORMATION
The table below presents information about certain revenues and income
(loss) from operations used by the chief operating decision maker of
the Company for the three and nine months ended September 30, 1999 and
1998 (in thousands):
<TABLE>
<CAPTION>
Revenues Income (loss)
Three months ended from external Intersegment from
September 30, 1999 customers revenues operations
------------------ --------- -------- ----------
<S> <C> <C> <C>
Agricultural $ 54,694 $ 18,678 $ (1,157)
Earthmoving/construction 39,089 10,121 2,055
Consumer 42,200 11,715 1,280
Reconciling items (a) 0 0 (6,123)
-------- -------- --------
Consolidated totals $135,983 $ 40,514 $ (3,945)
======== ======== ========
<CAPTION>
Three months ended
September 30, 1998
------------------
<S> <C> <C> <C>
Agricultural $ 69,388 $ 22,436 $ 4,117
Earthmoving/construction 40,973 10,048 6,082
Consumer 38,825 9,331 1,016
Reconciling items (a) 0 0 (6,198)
-------- -------- --------
Consolidated totals $149,186 $ 41,815 $ 5,017
======== ======== ========
</TABLE>
(a) Represents corporate expenses and depreciation and amortization expense
related to property, plant and equipment and goodwill carried at the
corporate level.
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TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
F. SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Revenues
Nine months ended from external Intersegment Income (loss)
September 30, 1999 customers revenues from operations
------------------ --------- -------- ---------------
<S> <C> <C> <C>
Agricultural $196,953 $ 67,280 $ 8,334
Earthmoving/construction 121,233 31,592 12,441
Consumer 135,452 37,532 5,598
Reconciling items (a) 0 0 (18,066)
-------- -------- --------
Consolidated totals $453,638 $136,404 $ 8,307
======== ======== ========
<CAPTION>
Nine months ended
September 30, 1998
------------------
<S> <C> <C> <C>
Agricultural $259,442 $ 78,593 $ 27,864
Earthmoving/construction 135,594 32,060 21,489
Consumer 122,794 33,948 5,164
Reconciling items (a) 0 0 (20,049)
-------- -------- --------
Consolidated totals $517,830 $144,601 $ 34,468
======== ======== ========
</TABLE>
(a) Represents corporate expenses and depreciation and amortization expense
related to property, plant and equipment and goodwill carried at the
corporate level.
7
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TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
G. COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss), which includes net income (loss) and the
effect of currency translation, was $(4.4) million for the third
quarter of 1999, compared to $3.9 million in 1998. Comprehensive income
(loss) for the nine months ended September 30, 1999 was $(9.7) million,
compared to $16.2 million in 1998.
H. STOCK REPURCHASE PROGRAM
The Company's Board of Directors has authorized the Company to
repurchase up to ten million shares of its common stock. During the
nine months ended September 30, 1999, the Company repurchased 0.3
million shares of common stock in the open market. The Company is
authorized to repurchase an additional 3.1 million common shares.
I. NEW ACCOUNTING STANDARD
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133), is effective
for the Company in 2001. The Company is evaluating the effect SFAS 133
will have on its financial position and results of operations.
8
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the quarter ended September 30, 1999, were $136.0 million compared
to 1998 third quarter net sales of $149.2 million. Net sales for the nine months
ended September 30, 1999, were $453.6 million, compared to 1998 net sales of
$517.8 million. Net sales decreased due to a decline in U.S. agricultural
equipment sales, which has contributed to extended shutdowns of certain
facilities at several of Titan's largest customers.
Net sales in the agricultural market were $54.7 and $197.0 million for the third
quarter of 1999 and for the nine months ended September 30, 1999 respectively,
as compared to $69.4 and $259.4 million in 1998. Earthmoving/construction market
net sales were $39.1 and $121.2 million for the third quarter of 1999 and for
the nine months ended September 30, 1999 respectively, as compared to $41.0 and
$135.6 million in 1998. The Company's consumer market net sales were $42.2 and
$135.5 million for the third quarter of 1999 and for the nine months ended
September 30, 1999, as compared to $38.8 and $122.8 million in 1998. Net sales
in all markets were negatively impacted by the shutdowns of certain facilities
at several of Titan's largest customers.
Cost of sales was $125.8 and $401.0 million for the third quarter of 1999 and
for the nine months ended September 30, 1999, as compared to $130.2 and $439.1
million in 1998. Gross profit for the third quarter of 1999 was $10.2 million or
7.5% of net sales, compared to $19.0 million or 12.7% of net sales for the third
quarter of 1998. Gross profit for the nine months ended September 30, 1999 was
$52.6 million or 11.6% of net sales, compared to $78.7 million or 15.2% of net
sales for 1998. Gross profit for the third quarter of 1999 and for the nine
months ended September 30, 1999, was negatively impacted primarily by
inefficiencies caused by extended shutdowns of certain facilities at several of
Titan's largest customers.
Selling, general and administrative ("SG&A") expenses for the third quarter of
1999 were $12.5 million or 9.2% of net sales, compared to $12.5 million or 8.4%
in 1998. SG&A expenses for the nine months ended September 30, 1999 were $39.5
million or 8.7% of net sales, compared to $38.8 million or 7.5% in 1998. The
rise in SG&A expenses, as a percentage of net sales, is primarily attributed to
the decrease in net sales volume as discussed above. Research and development
("R&D") expenses for the third quarter of 1999 were $1.6 million or 1.2% of net
sales, compared to $1.5 million or 1.0% in 1998. R&D expenses for the nine
months ended September 30, 1999 were $4.8 million or 1.1% of net sales, compared
to $5.4 million or 1.0% in 1998.
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Loss from operations for the third quarter of 1999 was $(3.9) million or 2.9% of
net sales, compared to income from operations of $5.0 million or 3.4% in 1998.
Income from operations for the nine months ended September 30, 1999 was $8.3
million or 1.8% of net sales, compared to $34.5 million or 6.7% in 1998. Income
and loss from operations was impacted by the items described in the preceding
paragraphs.
Loss from operations for the third quarter of 1999 in the agricultural market
was $(1.2) million, as compared to income from operations of $4.1 million in
1998. Income from operations in the agricultural market was $8.3 million for the
nine months ended September 30, 1999, as compared to $27.9 million in 1998. The
Company's earthmoving/construction market income from operations was $2.1 and
$12.4 million for the third quarter of 1999 and for the nine months ended
September 30, 1999 respectively, as compared to $6.1 and $21.5 million in 1998.
Consumer market income from operations was $1.3 and $5.6 million for the third
quarter of 1999 and for the nine months ended September 30, 1999 respectively,
as compared to $1.0 and $5.2 million in 1998. Income from operations has
decreased due to a decline in U.S. agricultural equipment sales, which has
contributed to shutdowns of certain facilities at several of Titan's largest
customers. Income from operations on a segment basis does not include corporate
expenses and depreciation and amortization expense related to property, plant
and equipment and goodwill carried at the corporate level of $6.1 and $18.1
million for the third quarter of 1999 and for the nine months ended September
30, 1999, respectively, as compared to $6.2 and $20.0 million in 1998.
Interest expense was $6.0 and $17.6 million for the third quarter of 1999 and
for the nine months ended September 30, 1999 respectively, compared to $4.7 and
$13.4 million in 1998. The increased interest expense was primarily due to an
increase in the average debt outstanding during the third quarter of 1999 and
for the nine months ended September 30, 1999.
Net loss for the third quarter of 1999 and for the nine months ended September
30, 1999 was $(5.9) and $(5.5) million respectively, compared to net income of
$0.4 and $13.5 million in 1998. Basic and diluted loss per share were $(.28) and
$(.26) for the third quarter of 1999 and for the nine months ended September 30,
1999 respectively, compared to earnings per share of $.02 and $.62 in 1998.
10
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities of $17.3 million for the nine months ended
September 30, 1999 were attributed to decreases in receivables, inventories and
other current assets. These amounts were partially offset by decreases in
accounts payable and other accrued liabilities. The decreases in inventories and
accounts payable are primarily due to lower production levels during the nine
months ended September 30, 1999. The decrease in other accrued liabilities of
$16.2 million relates primarily to the payment of liabilities to creditors of
approximately $11.8 million by the Company's Natchez, Mississippi facility, all
of which had been recorded at the acquisition date in the prior year. The
remaining decrease in other accrued liabilities relates primarily to timing of
payments.
The Company has invested $28.9 million in capital expenditures in 1999,
including $8.5 million for equipment and construction related to the
Brownsville, Texas facility. The balance represents various equipment purchases
and building improvements to enhance production capabilities.
During the nine months ended September 30, 1999 the Company acquired 35.9
percent of the stock of Wheels India Limited, which is being accounted for under
the equity method of accounting. With facilities in Madras and Poona, India,
Wheels India is the largest manufacturer of steel wheels for all applications in
the Indian sub-continent.
During the nine months ended September 30, 1999, the Company received $20.0
million in proceeds from its $250.0 million revolving credit facility. These
proceeds have been used to fund operations and capital expenditures.
The Company's Board of Directors has authorized the Company to repurchase up to
ten million shares of its common stock. During the nine months ended September
30, 1999, the Company repurchased 0.3 million shares of common stock in the open
market. The Company is authorized to repurchase an additional 3.1 million common
shares.
At September 30, 1999, the Company had cash and cash equivalents of $12.8
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.
11
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR 2000
During 1996, the Company formed a project team to address the inability of
certain computer and infrastructure systems to process dates in the year 2000
and later. The major areas for evaluation include mainframe computers, personal
computers, engineering hardware and software, manufacturing systems and the
readiness of the Company's suppliers, customers and distribution network. The
Company's phases for its Year 2000 program include planning, assessment,
remediation and testing and contingency planning.
Titan believes it is on schedule to become Year 2000 compliant. Planning began
in 1996 and is substantially complete. Assessment of the Company's information
technology ("IT") and non-IT systems is complete. The Company's non-IT systems
including manufacturing equipment, telecommunications equipment, building
control equipment and environmental equipment were considered. Date sensitive
non-IT and IT systems were identified and upgrade/replacement is anticipated to
be complete by November 1999. Remediation of IT and non-IT systems is 95 percent
complete and is estimated to be complete by December 1999. Testing is performed
as noncompliant systems are remediated and will continue through year 2000.
The Company is evaluating its critical suppliers to ensure that there is no
interruption in the delivery of products and services to Titan due to Year 2000
issues. In 1998, the Company sent questionnaires to its major and critical
suppliers and customers in order to evaluate their Year 2000 status. Alternate
suppliers have been identified and are in place.
The total capitalized cost of the software upgrades was approximately $0.8
million for the nine months ended September 30, 1999, and is expected to total
$1.1 million for 1999. The Company does not separately track the internal
payroll costs associated with remediating for year 2000; such costs are expensed
as incurred. The Company has utilized cash flows from operations in order to
carry out the Year 2000 plans discussed herein. Other major systems projects
have not been deferred due to the Year 2000 compliance projects.
The costs of the Company's Year 2000 conversion efforts and the dates by which
it believes these efforts will be completed are based on management's best
estimates. These were developed using many assumptions regarding future events,
including continued availability of certain resources, third-party remediation
plans and other factors. There can be no assurance that these estimates will
prove to be accurate and actual costs could differ materially from those
currently anticipated.
12
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR 2000 (CONTINUED)
The Company believes its most reasonably likely worst case scenario would
involve particular systems that are not fully or properly remediated. Until
necessary system modifications could be made, manual procedures would be
employed. Such a situation could result in additional costs and/or delays in
operating activities. The Company believes its most reasonably likely worst case
scenario with respect to third-parties would be the inability of such
third-parties to properly remediate for the year 2000 in which case manual
procedures would be employed or alternative relationships would be utilized.
The Company has developed and is in the process of implementing Year 2000
contingency plans that are designed to mitigate the impact on the Company in the
event that its Year 2000 compliance efforts are not successful. Such plans
contain alternate procedures to compensate for potential system and equipment
malfunctions including, but not limited to, use of alternate suppliers,
providing back-up power generators and use of cellular telephones at the
Company's facilities. The targeted completion date for implementation of the
Company's contingency plan is late-1999.
The Company's Year 2000 program is subject to a variety of risks and
uncertainties some of which are beyond the Company's control. Although no
assurances can be given as to the Company's compliance, particularly as it
relates to third-parties, based upon the progress to date, the Company does not
expect the consequences of any of the Company's unanticipated or unsuccessful
modifications to have a material adverse effect on its financial position or
results of operations. However, if all Year 2000 issues are not properly
identified, or assessment, remediation and testing are not completed for Year
2000 problems that are identified, there can be no assurance that the Year 2000
issue will not have a material adverse effect on the Company's relationships
with suppliers and customers. In addition, there can be no assurance that the
Year 2000 issues of other entities will not have a material adverse impact on
the Company's systems or results of operations.
EURO CONVERSION
The Company is in the process of identification, implementation and testing of
its systems to adopt the Euro currency in its operations affected by this
change. The Company expects to have its systems ready to process the Euro
conversion prior to January 1, 2002. The costs associated with the transition to
the Euro are not anticipated to be material.
13
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Form 10-Q contains forward-looking statements, including statements
regarding, among other items, (i) anticipated trends in the Company's business,
(ii) future expenditures for capital projects, (iii) the Company's ability to
continue to control costs and maintain quality, (iv) the Company's business
strategies, including its intention to introduce new products and (v) the
Company's intention to consider and pursue acquisitions. These forward-looking
statements are based partially on the Company's expectations and are subject to
a number of risks and uncertainties, certain of which are beyond the Company's
control. Actual results could differ materially from these forward-looking
statements as a result of certain factors, including, (i) changes in the
Company's end-user markets as a result of world economic or regulatory
influences, (ii) changes in the competitive marketplace, including new products
and pricing changes by the Company's competitors, or (iii) changes regarding the
effects of Year 2000 compliance and implementation of the Euro. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks and uncertainties, there can be no assurance that the
forward-looking information contained in this document will in fact transpire.
14
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TITAN INTERNATIONAL, INC.
PART II. OTHER INFORMATION
ITEM 5. OTHER MATTERS
Titan International, Inc. and Carlisle Companies Incorporated have
agreed not to extend the letter of intent providing for the merger of
Titan into Carlisle. The letter of intent expired on September 18,
1999. The initial announcement of the letter of intent was made on
August 4, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any Current Reports on Form 8-K during the
quarter ended September 30, 1999.
15
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SIGNATURE
Pursuant to the requirements 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.
TITAN INTERNATIONAL, INC.
(REGISTRANT)
DATE: November 12, 1999 BY: /s/ Kent W. Hackamack
--------------------- --------------------------------
Kent W. Hackamack
Vice President of Finance and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
16
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Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM
10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 12,827
<SECURITIES> 0
<RECEIVABLES> 110,347
<ALLOWANCES> 6,272
<INVENTORY> 138,481
<CURRENT-ASSETS> 289,693
<PP&E> 436,984
<DEPRECIATION> 148,423
<TOTAL-ASSETS> 666,611
<CURRENT-LIABILITIES> 142,417
<BONDS> 249,914
0
0
<COMMON> 27
<OTHER-SE> 234,059
<TOTAL-LIABILITY-AND-EQUITY> 666,611
<SALES> 453,638
<TOTAL-REVENUES> 453,638
<CGS> 401,022
<TOTAL-COSTS> 401,022
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,575
<INCOME-PRETAX> (8,825)
<INCOME-TAX> (3,354)
<INCOME-CONTINUING> (5,471)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,471)
<EPS-BASIC> (.26)
<EPS-DILUTED> (.26)
</TABLE>
