<PAGE> 1
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: JUNE 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 JULY 31, 1999
----- -------------
COMMON STOCK, NO PAR VALUE PER SHARE 20,646,555
<PAGE> 2
TITAN INTERNATIONAL, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Balance Sheets as of
June 30, 1999 and December 31, 1998 1
Consolidated Condensed Statements of Operations
for the Three and Six Months Ended
June 30, 1999 and 1998 2
Consolidated Condensed Statements of Cash Flows
for the Six Months Ended June 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 9-13
Part II. Other Information and Signature 14-16
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands, except share data)
<TABLE>
JUNE 30, DECEMBER 31,
1999 1998
---- ----
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 19,089 $ 14,116
Accounts receivable (net of allowance of
$6,197 and $6,200, respectively) 120,054 108,194
Inventories 140,598 154,045
Prepaid and other current assets 33,622 35,840
-------- --------
Total current assets 313,363 312,195
Property, plant and equipment, net 284,428 284,407
Other assets 41,574 40,896
Goodwill, net 39,585 40,776
-------- --------
Total assets $678,950 $678,274
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 31,495 $ 7,902
Accounts payable 51,213 66,522
Other current liabilities 67,178 67,306
-------- --------
Total current liabilities 149,886 141,730
Deferred income taxes 23,073 23,396
Other long-term liabilities 17,345 18,527
Long-term debt 249,987 247,584
-------- --------
Total liabilities 440,291 431,237
-------- --------
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 128,460 128,801
Accumulated other comprehensive income (9,953) (4,294)
Treasury stock at cost: 6,919,705 and 6,591,484 shares,
respectively (95,018) (92,304)
-------- --------
Total stockholders' equity 238,659 247,037
-------- --------
Total liabilities and stockholders' equity $678,950 $678,274
======== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
1
<PAGE> 4
TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands, except earnings per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $159,045 $181,216 $317,655 $368,644
Cost of sales 137,203 153,988 275,198 308,920
-------- -------- -------- --------
Gross profit 21,842 27,228 42,457 59,724
Selling, general & administrative expenses 13,510 13,601 26,952 26,307
Research and development expenses 1,656 1,738 3,253 3,966
---------- -------- -------- --------
Income from operations 6,676 11,889 12,252 29,451
Interest expense 6,074 4,580 11,624 8,719
Other expense (income) 175 (382) (6) (349)
-------- ------- -------- --------
Income before income taxes 427 7,691 634 21,081
Provision for income taxes 162 2,923 241 8,011
-------- -------- -------- --------
Net income $ 265 $ 4,768 $ 393 $ 13,070
======== ======== ======== ========
Earnings per share:
Basic $.01 $.22 $.02 $.60
Diluted $.01 $.22 $.02 $.60
Average shares outstanding:
Basic 20,807 21,729 20,859 21,702
Diluted 20,807 21,940 20,859 21,922
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
2
<PAGE> 5
TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 393 $ 13,070
Depreciation and amortization 19,572 16,592
Increase in receivables (15,578) (10,995)
(Increase)/decrease in inventories 11,575 (11,681)
(Increase)/decrease in other current assets 2,795 (14,427)
Decrease in accounts payable (12,494) (1,673)
Increase in other accrued liabilities 777 7,634
Other, net (1,741) (638)
------- --------
Net cash provided by/(used for) operating activities 5,299 (2,118)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (19,413) (14,776)
Acquisitions, net of cash acquired 0 (1,909)
Other (3,155) (7,143)
------- --------
Net cash used for investing activities (22,568) (23,828)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 26,434 25,231
Payment of debt (438) (742)
Repurchase of common stock (2,966) 0
Dividends paid (627) (651)
Other, net 495 964
------- --------
Net cash provided by financing activities 22,898 24,802
Effect of exchange rate changes on cash (656) 0
Net increase/(decrease) in cash and cash equivalents 4,973 (1,144)
Cash and cash equivalents at beginning of period 14,116 21,207
------- --------
Cash and cash equivalents at end of period $19,089 $ 20,063
======= ========
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
3
<PAGE> 6
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 June 30, 1999,
the results of operations for the three and six months ended June 30,
1999 and 1998, and cash flows for the six months ended June 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>
June 30, December 31,
1999 1998
---- ----
<S> <C> <C>
Raw materials $ 40,987 $ 49,970
Work-in-process 15,913 17,831
Finished goods 78,140 82,579
-------- --------
135,040 150,380
LIFO reserve 5,558 3,665
-------- --------
$140,598 $154,045
======== ========
</TABLE>
C. FIXED ASSETS
Property, plant and equipment, net reflects accumulated depreciation of
$137.7 million and $124.2 million at June 30, 1999, and December 31,
1998, respectively.
4
<PAGE> 7
TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
D. GOODWILL
Goodwill, net reflects accumulated amortization of $6.4 million
and $5.8 million at June 30, 1999, and December 31, 1998, respectively.
E. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 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 26,739 20,743
--------- ---------
281,482 255,486
Less: Amounts due within one year 31,495 7,902
-------- ---------
$ 249,987 $ 247,584
========= =========
</TABLE>
Aggregate maturities of long-term debt at June 30, 1999 are as follows
(in thousands):
<TABLE>
<CAPTION>
<S> <C>
July 1 - December 31, 1999 $ 7,865
2000 23,971
2001 6,513
2002 424
2003 and thereafter 242,709
---------
$ 281,482
=========
</TABLE>
5
<PAGE> 8
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 six months ended June 30, 1999 and 1998
(in thousands):
<TABLE>
<CAPTION>
Revenues Income (loss)
Three months ended from external Intersegment from
June 30, 1999 customers revenues operations
------------- --------- -------- ----------
<S> <C> <C> <C>
Agricultural $ 66,683 $ 21,982 $ 5,011
Earthmoving/construction 43,600 11,849 5,496
Consumer 48,762 13,614 2,147
Reconciling items (a) 0 0 (5,978)
--------- -------- --------
Consolidated totals $ 159,045 $ 47,445 $ 6,676
========= ======== ========
<CAPTION>
Three months ended
June 30, 1998
-------------
<S> <C> <C> <C>
Agricultural $ 91,945 $ 26,403 $ 9,679
Earthmoving/construction 46,622 10,072 7,326
Consumer 42,649 11,751 1,745
Reconciling items (a) 0 0 (6,861)
--------- -------- --------
Consolidated totals $ 181,216 $ 48,226 $ 11,889
========= ======== ========
</TABLE>
(a) Represents corporate expenses and depreciation and amortization expense
related to property, plant and equipment and goodwill carried at the
corporate level.
6
<PAGE> 9
TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
F. SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Revenues Income (loss)
Six months ended from external Intersegment from
June 30, 1999 customers revenues operations
------------- --------- -------- ----------
<S> <C> <C> <C>
Agricultural $ 142,259 $ 48,602 $ 9,491
Earthmoving/construction 82,144 21,471 10,386
Consumer 93,252 25,817 4,318
Reconciling items (a) 0 0 (11,943)
--------- --------- --------
Consolidated totals $ 317,655 $ 95,890 $ 12,252
========= ========= ========
<CAPTION>
Six months ended
June 30, 1998
-------------
<S> <C> <C> <C>
Agricultural $ 190,054 $ 56,157 $ 23,747
Earthmoving/construction 94,621 22,012 15,407
Consumer 83,969 24,617 4,148
Reconciling items (a) 0 0 (13,851)
--------- --------- --------
Consolidated totals $ 368,644 $ 102,786 $ 29,451
========= ========= ========
</TABLE>
(a) Represents corporate expenses and depreciation and amortization expense
related to property, plant and equipment and goodwill carried at the
corporate level.
7
<PAGE> 10
TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
G. COMPREHENSIVE INCOME
Comprehensive income, which includes net income and the effect of
currency translation, was $(1.3) million for the second quarter of
1999, compared to $4.5 million in 1998. Comprehensive income for the
six months ended June 30, 1999 was $(5.3) million, compared to $12.3
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 six
months ended June 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
<PAGE> 11
TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales for the quarter ended June 30, 1999, were $159.0 million compared to
1998 second quarter net sales of $181.2 million. Net sales for the six months
ended June 30, 1999, were $317.7 million, compared to 1998 net sales of $368.6
million. During the quarter, the Company continued to experience a labor strike
at its Des Moines, Iowa tire facility, the largest of the Company's tire
operations. As a result, production volumes decreased which caused decreases in
net sales and operating results, as discussed below. Net sales also decreased
due to a decline in the U.S. agricultural equipment sales, which has contributed
to shutdowns of certain facilities at several of Titan's largest customers.
Net sales in the agricultural market were $66.7 and $142.3 million for the
second quarter of 1999 and for the six months ended June 30, 1999 respectively,
as compared to $91.9 and $190.1 million in 1998. Earthmoving/construction market
net sales were $43.6 and $82.1 million for the second quarter of 1999 and for
the six months ended June 30, 1999 respectively, as compared to $46.6 and $94.6
million in 1998. The Company's consumer market net sales were $48.8 and $93.3
million for the second quarter of 1999 and for the six months ended June 30,
1999, as compared to $42.6 and $84.0 million in 1998. Net sales in all markets
were negatively impacted by a labor strike at the Des Moines, Iowa facility and
the shutdowns of certain facilities at several of Titan's largest customers.
Cost of sales was $137.2 and $275.2 million for the second quarter of 1999 and
for the six months ended June 30, 1999, as compared to $154.0 and $308.9 million
in 1998. Gross profit for the second quarter of 1999 was $21.8 million or 13.7%
of net sales, compared to $27.2 million or 15.0% of net sales for the second
quarter of 1998. Gross profit for the six months ended June 30, 1999 was $42.5
million or 13.4% of net sales, compared to $59.7 million or 16.2% of net sales
for 1998. Gross profit for the second quarter of 1999 and for the six months
ended June 30, 1999, was negatively impacted by inefficiencies caused by labor
issues at the Des Moines, Iowa facility and extended shutdowns of certain
facilities at several of Titan's largest customers.
Selling, general and administrative ("SG&A") expenses for the second quarter of
1999 were $13.5 million or 8.5% of net sales, compared to $13.6 million or 7.5%
in 1998. SG&A expenses for the six months ended June 30, 1999 were $27.0 million
or 8.5% of net sales, compared to $26.3 million or 7.1% in 1998. The rise in
SG&A expenses, as a percentage of sales, is primarily attributed to the decrease
in sales volume as discussed above. Research and development ("R&D") expenses
for the second quarter of 1999 were $1.7 million or 1.1% of net sales, compared
to $1.7 million or 0.9% in 1998. R&D expenses for the six months ended June 30,
1999 were $3.3 million or 1.0% of net sales, compared to $4.0 million or 1.1% in
1998.
9
<PAGE> 12
TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Income from operations for the second quarter of 1999 was $6.7 million or 4.2%
of net sales, compared to $11.9 million or 6.6% in 1998. Income from operations
for the six months ended June 30, 1999 was $12.3 million or 3.9% of net sales,
compared to $29.5 million or 8.0% in 1998. Income from operations was impacted
by the items described in the preceding paragraphs.
Income from operations in the agricultural market was $5.0 and $9.5 million for
the second quarter of 1999 and for the six months ended June 30, 1999
respectively, as compared to $9.7 and $23.7 million in 1998. The company's
earthmoving/construction market income from operations was $5.5 and $10.4
million for the second quarter of 1999 and for the six months ended June 30,
1999 respectively, as compared to $7.3 and $15.4 million in 1998. Consumer
market income from operations was $2.1 and $4.3 million for the second quarter
of 1999 and for the six months ended June 30, 1999 respectively, as compared to
$1.7 and $4.1 million in 1998. The decrease in income from operations in the
agricultural and earthmoving/construction markets was primarily due to the labor
strike at the Des Moines, Iowa facility. Income from operations has also
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 $6.0 and $11.9
million for the second quarter of 1999 and for the six months ended June 30,
1999, respectively, as compared to $6.9 and $13.9 million in 1998.
Interest expense was $6.1 and $11.6 million for the second quarter of 1999 and
for the six months ended June 30, 1999 respectively, compared to $4.6 and $8.7
million in 1998. The increased interest expense was primarily due to an increase
in the average debt outstanding during the second quarter of 1999 and for the
six months ended June 30, 1999.
Net income for the second quarter of 1999 and for the six months ended June 30,
1999 was $0.3 and $0.4 million respectively, compared to $4.8 and $13.1 million
in 1998. Basic and diluted earnings per share were $.01 and $.02 for the second
quarter of 1999 and for the six months ended June 30, 1999 respectively,
compared to $.22 and $.60 in 1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities of $5.3 million for the six months ended
June 30, 1999 were attributed to net income, and decreases in inventories and
other current assets. These amounts were partially offset by an increase in
receivables and a decrease in accounts payable. The increase in receivables is
primarily due to extended payment terms offered to certain customers during the
first quarter of 1999. The decreases in inventories and accounts payable is
primarily due to lower production levels during the six months ended June 30,
1999.
10
<PAGE> 13
TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company has invested $19.4 million in capital expenditures in 1999,
including $4.6 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 six months ended June 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 six months ended June 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 June 30, 1999, the Company had cash and cash equivalents of $19.1 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.
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 95 percent complete and is estimated to
be complete by September 1999. 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 October 1999. Remediation of IT and non-IT systems is 90 percent complete and
is estimated to be complete by November 1999. Testing is performed as
noncompliant systems are remediated and will continue through year 2000.
11
<PAGE> 14
TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR 2000 (CONTINUED)
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 $0.2
million for the six months ended June 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.
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.
12
<PAGE> 15
TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
YEAR 2000 (CONTINUED)
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 affect 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 during the transition period from January 1, 1999 through January 1,
2002. The costs associated with the transition to the Euro are not anticipated
to be material.
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.
13
<PAGE> 16
TITAN INTERNATIONAL, INC.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on May 20,
1999, for the purpose of electing three directors to serve for
three year terms and approving the appointment of independent
auditors.
All of management's nominees for directors as listed in the
proxy statement were elected with the following vote:
<TABLE>
<CAPTION>
Shares Shares
Voted For Withheld
--------- --------
<S> <C> <C>
Richard M. Cashin, Jr. 17,329,548 1,839,296
Albert J. Febbo 19,101,660 67,184
Mitchell I. Quain 19,101,772 67,072
</TABLE>
The appointment of PricewaterhouseCoopers LLP as independent
auditors was approved by the following vote:
<TABLE>
<CAPTION>
Shares Shares Shares
Voted For Against Withheld
--------- ------- --------
<S> <C> <C>
19,156,184 7,432 5,228
</TABLE>
14
<PAGE> 17
TITAN INTERNATIONAL, INC.
PART II. OTHER INFORMATION
ITEM 5. OTHER MATTERS
On August 4, 1999, Carlisle Companies Incorporated and Titan
International Inc. jointly announced that the two companies
have entered into a letter of intent providing for the merger
of Titan into Carlisle Companies in a transaction valued at
approximately $600 million including the assumption of debt.
Upon consummation of the merger, each share of Titan's common
stock issued and outstanding immediately prior to the merger
will be converted into the right to receive the fraction of
one share of Carlisle's common stock equal to the quotient
obtained by dividing (i) $17 by (ii) the average of the
closing price per share of Carlisle's common stock on the New
York Stock Exchange on each of the 15 consecutive trading days
immediately preceding the second trading day prior to the
actual date of the special meeting of Carlisle's stockholders
with respect to the transactions contemplated by the merger,
subject to a maximum and minimum exchange ration of .3652 and
.3242, respectively. The letter of intent has been approved by
the Board of Directors of Titan.
In connection with the execution of the letter of intent,
certain of Titan's stockholders, holding in the aggregate
approximately 37% of Titan's outstanding common stock, have
entered into voting agreements with Carlisle pursuant to which
such stockholders have agreed to vote their shares of Titan's
common stock in favor of the proposed merger.
The proposed merger is conditioned upon execution and delivery
of a definitive merger agreement, completion of due diligence,
approval of the Boards of Directors and the stockholders of
both Carlisle and Titan of the proposed merger and the
definitive merger agreement, procurement of applicable
regulatory approval, the proposed merger qualifying as a
"pooling-of-interest" transaction, and other customary
conditions to closing and may be terminated under certain
circumstances. Titan has agreed not to solicit competing
offers for a period of 45 days and to pay a termination fee of
$20,000,000 under certain circumstances.
15
<PAGE> 18
TITAN INTERNATIONAL, INC.
PART II. OTHER INFORMATION
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 June 30, 1999.
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: August 13, 1999 BY: /s/ Kent W. Hackamack
------------------------ -------------------------
Kent W. Hackamack
Vice President of Finance and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
16
<PAGE> 19
INDEX TO EXHIBITS
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 JUNE 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 19,089
<SECURITIES> 0
<RECEIVABLES> 126,251
<ALLOWANCES> 6,197
<INVENTORY> 140,598
<CURRENT-ASSETS> 313,363
<PP&E> 422,145
<DEPRECIATION> 137,717
<TOTAL-ASSETS> 678,950
<CURRENT-LIABILITIES> 149,886
<BONDS> 249,987
0
0
<COMMON> 27
<OTHER-SE> 238,632
<TOTAL-LIABILITY-AND-EQUITY> 678,950
<SALES> 317,655
<TOTAL-REVENUES> 317,655
<CGS> 275,198
<TOTAL-COSTS> 275,198
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,624
<INCOME-PRETAX> 634
<INCOME-TAX> 241
<INCOME-CONTINUING> 393
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 393
<EPS-BASIC> .02
<EPS-DILUTED> .02
</TABLE>
