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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED: JUNE 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-12936
TITAN INTERNATIONAL, INC.
(Exact name of Registrant as specified in its Charter)
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
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
-------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
SHARES OUTSTANDING AT
CLASS JULY 31, 2000
----- -----------------------
COMMON STOCK, NO PAR VALUE PER SHARE 20,695,634
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TITAN INTERNATIONAL, INC.
TABLE OF CONTENTS
Page Number
-----------
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Condensed Statements of Operations
for the Three and Six Months Ended
June 30, 2000 and 1999 1
Consolidated Condensed Balance Sheets as of
June 30, 2000 and December 31, 1999 2
Consolidated Condensed Statements of Cash Flows
for the Six Months Ended June 30, 2000 and 1999 3
Notes to Consolidated Condensed Financial Statements 4-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-14
Part II. Other Information and Signature 15-16
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 145,576 $ 159,045 $ 309,903 $ 317,655
Cost of sales 135,142 137,203 278,573 275,198
--------- --------- --------- ---------
Gross profit 10,434 21,842 31,330 42,457
Selling, general & administrative expenses 11,859 13,510 23,145 26,952
Research and development expenses 1,247 1,656 2,797 3,253
--------- --------- --------- ---------
Income (loss) from operations (2,672) 6,676 5,388 12,252
Interest expense 5,628 6,074 12,191 11,624
Gain on sale (38,727) 0 (38,727) 0
Other expense (income) (16) 175 (232) (6)
--------- --------- --------- ---------
Income before income taxes 30,443 427 32,156 634
Provision for income taxes 11,568 162 12,219 241
--------- --------- --------- ---------
Net income $ 18,875 $ 265 $ 19,937 $ 393
========= ========= ========= =========
Earnings per share:
-------------------
Basic $ .91 $ .01 $ .96 $ .02
Diluted $ .91 $ .01 $ .96 $ .02
Average shares outstanding:
---------------------------
Basic 20,694 20,807 20,680 20,859
Diluted 20,694 20,807 20,680 20,859
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
1
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TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
---- ----
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 24,957 $ 8,606
Accounts receivable (net of allowance of
$5,181 and $5,863, respectively) 104,548 97,457
Inventories 141,097 133,365
Prepaid and other current assets 31,896 39,650
--------- ---------
Total current assets 302,498 279,078
Property, plant and equipment, net 235,475 267,049
Other assets 52,557 51,927
Goodwill, net 18,570 39,127
--------- ---------
Total assets $ 609,100 $ 637,181
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 5,391 $ 20,195
Accounts payable 56,885 51,363
Other current liabilities 44,555 36,737
--------- ---------
Total current liabilities 106,831 108,295
Deferred income taxes 28,090 28,421
Other long-term liabilities 15,468 16,078
Long-term debt 213,211 255,521
--------- ---------
Total liabilities 363,600 408,315
--------- ---------
Stockholders' equity
Common stock, no par, 60,000,000 shares authorized,
27,555,081 issued 27 27
Additional paid-in capital 214,187 214,846
Retained earnings 135,439 116,123
Accumulated other comprehensive loss (10,223) (7,329)
Treasury stock at cost: 6,916,452 and 6,939,101 shares,
respectively (93,930) (94,801)
--------- ---------
Total stockholders' equity 245,500 228,866
--------- ---------
Total liabilities and stockholders' equity $ 609,100 $ 637,181
========= =========
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
2
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TITAN INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,937 $ 393
Depreciation and amortization 18,803 19,572
Gain on sale of assets (38,727) 0
Increase in receivables (9,452) (15,578)
(Increase)/decrease in inventories (17,436) 11,575
Decrease in other current assets 7,754 2,795
Increase/(decrease) in accounts payable 7,008 (12,494)
Increase in other accrued liabilities 7,434 777
Other, net (1,171) (1,741)
-------- --------
Net cash provided by/(used for) operating activities (5,850) 5,299
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (13,727) (19,413)
Fixed assets through like-kind exchange (354) 0
Proceeds from sale of assets 94,063 0
Other 0 (3,155)
-------- --------
Net cash provided by/(used for) investing activities 79,982 (22,568)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 0 26,434
Payment of debt (56,980) (438)
Repurchase of common stock (449) (2,966)
Dividends paid (619) (627)
Other, net 661 495
-------- --------
Net cash provided by/(used for) financing activities (57,387) 22,898
Effect of exchange rate changes on cash (394) (656)
Net increase in cash and cash equivalents 16,351 4,973
Cash and cash equivalents at beginning of period 8,606 14,116
-------- --------
Cash and cash equivalents at end of period $ 24,957 $ 19,089
======== ========
</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 June 30, 2000,
the results of operations for the three and six months ended June 30,
2000 and 1999, and cash flows for the six months ended June 30, 2000
and 1999.
Accounting policies have continued without change and are described in
the Summary of Significant Accounting Policies contained in the
Company's 1999 Annual Report on Form 10-K. These interim financial
statements have been prepared pursuant to the Securities and Exchange
Commission's rules for Form 10-Qs and are not a presentation in
accordance with generally accepted accounting principles. 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, 1999, filed in conjunction with the
Company's 1999 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,
2000 1999
---- ----
<S> <C> <C>
Raw materials $ 40,468 $ 35,333
Work-in-process 14,840 18,810
Finished goods 81,648 73,564
-------- --------
136,956 127,707
LIFO reserve 4,141 5,658
-------- --------
$141,097 $133,365
======== ========
</TABLE>
C. FIXED ASSETS
Property, plant and equipment, net reflects accumulated depreciation of
$145.3 million and $155.9 million at June 30, 2000, and December 31,
1999, respectively.
4
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TITAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
D. GOODWILL
Goodwill, net reflects accumulated amortization of $4.3 million and
$7.3 million at June 30, 2000, and December 31, 1999, respectively.
E. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---- ----
<S> <C> <C>
Senior subordinated notes $ 150,000 $ 150,000
Credit facility 45,000 82,000
Notes payable to Pirelli Armstrong Tire Corp. 10,000 29,743
Industrial revenue bonds and other 13,602 13,973
--------- ----------
218,602 275,716
Less: Amounts due within one year 5,391 20,195
--------- ----------
$ 213,211 $ 255,521
========= ==========
</TABLE>
Aggregate maturities of long-term debt at June 30, 2000 are as follows
(in thousands):
<TABLE>
<S> <C>
July 1 - December 31, 2000 $ 202
2001 5,386
2002 45,398
2003 6,350
2004 424
</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
from operations used by the chief operating decision maker of the
Company for the three and six months ended June 30, 2000 and 1999 (in
thousands):
<TABLE>
<CAPTION>
Revenues
Three months ended from external Intersegment Income from
June 30, 2000 customers revenues operations
------------- --------- -------- ----------
<S> <C> <C> <C>
Agricultural $ 79,528 $ 36,975 $ 4,780
Earthmoving/construction 43,667 15,731 2,605
Consumer 22,381 26,427 (1,497)
Reconciling items (a) 0 0 (8,560)
--------- -------- ---------
Consolidated totals $ 145,576 $ 79,133 $ (2,672)
========= ======== =========
<CAPTION>
Three months ended
June 30, 1999
-------------
<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
========= ======== =========
</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
Six months ended from external Intersegment Income from
June 30, 2000 customers revenues operations
---------------- --------- -------- ----------
<S> <C> <C> <C>
Agricultural $ 151,668 $ 72,138 $ 11,315
Earthmoving/construction 84,873 29,508 7,232
Consumer 73,362 52,991 2,370
Reconciling items (a) 0 0 (15,529)
--------- --------- ---------
Consolidated totals $ 309,903 $ 154,637 $ 5,388
========= ========= =========
<CAPTION>
Six months ended
June 30, 1999
----------------
<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
========= ========= =========
</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)
F. SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
June 30, June 30,
Total assets(a) 2000 1999
------------ ---- ----
<S> <C> <C>
Agricultural $245,326 $275,934
Earthmoving/construction 158,462 170,722
Consumer 128,287 145,167
Reconciling items (b) 77,025 87,127
--------- ---------
Consolidated totals $ 609,100 $ 678,950
========= =========
</TABLE>
(a) Total assets decreased as a result of the sale of assets.
(b) Represents property, plant and equipment and goodwill related to
certain acquisitions and other corporate assets.
G. COMPREHENSIVE INCOME
Comprehensive income, which includes net income and the effect of
currency translation, totaled $18.1 million for the second quarter of
2000, compared to $(1.3) million in the second quarter of 1999.
Comprehensive income for the six months ended June 30, 2000 was $17.0
million, compared to $(5.3) million in 1999.
H. NEW ACCOUNTING STANDARD
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133), will be
adopted on January 1, 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.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
I. SALE OF ASSETS
On April 14, 2000, the Company sold certain assets (primarily raw
material inventory, work-in-process inventory, and property, plant and
equipment) of two facilities located in Clinton, Tennessee, and
Slinger, Wisconsin, to Carlisle Tire and Wheel Company, a subsidiary of
Carlisle Companies Incorporated for approximately $94.1 million in
cash. The Company recorded a pretax gain of $38.7 million in the second
quarter of 2000. This nonrecurring gain has not been included in the
pro forma amounts described below. These two facilities are in the
business of providing wheels and tires to the consumer market.
Had the transaction occurred on January 1, 1999, net sales for the
three and six months ended June 30, 2000, would have been $138.8 and
$279.3 million respectively, compared to $136.2 and $272.3 million in
1999. Income (loss) from operations for the three and six months ended
June 30, 2000, would have been $(3.2) and $0.7 million respectively,
compared to $3.3 and $5.0 million in 1999. Net loss for the three and
six months ended June 30, 2000, would have been $(4.8) and $(5.8)
million respectively, compared to $(1.2) and $(2.8) million in 1999.
Loss per share for the three and six months ended June 30, 2000, would
have been $(.23) and $(.28) respectively, compared to $(.06) and (.14)
in 1999.
9
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RECENT DEVELOPMENTS
On April 14, 2000, the Company sold certain assets (primarily raw material
inventory, work-in-process inventory, and property, plant and equipment) of two
facilities located in Clinton, Tennessee, and Slinger, Wisconsin, to Carlisle
Tire and Wheel Company, a subsidiary of Carlisle Companies Incorporated for
approximately $94.1 million in cash. The Company recorded a pretax gain of $38.7
million in the second quarter of 2000. These two facilities are in the business
of providing wheels and tires to the consumer market. With this transaction,
Titan has exited the original equipment manufacturer ("OEM") business for lawn
and garden equipment and all terrain vehicles ("ATVs"), concentrating instead on
the agricultural and earthmoving/construction businesses for both LSW and
conventional wheel and tire assemblies to OEMs and the aftermarket.
Had the transaction occurred on January 1, 1999, net sales for the three and six
months ended June 30, 2000, would have been $138.8 and $279.3 million
respectively, compared to $136.2 and $272.3 million in 1999. Income (loss) from
operations for the three and six months ended June 30, 2000, would have been
$(3.2) and $0.7 million respectively, compared to $3.3 and $5.0 million in 1999.
Net loss for the three and six months ended June 30, 2000, would have been
$(4.8) and $(5.8) million respectively, compared to $(1.2) and $(2.8) million in
1999. Loss per share for the three and six months ended June 30, 2000, would
have been $(.23) and $(.28) respectively, compared to $(.06) and (.14) in 1999.
RESULTS OF OPERATIONS
Net sales for the quarter ended June 30, 2000, were $145.6 million, as compared
to 1999 second quarter net sales of $159.0 million. Net sales for the six months
ended June 30, 2000, were $309.9 million, compared to 1999 net sales of $317.7
million. Net sales decreased primarily due to the transaction described above.
Cost of sales was $135.1 and $278.6 million for the second quarter of 2000 and
for the six months ended June 30, 2000, as compared to $137.2 and $275.2 million
in 1999. Gross profit for the second quarter of 2000 was $10.4 million or 7.2%
of net sales, compared to $21.8 million or 13.7% of net sales for the second
quarter of 1999. Gross profit for the six months ended June 30, 2000, was $31.3
million or 10.1% of net sales, compared to $42.5 million or 13.4% of net sales
for 1999. Gross profit, as a percentage of sales, was negatively impacted by the
sale of assets.
10
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Selling, general and administrative ("SG&A") expenses for the second quarter of
2000 were $11.9 million or 8.1% of net sales, compared to $13.5 million or 8.5%
of net sales for 1999. SG&A expenses for the six months ended June 30, 2000 were
$23.1 million or 7.5% of net sales, compared to $27.0 or 8.5% of net sales in
1999. The decrease in SG&A expenses, as a percentage of net sales, is primarily
attributed to the Company's efforts to streamline costs at each of its
facilities. Research and development ("R&D") expenses for the second quarter of
2000 were $1.2 million, compared to $1.7 million in 1999. R&D expenses for the
six months ended June 30, 2000 were $2.8 million, compared to $3.3 million in
1999.
Loss from operations for the second quarter of 2000 was $(2.7) million or 1.8%
of net sales, compared to income from operations of $6.7 million or 4.2% in
1999. Income from operations for the six months ended June 30, 2000 was $5.4
million or 1.7% of net sales, compared to $12.3 million or 3.9% in 1999.
Operating results were impacted by the items described in the preceding
paragraphs.
Net sales in the agricultural market were $79.5 and $151.7 million for the
second quarter of 2000 and for the six months ended June 30, 2000 respectively,
as compared to $66.7 and $142.3 million in 1999. Earthmoving/construction market
net sales were $43.7 and $84.9 million for the second quarter of 2000 and for
the six months ended June 30, 2000 respectively, as compared to $43.6 and $82.1
million in 1999. The Company's consumer market net sales were $22.4 and $73.4
million for the second quarter of 2000 and for the six months ended June 30,
2000 respectively, as compared to $48.8 and $93.3 million in 1999. Sales in the
agricultural and earthmoving/construction market were positively impacted by
strong demand for smaller diameter tires and wheels, which has been partially
offset by a decrease in demand for large diameter tires and wheels. Sales in the
consumer market decreased primarily due to the Company exiting the OEM business
for lawn and garden equipment and ATVs, focusing instead on the aftermarket
business.
Income from operations in the agricultural market was $4.8 and $11.3 million for
the second quarter of 2000 and for the six months ended June 30, 2000
respectively, as compared to $5.0 and $9.5 million in 1999. The Company's
earthmoving/construction market income from operations was $2.6 and $7.2 million
for the second quarter of 2000 and for the six months ended June 30, 2000
respectively, as compared to $5.5 and $10.4 million in 1999. Loss from
operations for the second quarter of 2000 in the consumer market was $(1.5)
million, as compared to income from operations of $2.1 million in 1999. Income
from operations in the consumer market was $2.4 million for the six months ended
June 30, 2000, as compared to $4.3 million in 1999.
11
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
The increase in income from operations in the agricultural market for the six
months ended June 30, 2000, was primarily attributed to improved efficiencies
due to increased sales volume. The decrease in income from operations in the
earthmoving/ construction market is primarily due to a change in product mix
from larger to smaller diameter wheels and tires, which tend to receive lower
margins. The decrease in income from operations in the consumer market is
primarily due to the Company exiting the OEM business for lawn and garden
equipment and ATVs. 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
$8.6 and $15.5 million for the second quarter of 2000 and for the six months
ended June 30, 2000, respectively, as compared to $6.0 and $11.9 million in
1999.
Net interest expense was $5.6 and $12.2 million for the second quarter of 2000
and for the six months ended June 30, 2000 respectively, compared to $6.1 and
$11.6 million in 1999. The decreased interest expense for the second quarter of
2000 was primarily due to a decrease in the average debt outstanding.
Net income for the second quarter of 2000 and for the six months ended June 30,
2000 was $18.9 and $19.9 million respectively, compared to $0.3 and $0.4 million
in 1999. Basic and diluted earnings per share were $.91 and $.96 for the second
quarter of 2000 and for the six months ended June 30, 2000 respectively,
compared to $.01 and $.02 in 1999. Net income and earnings per share increased
primarily due to the sale of assets as described above.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 2000, negative cash flows from operating
activities of $5.9 million resulted from a loss from operations and increases in
receivables and inventories. These amounts were partially offset by increases in
accounts payable and other accrued liabilities and a decrease in other current
assets. The increase in receivables is primarily due to the Company's policy of
extending payment terms offered to certain customers during the first quarter of
2000. The Company has built inventory to meet expected production and sales
demand in the next six months which has also resulted in increased accounts
payable. The change in other current assets and other current liabilities is
primarily due to the impact of income taxes owed as a result of the sale of
assets.
The Company has invested $13.7 million in capital expenditures in 2000,
including $5.5 million for equipment and construction related to the
Brownsville, Texas facility. The balance represents various equipment purchases
and building improvements to enhance production capabilities.
12
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
During the second quarter of 2000, the Company received proceeds from the sale
of assets of $94.1 million. With the sale of assets Titan was able to reduce its
total debt to $218.6 million at June 30, 2000 from $303.7 million at March 31,
2000 ($275.7 million at December 31, 1999.)
In February 2000, the Company paid the subordinated note for $19.7 million to
Pirelli Armstrong Tire Corporation.
At June 30, 2000, the Company had cash and cash equivalents of $25.0 million.
Cash on hand, anticipated internal cash flows and utilization of remaining
available borrowing, which totals $130 million under the Company's credit
facility are expected to provide sufficient liquidity for working capital needs,
capital expenditures and acquisitions for the foreseeable future.
OUTLOOK
As indicated previously, Titan has exited the OEM business for lawn and garden
equipment and ATVs, concentrating instead on the agricultural and
earthmoving/construction businesses for both LSW and conventional wheel and tire
assemblies to OEMs and the aftermarket. Titan has made the decision to market
the LSW technology directly to equipment dealers in an effort to increase sales
and more effectively demonstrate the performance, safety and productivity
features of the LSW. The Company's national sales force has been actively
introducing this program during the second quarter of 2000, and gaining the
hands-on knowledge that will allow Titan to further enhance wheels and tires for
ultimate equipment performance. The introduction of the LSW assemblies and this
aggressive program is expected to drive aftermarket demand and should increase
original equipment margins in the future. Overall, business is stronger than
expected with the wheel facilities operating at increased volumes and the tire
facilities showing monthly production increases.
MARKET RISK SENSITIVE INSTRUMENTS
The Company's risks related to foreign currencies, commodity prices and interest
rates are consistent with those for 1999.
13
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TITAN INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NEW ACCOUNTING STANDARD
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133), will be adopted on January 1,
2001. The Company is evaluating the effect SFAS 133 will have on its financial
position 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 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
ITEMS 1 THROUGH 3 ARE NOT APPLICABLE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on May 18, 2000,
for the purpose of electing two directors to serve for three-year
terms, approving the appointment of independent auditors and voting on
the stockholder proposal regarding annual election of all directors.
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>
Erwin H. Billig 18,493,500 1,303,415
Anthony L. Soave 14,556,994 5,239,921
</TABLE>
The appointment of PricewaterhouseCoopers LLP as independent auditors
was approved by the following vote:
<TABLE>
<CAPTION>
Shares Shares Shares
Voted For Against Abstaining
--------- ------- ----------
<S> <C> <C>
19,775,356 8,408 13,151
</TABLE>
The stockholder proposal regarding annual election of all directors was
not approved by the following vote:
<TABLE>
<CAPTION>
Shares Shares Shares Broker
Voted For Against Abstaining Non-Votes
--------- ------- ---------- ---------
<S> <C> <C> <C>
7,732,516 10,238,459 62,341 1,763,599
</TABLE>
15
<PAGE> 18
TITAN INTERNATIONAL, INC.
PART II. OTHER INFORMATION
ITEM 5 IS NOT APPLICABLE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
In a Current Report filed on Form 8-K dated April 14, 2000 the
Company reported the sale of certain assets (primarily raw
material inventory, work-in-process inventory, and property,
plant and equipment) of two facilities located in Clinton,
Tennessee, and Slinger, Wisconsin, to Carlisle Tire and Wheel
Company, a subsidiary of Carlisle Companies Incorporated.
<PAGE> 19
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 11, 2000 BY: /s/ Kent W. Hackamack
------------------ ---------------------------------
Kent W. Hackamack
Vice President of Finance and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
16
<PAGE> 20
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
