Delaware (State or Other Jurisdiction of Incorporation or Organization) | No. 45-0357838 (IRS Employer Identification No.) |
Large accelerated filer o | Accelerated filer x | |||
Non-accelerated filer o | Smaller reporting company o | |||
Emerging Growth Company o |
Page No. | ||
• | new and used equipment sales; |
• | parts sales; |
• | equipment repair and maintenance services; and |
• | equipment rental and other activities. |
• | our ability to staff a large number of highly-trained service technicians across our network of stores, which makes it possible to schedule repair services on short notice without affecting our technician utilization rates; |
• | our ability to staff and leverage product and application specialists across our network of stores, which makes it possible to offer valuable pre-sale and aftermarket services, including equipment training, best practices education and precision farming technology support; and |
• | our ability to innovate and lead our industry through initiatives such as precision farming and farm data management products and services, which provide our customers with the latest advances in technology and operating practices. |
• | employing significant marketing and advertising programs, including targeted direct mailings, internet based marketing, advertising with targeted local media outlets, participation in and sponsorship of trade shows and industry events, our Titan Trader monthly magazine, and by hosting open houses, service clinics, equipment demonstrations, product showcases and customer appreciation outings; |
• | supporting and providing customers with training on evolving technologies, such as precision farming and farm data management, which are difficult for small dealers to support; |
• | maintaining state-of-the-art service facilities, mobile service trucks and trained service technicians to maximize our customers' equipment uptime through preventative maintenance programs and seasonal 24/7 service support; and |
• | centrally managing our inventory to optimize the availability of equipment and parts for our customers. |
• | our sales employees, who operate out of our network of local stores and call on customers in the markets surrounding each store; |
• | our area product support managers, and our store parts managers and service managers, who provide our customers with comprehensive after-market support; |
• | our website; |
• | local and regional advertising efforts, including broadcast, cable, print and web-based media; and |
• | alternative channels, such as auctions, for selling our aged equipment inventories. |
• | Floorplan payable financing for the purchase of a substantial portion of our equipment inventory; |
• | A significant percentage of the financing used by our customers to purchase CNH Industrial equipment from us; |
• | Reimbursement for warranty work performed by us pursuant to CNH’s product warranties; |
• | Incentive programs and discount programs from time to time that enable us to price our products more competitively; and |
• | Promotional and marketing activities on national, regional and local levels. |
• | difficulties in implementing our business model in foreign markets; |
• | costs and diversion of domestic management attention related to oversight of international operations; |
• | unexpected adverse changes in export duties, quotas and tariffs and difficulties in obtaining import licenses; |
• | cyclicality of demand in European Union member states for agricultural equipment, based on availability of European Union government subsidy programs and tax incentives; |
• | unexpected adverse changes in foreign laws or regulatory requirements; |
• | compliance with a variety of tax regulations, foreign laws and regulations; |
• | compliance with the Foreign Corrupt Practices Act and other U.S. laws that apply to the international operations of U.S. companies which may be difficult and costly to implement and monitor, can create competitive disadvantages if our competitors are not subject to such laws, and which, if violated, may result in substantial financial and reputational harm; |
• | fluctuations in foreign currency exchange rates to which we are exposed may adversely affect the results of our operations, the value of our foreign assets and liabilities and our cash flows; |
• | the laws of the European countries in which we operate, unlike U.S. states, do not include specific dealer protection laws and, therefore, we may be more susceptible to actions of suppliers that are adverse to our interests such as termination of our dealer agreements for any reason or installing additional dealers in our designated territories; and |
• | geo-political or economic instability. |
• | increase our vulnerability to general adverse economic and industry conditions; |
• | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and |
• | limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes. |
• | incur more debt; |
• | make investments; |
• | create liens; |
• | merge or consolidate; |
• | transfer and sell assets; |
• | pay dividends or repurchase stock; and |
• | issue equity instruments. |
• | market prices for like equipment; |
• | hours and condition of the equipment; |
• | time of year that the equipment is sold; |
• | the supply of used equipment in the market; and |
• | general economic conditions. |
Agriculture Segment | Construction Segment | International Segment | Total | ||||||||
US States | |||||||||||
North Dakota | 9 | 5 | — | 14 | |||||||
Minnesota | 10 | 3 | — | 13 | |||||||
Iowa | 10 | 3 | — | 13 | |||||||
Nebraska | 11 | 2 | — | 13 | |||||||
South Dakota | 8 | 2 | — | 10 | |||||||
Colorado | — | 3 | — | 3 | |||||||
Montana | — | 3 | — | 3 | |||||||
Arizona | — | 2 | — | 2 | |||||||
New Mexico | — | 1 | — | 1 | |||||||
Wisconsin | — | 1 | — | 1 | |||||||
Wyoming | — | 1 | — | 1 | |||||||
European Countries | |||||||||||
Bulgaria | — | — | 7 | 7 | |||||||
Germany | — | — | 4 | 4 | |||||||
Romania | — | — | 10 | 10 | |||||||
Ukraine | — | — | 8 | 8 | |||||||
Serbia | — | — | 1 | 1 | |||||||
Total | 48 | 26 | 30 | 104 |
Name | Age | Position | ||
David Meyer | 65 | Board Chair and Chief Executive Officer | ||
Mark Kalvoda | 47 | Chief Financial Officer and Treasurer | ||
Bryan Knutson | 40 | Chief Operating Officer |
January 31, | |||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||
Titan Machinery Inc. | $ | 100.00 | $ | 86.69 | $ | 52.09 | $ | 84.72 | $ | 131.84 | $ | 114.97 | |||||||||||
Russell 2000 Index | 100.00 | 103.05 | 91.56 | 120.42 | 139.27 | 132.95 | |||||||||||||||||
S&P 500 Retail Index | 100.00 | 118.75 | 137.22 | 160.31 | 230.59 | 241.71 |
Year Ended January 31, | ||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||
Store Count Data | ||||||||||||||
Net change in store count during fiscal year | 7 | (12 | ) | 1 | (4 | ) | (7 | ) | ||||||
Store count at end of fiscal year | 104 | 97 | 109 | 108 | 112 |
Year Ended January 31, | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||
Revenue | |||||||||||||||||||
Equipment | $ | 909,178 | $ | 844,768 | $ | 838,037 | $ | 972,496 | $ | 1,462,956 | |||||||||
Parts | 210,796 | 203,231 | 214,103 | 222,982 | 241,636 | ||||||||||||||
Service | 86,840 | 88,794 | 94,408 | 94,216 | 99,175 | ||||||||||||||
Rental and other | 54,691 | 55,813 | 55,149 | 66,098 | 78,663 | ||||||||||||||
Total Revenue | 1,261,505 | 1,192,606 | 1,201,697 | 1,355,792 | 1,882,430 | ||||||||||||||
Cost of Revenue | |||||||||||||||||||
Equipment | 812,467 | 764,649 | 769,924 | 917,779 | 1,323,691 | ||||||||||||||
Parts | 149,615 | 143,729 | 149,212 | 156,563 | 170,121 | ||||||||||||||
Service | 29,036 | 30,679 | 31,490 | 30,121 | 29,071 | ||||||||||||||
Rental and other | 38,799 | 38,249 | 37,342 | 45,415 | 51,163 | ||||||||||||||
Total Cost of Revenue | 1,029,917 | 977,306 | 987,968 | 1,149,878 | 1,574,046 | ||||||||||||||
Gross Profit | 231,588 | 215,300 | 213,729 | 205,914 | 308,384 | ||||||||||||||
Operating Expenses | 201,537 | 203,203 | 211,372 | 220,524 | 273,271 | ||||||||||||||
Impairment and Restructuring Costs | 2,570 | 11,172 | 4,729 | 8,500 | 34,390 | ||||||||||||||
Income (Loss) from Operations | 27,481 | 925 | (2,372 | ) | (23,110 | ) | 723 | ||||||||||||
Other Income (Expense) | |||||||||||||||||||
Interest income and other income (expense) | 2,547 | 1,635 | 1,524 | (478 | ) | (4,272 | ) | ||||||||||||
Interest expense | (13,874 | ) | (16,999 | ) | (21,865 | ) | (32,623 | ) | (34,791 | ) | |||||||||
Income (Loss) Before Income Taxes | 16,154 | (14,439 | ) | (22,713 | ) | (56,211 | ) | (38,340 | ) | ||||||||||
Provision for (Benefit from) Income Taxes | 3,972 | (7,390 | ) | (8,178 | ) | (17,982 | ) | (4,923 | ) | ||||||||||
Net Income (Loss) Including Noncontrolling Interest | 12,182 | (7,049 | ) | (14,535 | ) | (38,229 | ) | (33,417 | ) | ||||||||||
Less: Loss Attributable to Noncontrolling Interest | — | — | (356 | ) | (337 | ) | (1,260 | ) | |||||||||||
Net Income (Loss) Attributable to Titan Machinery Inc. | 12,182 | (7,049 | ) | (14,179 | ) | (37,892 | ) | (32,157 | ) | ||||||||||
Earnings (Loss) per Share: | |||||||||||||||||||
Basic | $ | 0.55 | $ | (0.32 | ) | $ | (0.65 | ) | $ | (1.76 | ) | $ | (1.51 | ) | |||||
Diluted | $ | 0.55 | $ | (0.32 | ) | $ | (0.65 | ) | $ | (1.76 | ) | $ | (1.51 | ) | |||||
Weighted Average Shares Outstanding: | |||||||||||||||||||
Basic | 21,809 | 21,543 | 21,294 | 21,111 | 20,989 | ||||||||||||||
Diluted | 21,816 | 21,543 | 21,294 | 21,111 | 20,989 |
January 31, | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||
Cash | $ | 56,745 | $ | 53,396 | $ | 53,151 | $ | 89,465 | $ | 127,528 | |||||||||
Receivables, net | 77,500 | 60,672 | 60,082 | 65,534 | 84,921 | ||||||||||||||
Inventories | 491,091 | 472,467 | 478,266 | 680,482 | 870,901 | ||||||||||||||
Prepaid expenses and other | 15,556 | 12,440 | 10,989 | 9,753 | 10,634 | ||||||||||||||
Income taxes receivable | — | 171 | 5,380 | 13,011 | 166 | ||||||||||||||
Assets held for sale | — | — | — | — | 15,312 | ||||||||||||||
Total current assets | 640,892 | 599,146 | 607,868 | 858,245 | 1,109,462 | ||||||||||||||
Goodwill and intangibles, net | 8,408 | 5,193 | 5,001 | 5,134 | 5,458 | ||||||||||||||
Property and equipment, net of accumulated depreciation | 138,950 | 151,047 | 156,647 | 183,179 | 208,680 | ||||||||||||||
Deferred income taxes | 3,010 | 3,472 | 547 | — | — | ||||||||||||||
Other assets | 1,178 | 1,450 | 1,359 | 1,317 | 2,014 | ||||||||||||||
Total Assets | $ | 792,438 | $ | 760,308 | $ | 771,422 | $ | 1,047,875 | $ | 1,325,614 | |||||||||
Accounts payable | $ | 16,607 | $ | 15,136 | $ | 17,326 | $ | 16,863 | $ | 17,659 | |||||||||
Floorplan payable (1) | 273,756 | 247,392 | 233,228 | 444,780 | 625,162 | ||||||||||||||
Senior convertible notes | 45,249 | — | — | — | — | ||||||||||||||
Current maturities of long-term debt | 3,340 | 1,574 | 1,373 | 1,557 | 7,749 | ||||||||||||||
Deferred revenue | 46,409 | 32,324 | 26,366 | 31,159 | 35,090 | ||||||||||||||
Accrued expenses and other | 35,091 | 31,863 | 30,533 | 29,066 | 39,025 | ||||||||||||||
Liabilities held for sale | — | — | — | — | 2,835 | ||||||||||||||
Total current liabilities | 420,452 | 328,289 | 308,826 | 523,425 | 727,520 | ||||||||||||||
Senior convertible notes | — | 62,819 | 88,501 | 134,145 | 129,889 | ||||||||||||||
Long-term debt, less current maturities | 25,812 | 34,578 | 38,236 | 38,409 | 66,563 | ||||||||||||||
Deferred income taxes | 4,955 | 2,275 | 9,500 | 11,135 | 19,971 | ||||||||||||||
Other long-term liabilities | 5,908 | 10,492 | 5,180 | 2,412 | 3,312 | ||||||||||||||
Total stockholders' equity | 335,311 | 321,855 | 321,179 | 338,349 | 378,359 | ||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 792,438 | $ | 760,308 | $ | 771,422 | $ | 1,047,875 | $ | 1,325,614 | |||||||||
(1) Portion of floorplan payable balance which is interest-bearing as of January 31 | 45 | % | 47 | % | 72 | % | 75 | % | 75 | % |
• | new and used equipment sales; |
• | parts sales; |
• | equipment repair and maintenance services; and |
• | equipment rental and other activities. |
• | CNH Industrial’s product offerings, reputation and market share; |
• | CNH Industrial’s product prices and incentive and discount programs; |
• | CNH Industrial's supply of inventory; |
• | CNH Industrial's offering of floorplan payable financing for the purchase of a substantial portion of our inventory; and |
• | CNH Industrial's offering of financing and leasing used by our customers to purchase CNH Industrial equipment from us. |
• | Equipment: We derive equipment revenue from the sale of new and used agricultural and construction equipment. |
• | Parts: We derive parts revenue from the sale of parts for brands of equipment that we sell, other makes of equipment, and other types of equipment and related components. Our parts sales provide us with a relatively stable revenue stream that is less sensitive to the economic cycles that affect our equipment sales. |
• | Service: We derive services revenue from repair and maintenance services to our customers' equipment. Our repair and maintenance services provide a high-margin, relatively stable source of revenue through changing economic cycles. |
• | Rental and other: We derive other revenue from equipment rentals and ancillary equipment support activities such as equipment transportation, GPS signal subscriptions and reselling finance and insurance products. |
• | Equipment: Cost of equipment revenue is the lower of the acquired cost or the market value of the specific piece of equipment sold. |
• | Parts: Cost of parts revenue is the lower of the acquired cost or the market value of the parts sold, based on average costing. |
• | Service: Cost of service revenue represents costs attributable to services provided for the maintenance and repair of customer-owned equipment and equipment then on-rent by customers. |
• | Rental and other: Costs of other revenue represent costs associated with equipment rental, such as depreciation, maintenance and repairs, as well as costs associated providing transportation, hauling, parts freight, GPS subscriptions and damage waivers, including, among other items, drivers' wages, fuel costs, shipping costs and our costs related to damage waiver policies. |
Year Ended January 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(dollars in thousands) | |||||||||||
Equipment | |||||||||||
Revenue | $ | 909,178 | $ | 844,768 | $ | 838,037 | |||||
Cost of revenue | 812,467 | 764,649 | 769,924 | ||||||||
Gross profit | $ | 96,711 | $ | 80,119 | $ | 68,113 | |||||
Gross profit margin | 10.6 | % | 9.5 | % | 8.1 | % | |||||
Parts | |||||||||||
Revenue | $ | 210,796 | $ | 203,231 | $ | 214,103 | |||||
Cost of revenue | 149,615 | 143,729 | 149,212 | ||||||||
Gross profit | $ | 61,181 | $ | 59,502 | $ | 64,891 | |||||
Gross profit margin | 29.0 | % | 29.3 | % | 30.3 | % | |||||
Service | |||||||||||
Revenue | $ | 86,840 | $ | 88,794 | $ | 94,408 | |||||
Cost of revenue | 29,036 | 30,679 | 31,490 | ||||||||
Gross profit | $ | 57,804 | $ | 58,115 | $ | 62,918 | |||||
Gross profit margin | 66.6 | % | 65.4 | % | 66.6 | % | |||||
Rental and other | |||||||||||
Revenue | $ | 54,691 | $ | 55,813 | $ | 55,149 | |||||
Cost of revenue | 38,799 | 38,249 | 37,342 | ||||||||
Gross profit | $ | 15,892 | $ | 17,564 | $ | 17,807 | |||||
Gross profit margin | 29.1 | % | 31.5 | % | 32.3 | % |
Year Ended January 31, | ||||||||
2019 | 2018 | 2017 | ||||||
Revenue | ||||||||
Equipment | 72.1 | % | 70.8 | % | 69.7 | % | ||
Parts | 16.7 | % | 17.0 | % | 17.8 | % | ||
Service | 6.9 | % | 7.4 | % | 7.9 | % | ||
Rental and other | 4.3 | % | 4.7 | % | 4.6 | % | ||
Total Revenue | 100.0 | % | 100.0 | % | 100.0 | % | ||
Total Cost of Revenue | 81.6 | % | 81.9 | % | 82.2 | % | ||
Gross Profit Margin | 18.4 | % | 18.1 | % | 17.8 | % | ||
Operating Expenses | 16.0 | % | 17.0 | % | 17.6 | % | ||
Impairment of Intangible and Long-Lived Assets | 0.2 | % | 0.1 | % | 0.4 | % | ||
Restructuring Costs | — | % | 0.9 | % | — | % | ||
Income (Loss) from Operations | 2.2 | % | 0.1 | % | (0.2 | )% | ||
Other Income (Expense) | (0.9 | )% | (1.3 | )% | (1.7 | )% | ||
Income (Loss) Before Income Taxes | 1.3 | % | (1.2 | )% | (1.9 | )% | ||
Provision for (Benefit from) Income Taxes | 0.3 | % | (0.6 | )% | (0.7 | )% | ||
Net Income (Loss) Including Noncontrolling Interest | 1.0 | % | (0.6 | )% | (1.2 | )% | ||
Less: Net Income (Loss) Attributable to Noncontrolling Interest | — | % | — | % | — | % | ||
Net Income (Loss) Attributable to Titan Machinery Inc. | 1.0 | % | (0.6 | )% | (1.2 | )% |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Equipment | $ | 909,178 | $ | 844,768 | $ | 64,410 | 7.6 | % | ||||||
Parts | 210,796 | 203,231 | 7,565 | 3.7 | % | |||||||||
Service | 86,840 | 88,794 | (1,954 | ) | (2.2 | )% | ||||||||
Rental and other | 54,691 | 55,813 | (1,122 | ) | (2.0 | )% | ||||||||
Total Revenue | $ | 1,261,505 | $ | 1,192,606 | $ | 68,899 | 5.8 | % |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Gross Profit | ||||||||||||||
Equipment | $ | 96,711 | $ | 80,119 | $ | 16,592 | 20.7 | % | ||||||
Parts | 61,181 | 59,502 | 1,679 | 2.8 | % | |||||||||
Service | 57,804 | 58,115 | (311 | ) | (0.5 | )% | ||||||||
Rental and other | 15,892 | 17,564 | (1,672 | ) | (9.5 | )% | ||||||||
Total Gross Profit | $ | 231,588 | $ | 215,300 | $ | 16,288 | 7.6 | % | ||||||
Gross Profit Margin | ||||||||||||||
Equipment | 10.6 | % | 9.5 | % | 1.1 | % | 11.6 | % | ||||||
Parts | 29.0 | % | 29.3 | % | (0.3 | )% | (1.0 | )% | ||||||
Service | 66.6 | % | 65.4 | % | 1.2 | % | 1.8 | % | ||||||
Rental and other | 29.1 | % | 31.5 | % | (2.4 | )% | (7.6 | )% | ||||||
Total Gross Profit Margin | 18.4 | % | 18.1 | % | 0.3 | % | 1.7 | % | ||||||
Gross Profit Mix | ||||||||||||||
Equipment | 41.8 | % | 37.2 | % | 4.6 | % | 12.4 | % | ||||||
Parts | 26.4 | % | 27.6 | % | (1.2 | )% | (4.3 | )% | ||||||
Service | 25.0 | % | 27.0 | % | (2.0 | )% | (7.4 | )% | ||||||
Rental and other | 6.8 | % | 8.2 | % | (1.4 | )% | (17.1 | )% | ||||||
Total Gross Profit Mix | 100.0 | % | 100.0 | % |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Operating Expenses | $ | 201,537 | $ | 203,203 | $ | (1,666 | ) | 0.8 | % | |||||
Operating Expenses as a Percentage of Revenue | 16.0 | % | 17.0 | % | (1.0 | )% | (5.9 | )% |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Impairment of Long-Lived Assets | $ | 2,156 | $ | 673 | $ | 1,483 | n/m | |||||||
Restructuring Costs | 414 | 10,499 | (10,085 | ) | 96.0 | % |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Interest income and other income (expense) | $ | 2,548 | $ | 1,635 | $ | 913 | 55.8 | % | ||||||
Floorplan interest expense | (6,114 | ) | (8,152 | ) | (2,038 | ) | 25.0 | % | ||||||
Other interest expense | (7,761 | ) | (8,847 | ) | (1,086 | ) | 12.3 | % |
Year Ended January 31, | Increase/ | Percent | |||||||||||
2019 | 2018 | (Decrease) | Change | ||||||||||
(dollars in thousands) | |||||||||||||
Provision for (Benefit from) Income Taxes | $ | 3,972 | $ | (7,390 | ) | $ | 11,362 | n/m |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Revenue | ||||||||||||||
Agriculture | $ | 726,793 | $ | 689,854 | $ | 36,939 | 5.4 | % | ||||||
Construction | 301,989 | 293,860 | 8,129 | 2.8 | % | |||||||||
International | 232,723 | 208,892 | 23,831 | 11.4 | % | |||||||||
Total | $ | 1,261,505 | $ | 1,192,606 | $ | 68,899 | 5.8 | % | ||||||
Income (Loss) Before Income Taxes | ||||||||||||||
Agriculture | $ | 16,799 | $ | (3,678 | ) | $ | 20,477 | n/m | ||||||
Construction | (4,400 | ) | (7,278 | ) | 2,878 | 39.5 | % | |||||||
International | 5,160 | 2,205 | 2,955 | 134.0 | % | |||||||||
Segment income (loss) before income taxes | 17,559 | (8,751 | ) | 26,310 | n/m | |||||||||
Shared Resources | (1,405 | ) | (5,688 | ) | 4,283 | 75.3 | % | |||||||
Total | $ | 16,154 | $ | (14,439 | ) | $ | 30,593 | n/m |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2018 | 2017 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Equipment | $ | 844,768 | $ | 838,037 | $ | 6,731 | 0.8 | % | ||||||
Parts | 203,231 | 214,103 | (10,872 | ) | (5.1 | )% | ||||||||
Service | 88,794 | 94,408 | (5,614 | ) | (5.9 | )% | ||||||||
Rental and other | 55,813 | 55,149 | 664 | 1.2 | % | |||||||||
Total Revenue | $ | 1,192,606 | $ | 1,201,697 | $ | (9,091 | ) | (0.8 | )% |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2018 | 2017 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Gross Profit | ||||||||||||||
Equipment | $ | 80,119 | $ | 68,113 | $ | 12,006 | 17.6 | % | ||||||
Parts | 59,502 | 64,891 | (5,389 | ) | (8.3 | )% | ||||||||
Service | 58,115 | 62,918 | (4,803 | ) | (7.6 | )% | ||||||||
Rental and other | 17,564 | 17,807 | (243 | ) | (1.4 | )% | ||||||||
Total Gross Profit | $ | 215,300 | $ | 213,729 | $ | 1,571 | 0.7 | % | ||||||
Gross Profit Margin | ||||||||||||||
Equipment | 9.5 | % | 8.1 | % | 1.4 | % | 17.3 | % | ||||||
Parts | 29.3 | % | 30.3 | % | (1.0 | )% | (3.3 | )% | ||||||
Service | 65.4 | % | 66.6 | % | (1.2 | )% | (1.8 | )% | ||||||
Rental and other | 31.5 | % | 32.3 | % | (0.8 | )% | (2.5 | )% | ||||||
Total Gross Profit Margin | 18.1 | % | 17.8 | % | 0.3 | % | 1.7 | % | ||||||
Gross Profit Mix | ||||||||||||||
Equipment | 37.2 | % | 31.9 | % | 5.3 | % | 16.6 | % | ||||||
Parts | 27.6 | % | 30.4 | % | (2.8 | )% | (9.2 | )% | ||||||
Service | 27.0 | % | 29.4 | % | (2.4 | )% | (8.2 | )% | ||||||
Rental and other | 8.2 | % | 8.3 | % | (0.1 | )% | (1.2 | )% | ||||||
Total Gross Profit Mix | 100.0 | % | 100.0 | % | — | % | — | % |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2018 | 2017 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Operating Expenses | $ | 203,203 | $ | 211,372 | $ | (8,169 | ) | (3.9 | )% | |||||
Operating Expenses as a Percentage of Revenue | 17.0 | % | 17.6 | % | (0.6 | )% | 3.4 | % |
Year Ended January 31, | Increase | Percent | |||||||||
2018 | 2017 | (Decrease) | Change | ||||||||
(dollars in thousands) | |||||||||||
Impairment of Long-Lived Assets | 673 | 4,410 | (3,737 | ) | (84.7 | )% | |||||
Restructuring Costs | 10,499 | 319 | 10,180 | n/m |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2018 | 2017 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Interest income and other income (expense) | $ | 1,635 | $ | 1,524 | $ | 111 | 7.3 | % | ||||||
Floorplan interest expense | (8,152 | ) | (13,560 | ) | (5,408 | ) | (39.9 | )% | ||||||
Other interest expense | (8,847 | ) | (8,305 | ) | 542 | 6.5 | % |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2018 | 2017 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Benefit from Income Taxes | $ | (7,390 | ) | $ | (8,178 | ) | $ | (788 | ) | (9.6 | )% |
Year Ended January 31, | Increase/ | Percent | ||||||||||||
2018 | 2017 | (Decrease) | Change | |||||||||||
(dollars in thousands) | ||||||||||||||
Revenue | ||||||||||||||
Agriculture | $ | 689,854 | $ | 734,283 | $ | (44,429 | ) | (6.1 | )% | |||||
Construction | 293,860 | 317,126 | (23,266 | ) | (7.3 | )% | ||||||||
International | 208,892 | 150,288 | 58,604 | 39.0 | % | |||||||||
Total | $ | 1,192,606 | $ | 1,201,697 | $ | (9,091 | ) | (0.8 | )% | |||||
Income (Loss) Before Income Taxes | ||||||||||||||
Agriculture | $ | (3,678 | ) | $ | (15,781 | ) | $ | 12,103 | 76.7 | % | ||||
Construction | (7,278 | ) | (5,875 | ) | (1,403 | ) | (23.9 | )% | ||||||
International | 2,205 | (469 | ) | 2,674 | n/m | |||||||||
Segment income (loss) before income taxes | (8,751 | ) | (22,125 | ) | 13,374 | 60.4 | % | |||||||
Shared Resources | (5,688 | ) | (588 | ) | (5,100 | ) | n/m | |||||||
Total | $ | (14,439 | ) | $ | (22,713 | ) | $ | 8,274 | 36.4 | % |
Year Ended January 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(dollars in thousands, except per share data) | |||||||||||
Adjusted Net Income (Loss) Including Noncontrolling Interest | |||||||||||
Net Income (Loss) Including Noncontrolling Interest | $ | 12,182 | $ | (7,049 | ) | $ | (14,535 | ) | |||
Adjustments | |||||||||||
(Gain) loss on repurchase of senior convertible notes | 615 | (22 | ) | (3,130 | ) | ||||||
Debt issuance cost write-off | — | 416 | 624 | ||||||||
Restructuring & impairment charges | 2,570 | 11,172 | 4,729 | ||||||||
Ukraine remeasurement (1) | — | — | 195 | ||||||||
Interest rate swap termination & reclassification | — | 631 | — | ||||||||
Gain on insurance recoveries | — | — | (1,997 | ) | |||||||
Total Pre-Tax Adjustments | 3,185 | 12,197 | 421 | ||||||||
Less: Tax Effect of Adjustments (2) | 636 | 4,103 | (6 | ) | |||||||
Less: Tax Benefit from Tax Act (3) | — | 1,809 | — | ||||||||
Plus: Income Tax Valuation Allowance (4) | — | (1,920 | ) | (44 | ) | ||||||
Total Adjustments | 2,549 | 4,365 | 383 | ||||||||
Adjusted Net Income (Loss) Including Noncontrolling Interest | $ | 14,731 | $ | (2,684 | ) | $ | (14,152 | ) | |||
Year Ended January 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(dollars in thousands, except per share data) | |||||||||||
Adjusted Diluted EPS | |||||||||||
Diluted EPS | $ | 0.55 | $ | (0.32 | ) | $ | (0.65 | ) | |||
Adjustments (5) | |||||||||||
(Gain) loss on repurchase of senior convertible notes | 0.03 | — | (0.15 | ) | |||||||
Debt issuance cost write-off | — | 0.02 | 0.03 | ||||||||
Restructuring & impairment charges | 0.12 | 0.51 | 0.21 | ||||||||
Ukraine remeasurement | — | — | 0.01 | ||||||||
Interest rate swap termination & reclassification | — | 0.03 | — | ||||||||
Gain on insurance recoveries | — | — | (0.10 | ) | |||||||
Total Pre-Tax Adjustments | 0.15 | 0.56 | — | ||||||||
Less: Tax Effect of Adjustments (2) | 0.03 | 0.19 | — | ||||||||
Less: Tax Benefit from Tax Act (3) | — | 0.08 | — | ||||||||
Plus: Income Tax Valuation Allowance (4) | — | (0.09 | ) | — | |||||||
Total Adjustments | 0.12 | 0.20 | — | ||||||||
Adjusted Diluted EPS | $ | 0.67 | $ | (0.12 | ) | $ | (0.65 | ) | |||
Adjusted EBITDA | |||||||||||
Net Income (Loss) Including Noncontrolling Interest | $ | 12,182 | $ | (7,049 | ) | $ | (14,535 | ) | |||
Adjustments | |||||||||||
Interest expense, net of interest income | 6,818 | 7,935 | 7,112 | ||||||||
Provision for (benefit from) income taxes | 3,972 | (7,390 | ) | (8,178 | ) | ||||||
Depreciation and amortization | 23,605 | 25,105 | 26,868 | ||||||||
EBITDA | 46,577 | 18,601 | 11,267 | ||||||||
Adjustments | |||||||||||
(Gain) loss on repurchase of senior convertible notes | 615 | $ | (22 | ) | (3,130 | ) | |||||
Debt issuance cost write-off | — | 416 | 624 | ||||||||
Restructuring & impairment charges | 2,570 | 11,172 | 4,729 | ||||||||
Ukraine remeasurement | — | — | 195 | ||||||||
Interest rate swap termination & reclassification | — | 631 | — | ||||||||
Gain on insurance recoveries | — | — | (1,997 | ) | |||||||
Total Adjustments | 3,185 | 12,197 | 421 | ||||||||
Adjusted EBITDA | $ | 49,762 | $ | 30,798 | $ | 11,688 |
(1) | Beginning in the second quarter of fiscal 2017 we discontinued incorporating Ukraine remeasurement losses into our adjusted income (loss) and earnings (loss) per share calculations. The Ukrainian hryvnia (UAH) remained relatively stable subsequent to April 30, 2016 and therefore did not significantly impact our consolidated statement of operations during this period. Absent any future significant hryvnia volatility and resulting financial statement impact, we will not include Ukraine remeasurement losses in our adjusted amounts in future periods. |
(2) | The tax effect of adjustments for all U.S. related items was determined using the federal statutory tax rate applicable to the respective period and no impact for state taxes given our valuation allowances against state deferred tax assets. The federal statutory tax rate for the years ended January 31, 2019, 2018, and 2017 was 21.0%, 33.8%, and 35.0%. No tax effect was recognized for foreign related items as all adjustments occurred in foreign jurisdictions that have full valuation allowances on deferred tax assets. |
(3) | Tax benefit recognized as a result of the Tax Act enacted on December 22, 2017. |
(4) | Amounts reflect the tax benefit recognized from the release of the valuation allowance on our Ukrainian deferred tax assets, net of the incremental valuation allowance recognized as a result of restructuring costs incurred during the fiscal year ended January 31, 2018. |
(5) | Adjustments are net of the impact of amounts attributable to noncontrolling interests and allocated to participating securities where applicable. |
Net Cash Provided by (Used for) Operating Activities | Net Cash Provided by (Used for) Financing Activities | ||||||||||||||||||||||
Year Ended January 31, | Year Ended January 31, | ||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Cash Flow, As Reported | $ | 46,605 | $ | 95,812 | $ | 140,997 | $ | (16,727 | ) | $ | (71,466 | ) | $ | (167,976 | ) | ||||||||
Adjustment for Non-Manufacturer Floorplan Net Payments | 16,818 | (38,626 | ) | (116,558 | ) | (16,818 | ) | 38,626 | 116,558 | ||||||||||||||
Adjustment for Constant Equity in Equipment Inventory | (16,030 | ) | (11,603 | ) | 64,400 | — | — | — | |||||||||||||||
Adjusted Cash Flow | $ | 47,393 | $ | 45,583 | $ | 88,839 | $ | (33,545 | ) | $ | (32,840 | ) | $ | (51,418 | ) |
Payments Due By Period | ||||||||||||||||||||
Contractual Obligations | Total | Less Than 1 Year | 1 to 3 Years | 3 to 5 Years | More Than 5 Years | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Long-term debt obligations (1) | $ | 44,782 | $ | 6,211 | $ | 11,427 | $ | 8,070 | $ | 19,074 | ||||||||||
Senior convertible note obligations (2) | 46,065 | 46,065 | — | — | — | |||||||||||||||
Operating lease (3) | 158,566 | 20,117 | 36,780 | 33,260 | 68,409 | |||||||||||||||
Purchase obligations (4) | 5,317 | 1,849 | 2,941 | 527 | — | |||||||||||||||
Total | $ | 254,730 | $ | 74,242 | $ | 51,148 | $ | 41,857 | $ | 87,483 |
(1) | Includes obligations under our capital lease and financing obligations, long-term debt obligations and estimates of interest payable under all such obligations. |
(2) | Includes coupon payments of interest on the contractual payment dates and payment of the principal balance on maturity in May 2019. |
(3) | Includes minimum lease payment obligations under operating leases. Amounts do not include insurance or real estate taxes, which we include in our operating expenses and which we estimate will be approximately $2.7 million for the less than 1 year period, $5.2 million for the 1 to 3 year period, $5.1 million for the 3 to 5 year period, and $8.2 million for the more than 5 years period for a total of approximately $21.3 million. See Note 15 to our consolidated financial statements for a description of our operating lease obligations. |
(4) | Primarily represents contracts related to information technology systems. |
• | our beliefs and intentions with respect to our growth strategy, including growth through acquisitions, the profitability of acquisitions, the types of acquisition targets we intend to pursue, the availability of suitable acquisition targets, our ability to identify such targets, the industry climate for dealer consolidation, and our ability to implement our growth strategy; |
• | our beliefs with respect to factors that will affect demand and seasonality of purchasing in the agricultural and construction industries; |
• | our beliefs with respect to our primary supplier (CNH Industrial) of equipment and parts inventory; |
• | our beliefs with respect to the equipment market, our competitors and our competitive advantages; |
• | our beliefs with respect to the impact of government subsidies on the agriculture economy; |
• | our beliefs with respect to the impact of natural resource exploration and related commodity prices in our operating region on our operating results; |
• | our beliefs with respect to the impact of government regulations; |
• | our beliefs with respect to continued operations in the event of information systems inoperability; |
• | our beliefs with respect to our business strengths, including the Titan Operating Model, the diversity of our customer base, and the growth rate of our shared resources expenditures and our marketing efforts; |
• | our plans and beliefs with respect to real property used in our business; |
• | our plans and beliefs regarding future sales, sales mix, and marketing activities; |
• | our beliefs and assumptions regarding the payment of dividends and repatriation of earnings from foreign operations; |
• | our beliefs and assumptions regarding valuation reserves, equipment inventory balances, fixed operating expenses, and absorption rate; |
• | our beliefs and expectations regarding our restructuring activities including the amount and recognition of related costs; |
• | our beliefs and expectations regarding the effects of the political climate and economy in Ukraine; |
• | our beliefs and assumptions with respect to our rental equipment operations; |
• | our beliefs with respect to our employee relations and the impact of employee training and management strength on our revenues; |
• | our assumptions, beliefs and expectations with respect to past and future market conditions, including interest rates, and public infrastructure spending, new environmental standards, and the impact these conditions will have on our operating results; |
• | our beliefs with respect to the impact of our credit agreements, including future interest expense, limits on corporate transactions, financial covenant compliance, and ability to negotiate amendments or waivers; |
• | our beliefs with respect to the impact of increase or decrease in applicable foreign exchange rates; |
• | our beliefs with respect to the adequacy of our capital resources and the funding of debt service obligations and capital expenditures; |
• | our plans and assumptions for future capital expenditures; |
• | our cash needs, sources of liquidity, and the adequacy of our working capital; and |
• | our expectations regarding the impact of inflation. |
• | incorrect assumptions regarding our cash needs; |
• | general economic conditions and construction activity in the markets where we operate; |
• | our relationships with equipment suppliers; |
• | our leverage; |
• | the risks associated with the expansion of our business; |
• | the potential inability to integrate any businesses we acquire; |
• | competitive pressures; |
• | compliance with laws and regulations; and |
• | other factors discussed under "Risk Factors" or elsewhere in this Form 10-K. |
Page | |
Titan Machinery Inc.—Financial Statements | |
Audited Consolidated Financial Statements | |
Report of Independent Registered Public Accounting Firm | |
Report of Independent Registered Public Accounting Firm | |
Consolidated Balance Sheets as of January 31, 2019 and 2018 | |
Consolidated Statements of Operations for the fiscal years ended January 31, 2019, 2018 and 2017 | |
Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended January 31, 2019, 2018 and 2017 | |
Consolidated Statements of Stockholders' Equity for the fiscal years ended January 31, 2019, 2018 and 2017 | |
Consolidated Statements of Cash Flows for the fiscal years ended January 31, 2019, 2018 and 2017 | |
Notes to Consolidated Financial Statements |
January 31, 2019 | January 31, 2018 | ||||||
Assets | |||||||
Current Assets | |||||||
Cash | $ | 56,745 | $ | 53,396 | |||
Receivables, net of allowance for doubtful accounts | 77,500 | 60,672 | |||||
Inventories | 491,091 | 472,467 | |||||
Prepaid expenses and other | 15,556 | 12,611 | |||||
Total current assets | 640,892 | 599,146 | |||||
Noncurrent Assets | |||||||
Property and equipment, net of accumulated depreciation | 138,950 | 151,047 | |||||
Deferred income taxes | 3,010 | 3,472 | |||||
Goodwill | 1,161 | 250 | |||||
Intangible assets, net of accumulated amortization | 7,247 | 5,193 | |||||
Other | 1,178 | 1,200 | |||||
Total noncurrent assets | 151,546 | 161,162 | |||||
Total Assets | $ | 792,438 | $ | 760,308 | |||
Liabilities and Stockholders' Equity | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 16,607 | $ | 15,136 | |||
Floorplan payable | 273,756 | 247,392 | |||||
Senior convertible notes | 45,249 | — | |||||
Current maturities of long-term debt | 3,340 | 1,574 | |||||
Deferred revenue | 46,409 | 32,324 | |||||
Accrued expenses and other | 35,091 | 31,863 | |||||
Total current liabilities | 420,452 | 328,289 | |||||
Long-Term Liabilities | |||||||
Senior convertible notes | — | 62,819 | |||||
Long-term debt, less current maturities | 25,812 | 34,578 | |||||
Deferred income taxes | 4,955 | 2,275 | |||||
Other long-term liabilities | 5,908 | 10,492 | |||||
Total long-term liabilities | 36,675 | 110,164 | |||||
Commitments and Contingencies (Notes 14 and 15) | |||||||
Stockholders' Equity | |||||||
Common stock, par value $0.00001 per share, 45,000 shares authorized; 22,218 shares issued and outstanding at January 31, 2019; 22,102 shares issued and outstanding at January 31, 2018 | — | — | |||||
Additional paid-in-capital | 248,423 | 246,509 | |||||
Retained earnings | 89,228 | 77,046 | |||||
Accumulated other comprehensive loss | (2,340 | ) | (1,700 | ) | |||
Total stockholders' equity | 335,311 | 321,855 | |||||
Total Liabilities and Stockholders' Equity | $ | 792,438 | $ | 760,308 |
2019 | 2018 | 2017 | |||||||||
Revenue | |||||||||||
Equipment | $ | 909,178 | $ | 844,768 | $ | 838,037 | |||||
Parts | 210,796 | 203,231 | 214,103 | ||||||||
Service | 86,840 | 88,794 | 94,408 | ||||||||
Rental and other | 54,691 | 55,813 | 55,149 | ||||||||
Total Revenue | 1,261,505 | 1,192,606 | 1,201,697 | ||||||||
Cost of Revenue | |||||||||||
Equipment | 812,467 | 764,649 | 769,924 | ||||||||
Parts | 149,615 | 143,729 | 149,212 | ||||||||
Service | 29,036 | 30,679 | 31,490 | ||||||||
Rental and other | 38,799 | 38,249 | 37,342 | ||||||||
Total Cost of Revenue | 1,029,917 | 977,306 | 987,968 | ||||||||
Gross Profit | 231,588 | 215,300 | 213,729 | ||||||||
Operating Expenses | 201,537 | 203,203 | 211,372 | ||||||||
Impairment of Long-Lived Assets | 2,156 | 673 | 4,410 | ||||||||
Restructuring Costs | 414 | 10,499 | 319 | ||||||||
Income (Loss) from Operations | 27,481 | 925 | (2,372 | ) | |||||||
Other Income (Expense) | |||||||||||
Interest income and other income (expense) | 2,547 | 1,635 | 1,524 | ||||||||
Floorplan interest expense | (6,114 | ) | (8,152 | ) | (13,560 | ) | |||||
Other interest expense | (7,760 | ) | (8,847 | ) | (8,305 | ) | |||||
Income (Loss) Before Income Taxes | 16,154 | (14,439 | ) | (22,713 | ) | ||||||
Provision for (Benefit from) Income Taxes | 3,972 | (7,390 | ) | (8,178 | ) | ||||||
Net Income (Loss) Including Noncontrolling Interest | 12,182 | (7,049 | ) | (14,535 | ) | ||||||
Less: Net Loss Attributable to Noncontrolling Interest | — | — | 356 | ||||||||
Net Income (Loss) Attributable to Titan Machinery Inc. | 12,182 | (7,049 | ) | (14,179 | ) | ||||||
Earnings (Loss) per Share: | |||||||||||
Basic | $ | 0.55 | $ | (0.32 | ) | $ | (0.65 | ) | |||
Diluted | $ | 0.55 | $ | (0.32 | ) | $ | (0.65 | ) | |||
Weighted Average Common Shares: | |||||||||||
Basic | 21,809 | 21,543 | 21,294 | ||||||||
Diluted | 21,816 | 21,543 | 21,294 |
2019 | 2018 | 2017 | |||||||||
Net Income (Loss) Including Noncontrolling Interest | $ | 12,182 | $ | (7,049 | ) | $ | (14,535 | ) | |||
Other Comprehensive Income (Loss) | |||||||||||
Foreign currency translation adjustments | (640 | ) | 2,399 | (1,090 | ) | ||||||
Cash flow hedging instruments, net of tax | — | 684 | 988 | ||||||||
Total Other Comprehensive Income (Loss) | (640 | ) | 3,083 | (102 | ) | ||||||
Comprehensive Income (Loss) | 11,542 | (3,966 | ) | (14,637 | ) | ||||||
Comprehensive Loss Attributable to Noncontrolling Interest | — | — | (333 | ) | |||||||
Comprehensive Income (Loss) Attributable To Titan Machinery Inc. | $ | 11,542 | $ | (3,966 | ) | $ | (14,304 | ) |
Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Titan Machinery Inc. Stockholders' Equity | Non controlling Interest | Total Stockholders' Equity | ||||||||||||||||||||||||
Shares Outstanding | Amount | |||||||||||||||||||||||||||||
BALANCE, JANUARY 31, 2016 | 21,604 | $ | — | $ | 242,491 | $ | 99,526 | $ | (4,461 | ) | $ | 337,556 | $ | 793 | $ | 338,349 | ||||||||||||||
Common stock issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax | 232 | — | (355 | ) | — | — | (355 | ) | — | (355 | ) | |||||||||||||||||||
Stock-based compensation expense | — | — | 2,145 | — | — | 2,145 | — | 2,145 | ||||||||||||||||||||||
Acquisition of non-controlling interest | — | — | (3,666 | ) | — | (197 | ) | (3,863 | ) | (460 | ) | (4,323 | ) | |||||||||||||||||
Net loss | — | — | — | (14,179 | ) | — | (14,179 | ) | (356 | ) | (14,535 | ) | ||||||||||||||||||
Other comprehensive loss | — | — | — | — | (125 | ) | (125 | ) | 23 | (102 | ) | |||||||||||||||||||
BALANCE, JANUARY 31, 2017 | 21,836 | — | 240,615 | 85,347 | (4,783 | ) | 321,179 | — | 321,179 | |||||||||||||||||||||
ASU 2016-09 cumulative effect adjustment | — | — | 2,087 | (1,252 | ) | — | 835 | — | 835 | |||||||||||||||||||||
Common stock issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax | 266 | — | 989 | — | — | 989 | — | 989 | ||||||||||||||||||||||
Stock-based compensation expense | — | — | 3,441 | — | — | 3,441 | — | 3,441 | ||||||||||||||||||||||
Repurchase of senior convertible notes | — | — | (623 | ) | — | — | (623 | ) | — | (623 | ) | |||||||||||||||||||
Net loss | — | — | — | (7,049 | ) | — | (7,049 | ) | — | (7,049 | ) | |||||||||||||||||||
Other comprehensive income | — | — | — | — | 3,083 | 3,083 | — | 3,083 | ||||||||||||||||||||||
BALANCE, JANUARY 31, 2018 | 22,102 | — | 246,509 | 77,046 | (1,700 | ) | 321,855 | — | 321,855 | |||||||||||||||||||||
Common stock issued on grant of restricted stock and exercise of stock options, net of restricted stock forfeitures and restricted stock withheld for employee withholding tax | 116 | — | (621 | ) | — | — | (621 | ) | — | (621 | ) | |||||||||||||||||||
Stock-based compensation expense | — | — | 2,535 | — | — | 2,535 | — | 2,535 | ||||||||||||||||||||||
Net income | — | — | — | 12,182 | — | 12,182 | — | 12,182 | ||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | (640 | ) | (640 | ) | — | (640 | ) | |||||||||||||||||||
BALANCE, JANUARY 31, 2019 | 22,218 | $ | — | $ | 248,423 | $ | 89,228 | $ | (2,340 | ) | $ | 335,311 | $ | — | $ | 335,311 |
2019 | 2018 | 2017 | |||||||||
Operating Activities | |||||||||||
Net income (loss) including noncontrolling interest | $ | 12,182 | $ | (7,049 | ) | $ | (14,535 | ) | |||
Adjustments to reconcile net income (loss) including noncontrolling interest to net cash provided by operating activities | |||||||||||
Depreciation and amortization | 23,605 | 25,105 | 26,868 | ||||||||
Impairment | 2,156 | 673 | 4,410 | ||||||||
Deferred income taxes | 2,511 | (8,920 | ) | (2,841 | ) | ||||||
Stock-based compensation expense | 2,535 | 3,441 | 2,145 | ||||||||
Noncash interest expense | 2,432 | 3,651 | 5,314 | ||||||||
Loss (gain) on repurchase of senior convertible notes | 615 | (22 | ) | (3,130 | ) | ||||||
Other, net | 995 | (2,406 | ) | (925 | ) | ||||||
Changes in assets and liabilities | |||||||||||
Receivables, prepaid expenses and other assets | (13,475 | ) | (1,002 | ) | (1,885 | ) | |||||
Inventories | 4,996 | 20,338 | 211,793 | ||||||||
Manufacturer floorplan payable | (2,635 | ) | 46,141 | (95,341 | ) | ||||||
Accounts payable, deferred revenue, accrued expenses and other and other long-term liabilities | 10,688 | 15,862 | 9,124 | ||||||||
Net Cash Provided by Operating Activities | 46,605 | 95,812 | 140,997 | ||||||||
Investing Activities | |||||||||||
Rental fleet purchases | (5,665 | ) | (12,578 | ) | (3,137 | ) | |||||
Property and equipment purchases (excluding rental fleet) | (6,286 | ) | (13,537 | ) | (9,288 | ) | |||||
Proceeds from sale of property and equipment | 1,549 | 5,030 | 2,388 | ||||||||
Acquisition consideration, net of cash acquired | (15,299 | ) | (3,652 | ) | — | ||||||
Proceeds from insurance recoveries | — | — | 1,431 | ||||||||
Other, net | (131 | ) | 148 | (519 | ) | ||||||
Net Cash Used for Investing Activities | (25,832 | ) | (24,589 | ) | (9,125 | ) | |||||
Financing Activities | |||||||||||
Net change in non-manufacturer floorplan payable | 16,818 | (38,626 | ) | (116,558 | ) | ||||||
Repurchase of senior convertible notes | (20,025 | ) | (29,093 | ) | (46,013 | ) | |||||
Proceeds from long-term debt borrowings | 3,252 | 33,001 | 14,009 | ||||||||
Principal payments on long-term debt | (16,116 | ) | (36,786 | ) | (17,199 | ) | |||||
Loan provided to non-controlling interest holder | — | — | (2,148 | ) | |||||||
Other, net | (656 | ) | 38 | (67 | ) | ||||||
Net Cash Used for Financing Activities | (16,727 | ) | (71,466 | ) | (167,976 | ) | |||||
Effect of Exchange Rate Changes on Cash | (697 | ) | 488 | (210 | ) | ||||||
Net Change in Cash | 3,349 | 245 | (36,314 | ) | |||||||
Cash at Beginning of Period | 53,396 | 53,151 | 89,465 | ||||||||
Cash at End of Period | $ | 56,745 | $ | 53,396 | $ | 53,151 | |||||
Supplemental Disclosures of Cash Flow Information | |||||||||||
Cash paid (received) during the period | |||||||||||
Income taxes, net of refunds | $ | 3,681 | $ | (5,555 | ) | $ | (13,086 | ) | |||
Interest | $ | 11,064 | $ | 13,634 | $ | 20,782 | |||||
Supplemental Disclosures of Noncash Investing and Financing Activities | |||||||||||
Net property and equipment financed with long-term debt, capital leases, accounts payable and accrued liabilities | $ | 5,230 | $ | 752 | $ | 2,496 | |||||
Business combination assets acquired through direct financing | $ | — | $ | 871 | $ | — | |||||
Net transfer of assets from property and equipment to inventories | $ | 5,263 | $ | 3,609 | $ | 7,454 | |||||
Acquisition of non-controlling interest through satisfaction of outstanding receivables | $ | — | $ | — | $ | 4,324 |
• | CNH Industrial provides floorplan payable financing for the purchase of a substantial portion of the Company's inventory |
• | CNH Industrial provides a significant percentage of the financing and lease financing used by the Company's customers to purchase CNH Industrial equipment from the Company |
Buildings and leasehold improvements | Lesser of 10 - 40 years or lease term |
Machinery and equipment | 3 - 10 years |
Furniture and fixtures | 3 - 10 years |
Vehicles | 5 - 10 years |
Rental fleet | 3 - 10 years |
Year Ended January 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in thousands, except per share data) | |||||||||||
Numerator | |||||||||||
Net income (loss) attributable to Titan Machinery Inc. | $ | 12,182 | $ | (7,049 | ) | $ | (14,179 | ) | |||
Allocation to participating securities | (202 | ) | 141 | 243 | |||||||
Net income (loss) attributable to Titan Machinery Inc. common stockholders | $ | 11,980 | $ | (6,908 | ) | $ | (13,936 | ) | |||
Denominator | |||||||||||
Basic weighted-average common shares outstanding | 21,809 | 21,543 | 21,294 | ||||||||
Plus: incremental shares from assumed vesting of restricted stock units | 7 | — | — | ||||||||
Diluted weighted-average common shares outstanding | 21,816 | 21,543 | 21,294 | ||||||||
Earnings (Loss) per Share: | |||||||||||
Basic | $ | 0.55 | $ | (0.32 | ) | $ | (0.65 | ) | |||
Diluted | $ | 0.55 | $ | (0.32 | ) | $ | (0.65 | ) | |||
Anti-dilutive shares excluded from diluted weighted-average common shares outstanding: | |||||||||||
Stock options and restricted stock units | — | 95 | 144 | ||||||||
Shares underlying senior convertible notes (conversion price of $43.17) | 1,057 | 1,521 | 2,217 |
As of February 1, 2017 | |||||||||||
Balance Sheet Classification | |||||||||||
Additional paid-in capital | Deferred income tax liability | Retained earnings | |||||||||
(in thousands) | |||||||||||
Increase (Decrease) | |||||||||||
Impact of cumulative-effect adjustment from adoption of ASU 2016-09 | $ | 2,087 | $ | (835 | ) | $ | (1,252 | ) |
Year Ended January 31, 2019 | |||||||||||||||
Agriculture | Construction | International | Total | ||||||||||||
(in thousands) | |||||||||||||||
Equipment | $ | 535,034 | $ | 185,163 | $ | 188,981 | $ | 909,178 | |||||||
Parts | 127,741 | 47,404 | 35,651 | 210,796 | |||||||||||
Service | 58,823 | 23,267 | 4,750 | 86,840 | |||||||||||
Other | 2,690 | 3,896 | 179 | 6,765 | |||||||||||
Revenue from contracts with customers | 724,288 | 259,730 | 229,561 | 1,213,579 | |||||||||||
Rental | 2,505 | 42,259 | 3,162 | 47,926 | |||||||||||
Total revenues | $ | 726,793 | $ | 301,989 | $ | 232,723 | $ | 1,261,505 |
January 31, 2019 | January 31, 2018 | ||||||
(in thousands) | |||||||
Trade and unbilled receivables from contracts with customers | |||||||
Trade receivables due from customers | $ | 38,827 | $ | 25,396 | |||
Trade receivables due from finance companies | 10,265 | 8,906 | |||||
Unbilled receivables | 11,222 | 10,967 | |||||
Trade and unbilled receivables from rental contracts | |||||||
Trade receivables | 6,386 | 7,571 | |||||
Unbilled receivables | 828 | 847 | |||||
Other receivables | |||||||
Due from manufacturers | 12,950 | 8,805 | |||||
Other | 550 | 1,131 | |||||
Total receivables | 81,028 | 63,623 | |||||
Less allowance for doubtful accounts | (3,528 | ) | (2,951 | ) | |||
Receivables, net of allowance for doubtful accounts | $ | 77,500 | $ | 60,672 |
January 31, 2019 | January 31, 2018 | ||||||
(in thousands) | |||||||
New equipment | $ | 258,081 | $ | 258,559 | |||
Used equipment | 158,951 | 141,450 | |||||
Parts and attachments | 72,760 | 71,110 | |||||
Work in process | 1,299 | 1,348 | |||||
$ | 491,091 | $ | 472,467 |
January 31, 2019 | January 31, 2018 | ||||||
(in thousands) | |||||||
Rental fleet equipment | $ | 111,164 | $ | 123,430 | |||
Machinery and equipment | 21,646 | 22,025 | |||||
Vehicles | 42,330 | 37,741 | |||||
Furniture and fixtures | 40,645 | 39,851 | |||||
Land, buildings, and leasehold improvements | 63,091 | 62,243 | |||||
278,876 | 285,290 | ||||||
Less accumulated depreciation | (139,926 | ) | (134,243 | ) | |||
$ | 138,950 | $ | 151,047 |
January 31, 2019 | January 31, 2018 | ||||||||||||||||||||||
Cost | Accumulated Amortization | Net | Cost | Accumulated Amortization | Net | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Covenants not to compete | $ | 200 | $ | (138 | ) | $ | 62 | $ | 440 | $ | (369 | ) | $ | 71 | |||||||||
Customer relationships | 112 | (19 | ) | 93 | — | — | — | ||||||||||||||||
$ | 312 | $ | (157 | ) | $ | 155 | $ | 440 | $ | (369 | ) | $ | 71 |
Fiscal years ending January 31, | Amount | ||
(in thousands) | |||
2020 | $ | 60 | |
2021 | 48 | ||
2022 | 26 | ||
2023 | 8 | ||
2024 | 3 | ||
Thereafter | 10 | ||
$ | 155 |
January 31, | |||||||
2019 | 2018 | ||||||
(in thousands) | |||||||
Segment | |||||||
Agriculture | $ | 5,050 | $ | 5,050 | |||
Construction | 237 | 72 | |||||
International | 1,805 | — | |||||
$ | 7,092 | $ | 5,122 |
Agriculture | Construction | International | Total | ||||||||||||
(in thousands) | |||||||||||||||
Balance, January 31, 2017 | $ | — | $ | — | $ | — | $ | — | |||||||
Arising from business combinations | 250 | — | — | 250 | |||||||||||
Foreign currency translation | — | — | — | — | |||||||||||
Balance, January 31, 2018 | 250 | — | — | 250 | |||||||||||
Arising from business combinations | — | — | 924 | 924 | |||||||||||
Foreign currency translation | — | — | (13 | ) | (13 | ) | |||||||||
Balance, January 31, 2019 | $ | 250 | $ | — | $ | 911 | $ | 1,161 |
January 31, 2019 | January 31, 2018 | ||||||
(in thousands) | |||||||
CNH Industrial | $ | 120,319 | $ | 116,177 | |||
Wells Fargo Floorplan Payable Line | 49,100 | 57,500 | |||||
DLL Finance | 13,432 | 11,507 | |||||
Other outstanding balances with manufacturers and non-manufacturers | 90,905 | 62,208 | |||||
$ | 273,756 | $ | 247,392 |
January 31, 2019 | January 31, 2018 | ||||||
(in thousands) | |||||||
Deferred revenue from contracts with customers | $ | 44,893 | $ | 30,139 | |||
Deferred revenue from rental and other contracts | 1,516 | 2,186 | |||||
$ | 46,409 | $ | 32,324 |
January 31, 2019 | January 31, 2018 | ||||||
(in thousands) | |||||||
Compensation | $ | 19,661 | $ | 16,413 | |||
Sales, payroll, real estate and value added taxes | 4,698 | 4,448 | |||||
Interest | 905 | 1,148 | |||||
Insurance | 2,083 | 3,004 | |||||
Income taxes payable | 1,574 | 2,419 | |||||
Lease residual value guarantees | 2,089 | 215 | |||||
Other | 4,081 | 4,216 | |||||
$ | 35,091 | $ | 31,863 |
i. | During any fiscal quarter commencing after July 31, 2012, if for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sale price of the Company's common stock on such trading day is greater than or equal to 120% of the applicable conversion price on such trading day. |
ii. | During the five consecutive business day period immediately following any five consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of the Senior Convertible |
iii. | If the Company calls any or all of the Senior Convertible Notes for redemption at any time prior to the close of business on the business day immediately preceding the redemption date. |
iv. | Upon the occurrence of corporate transactions specified in the Indenture. |
v. | At any time on and after February 1, 2019 until the close of business on the business day immediately preceding the maturity date. |
January 31, 2019 | January 31, 2018 | ||||||
(in thousands, except conversion rate and conversion price) | |||||||
Principal value | $ | 45,644 | $ | 65,644 | |||
Unamortized debt discount | (350 | ) | (2,497 | ) | |||
Unamortized debt issuance costs | (45 | ) | (328 | ) | |||
Carrying value of senior convertible notes | $ | 45,249 | $ | 62,819 | |||
Carrying value of equity component, net of deferred taxes | $ | 14,923 | $ | 14,923 | |||
Conversion rate (shares of common stock per $1,000 principal amount of notes) | 23.1626 | ||||||
Conversion price (per share of common stock) | $ | 43.17 |
Year Ended January 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in thousands) | |||||||||||
Cash Interest Expense | |||||||||||
Coupon interest expense | $ | 2,014 | $ | 2,782 | $ | 4,355 | |||||
Noncash Interest Expense | |||||||||||
Amortization of debt discount | 1,626 | 2,104 | 2,849 | ||||||||
Amortization of transaction costs | 216 | 290 | 439 | ||||||||
$ | 3,856 | $ | 5,176 | $ | 7,643 |
January 31, 2019 | January 31, 2018 | ||||||
(in thousands) | |||||||
Sale-leaseback financing obligations and capital leases, interest rates primarily ranging from 3.4% to 12.6% with various maturity dates through December 2030 | $ | 25,419 | $ | 23,152 | |||
Working Capital Line payable to Wells Fargo (see details in Note 7) | — | 13,000 | |||||
Real estate mortgage bearing interest at 2.09%, payable in monthly installments, maturing on June 30, 2026, secured by real estate assets | 2,978 | — | |||||
Other long-term debt primarily bearing interest at three-month EURIBOR plus 2.6%, payable in quarterly installments, maturing on January 31, 2021 | 755 | — | |||||
29,152 | 36,152 | ||||||
Less current maturities | (3,340 | ) | (1,574 | ) | |||
$ | 25,812 | $ | 34,578 |
Sale-Leaseback Financing Obligations & Capital Leases | Total Present Value of Minimum Lease Payments and Other Long-Term Debt | ||||||||||||||||||
Years Ending January 31, | Minimum Lease Payments | Interest | Present Value of Minimum Lease Payments | Other Long-Term Debt | |||||||||||||||
(in thousands) | |||||||||||||||||||
2020 | $ | 5,271 | $ | 2,797 | $ | 2,474 | $ | 866 | $ | 3,340 | |||||||||
2021 | 5,276 | 2,500 | 2,776 | 683 | 3,459 | ||||||||||||||
2022 | 4,969 | 2,342 | 2,627 | 397 | 3,024 | ||||||||||||||
2023 | 4,126 | 1,971 | 2,155 | 397 | 2,552 | ||||||||||||||
2024 | 3,087 | 1,344 | 1,743 | 397 | 2,140 | ||||||||||||||
Thereafter | 18,070 | 4,426 | 13,644 | 993 | 14,637 | ||||||||||||||
$ | 40,799 | $ | 15,380 | $ | 25,419 | $ | 3,733 | $ | 29,152 |
Year Ended January 31, | |||||||||||||||
Cumulative Amount | 2019 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Lease accrual and termination costs | $ | 6,095 | $ | 414 | $ | 5,681 | $ | — | |||||||
Termination benefits | 5,053 | — | 5,053 | — | |||||||||||
Impairment of fixed assets, net of gains on asset disposition | 2,206 | — | (751 | ) | 2,957 | ||||||||||
Asset relocation and other costs | 516 | — | 516 | — | |||||||||||
$ | 13,870 | $ | 414 | $ | 10,499 | $ | 2,957 |
Year Ended | |||
January 31, 2017 | |||
(in thousands) | |||
Lease accrual and termination costs | $ | (128 | ) |
Termination benefits | 399 | ||
Impairment of fixed assets, net of gains on asset disposition | — | ||
Asset relocation and other costs | 48 | ||
$ | 319 |
Year Ended January 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in thousands) | |||||||||||
Segment | |||||||||||
Agriculture | $ | 441 | $ | 6,886 | $ | 983 | |||||
Construction | (27 | ) | 2,093 | 1,914 | |||||||
International | — | 62 | — | ||||||||
Shared Resources | — | 1,458 | 379 | ||||||||
Total | $ | 414 | $ | 10,499 | $ | 3,276 |
Lease Accrual & Termination Costs | Termination Benefits | Asset Relocation & Other Costs | Total | |||||||||||
(in thousands) | ||||||||||||||
Balance, January 31, 2017 | — | $ | — | — | $ | — | ||||||||
Exit costs incurred and charged to expense | 5,681 | 4,568 | 516 | 10,765 | ||||||||||
Exit costs paid | (288 | ) | (4,164 | ) | (516 | ) | (4,968 | ) | ||||||
Balance, January 31, 2018 | 5,393 | 404 | — | 5,797 | ||||||||||
Exit costs incurred and charged to expense | 414 | — | — | 414 | ||||||||||
Exit costs paid | (3,428 | ) | (404 | ) | — | (3,832 | ) | |||||||
Balance, January 31, 2019 | 2,379 | — | — | 2,379 |
Year Ended January 31, | |||||||||||||||||||||||
2019 | 2018 | 2017 | |||||||||||||||||||||
OCI | Income | OCI | Income | OCI | Income | ||||||||||||||||||
(in thousands) | (in thousands) | (in thousands) | |||||||||||||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||
Interest rate swap (a) | — | — | 48 | (1,091 | ) | 263 | (1,384 | ) | |||||||||||||||
Derivatives Not Designated as Hedging Instruments: | |||||||||||||||||||||||
Foreign currency contracts (b) | — | 1,696 | — | (1,510 | ) | — | 365 | ||||||||||||||||
Total Derivatives | $ | — | $ | 1,696 | $ | 48 | $ | (2,601 | ) | $ | 263 | $ | (1,019 | ) |
Years ending January 31, | Amount | ||
(in thousands) | |||
2020 | $ | 20,117 | |
2021 | 18,786 | ||
2022 | 17,994 | ||
2023 | 17,117 | ||
2024 | 16,143 | ||
Thereafter | 68,409 | ||
$ | 158,566 |
2019 | 2018 | 2017 | |||||||||
(in thousands) | |||||||||||
U.S. | $ | 10,994 | $ | (16,644 | ) | $ | (22,244 | ) | |||
Foreign | 5,160 | 2,205 | (469 | ) | |||||||
Total | $ | 16,154 | $ | (14,439 | ) | $ | (22,713 | ) |
2019 | 2018 | 2017 | |||||||||
(in thousands) | |||||||||||
Current | |||||||||||
Federal | $ | (110 | ) | $ | 130 | $ | (5,368 | ) | |||
State | (189 | ) | 50 | (85 | ) | ||||||
Foreign | 1,760 | 1,350 | 116 | ||||||||
Total current taxes | 1,461 | 1,530 | (5,337 | ) | |||||||
Deferred | |||||||||||
Federal | 2,071 | (6,247 | ) | (1,819 | ) | ||||||
State | (45 | ) | 270 | (471 | ) | ||||||
Foreign | 485 | (2,943 | ) | (551 | ) | ||||||
Total deferred taxes | 2,511 | (8,920 | ) | (2,841 | ) | ||||||
$ | 3,972 | $ | (7,390 | ) | $ | (8,178 | ) |
2019 | 2018 | 2017 | ||||||
U.S. statutory rate | 21.0 | % | (33.8 | )% | (35.0 | )% | ||
Foreign statutory rates | 0.6 | % | 1.4 | % | 2.8 | % | ||
State taxes on income net of federal tax benefit | 5.6 | % | (4.3 | )% | (4.3 | )% | ||
Valuation allowances | (5.2 | )% | (4.4 | )% | (2.7 | )% | ||
U.S. statutory rate reduction | — | % | (13.9 | )% | — | % | ||
All other, net | 2.6 | % | 3.8 | % | 3.2 | % | ||
24.6 | % | (51.2 | )% | (36.0 | )% |
2019 | 2018 | ||||||
(in thousands) | |||||||
Deferred tax assets: | |||||||
Inventory allowances | $ | 3,598 | $ | 5,061 | |||
Intangible assets | 2,670 | 3,763 | |||||
Net operating losses | 6,266 | 12,366 | |||||
Accrued liabilities and other | 4,120 | 5,084 | |||||
Receivables | 740 | 719 | |||||
Stock-based compensation | 1,103 | 1,119 | |||||
Other | 806 | 1,241 | |||||
Total deferred tax assets | 19,303 | 29,353 | |||||
Valuation allowances | (6,727 | ) | (7,717 | ) | |||
Deferred tax assets, net of valuation allowances | $ | 12,576 | $ | 21,636 | |||
Deferred tax liabilities: | |||||||
Property and equipment | $ | (14,433 | ) | $ | (19,810 | ) | |
Senior convertible notes | (88 | ) | (629 | ) | |||
Total deferred tax liabilities | $ | (14,521 | ) | $ | (20,439 | ) | |
Net deferred tax asset (liability) | $ | (1,945 | ) | $ | 1,197 |
Number of Stock Options | Weighted Average Exercise Price | Aggregate Intrinsic Value | Weighted Average Remaining Contractual Life (Years) | |||||||||
(in thousands) | (in thousands) | |||||||||||
Outstanding at January 31, 2018 | 68 | $ | 21.63 | $ | 18 | 0.5 | ||||||
Granted | — | — | ||||||||||
Exercised | (5 | ) | 18.46 | |||||||||
Forfeited | (63 | ) | 21.88 | |||||||||
Outstanding at January 31, 2019 | — | $ | — | $ | — | 0.0 |
Shares | Weighted Average Grant Date Fair Value | |||||
(in thousands) | ||||||
Nonvested at January 31, 2018 | 406 | $ | 16.25 | |||
Granted | 145 | 17.22 | ||||
Forfeited | (7 | ) | 16.04 | |||
Vested | (164 | ) | 14.04 | |||
Nonvested at January 31, 2019 | 380 | $ | 15.88 |
Shares | Weighted Average Grant Date Fair Value | |||||
(in thousands) | ||||||
Nonvested at January 31, 2018 | 22 | $ | 14.70 | |||
Granted | — | — | ||||
Modified | (11 | ) | 15.01 | |||
Forfeited | (4 | ) | 14.47 | |||
Vested | (2 | ) | $ | 13.53 | ||
Nonvested at January 31, 2019 | 5 | $ | 14.19 |
Shares | Weighted Average Grant Date Fair Value | ||||
(in thousands) | |||||
Nonvested at January 31, 2018 | — | — | |||
Granted | 13 | 17.25 | |||
Modified | 11 | 15.01 | |||
Forfeited | — | — | |||
Vested | — | — | |||
Nonvested at January 31, 2019 | 24 | 16.22 |
Foreign Currency Translation Adjustment | Net Investment Hedging Instruments, Unrealized Gain (Loss) | Cash Flow Hedging Instruments, Unrealized Gain (Loss) | Total Accumulated Other Comprehensive Income (Loss) | ||||||||||||
(in thousands) | |||||||||||||||
Balance, January 31, 2016 | $ | (5,500 | ) | $ | 2,711 | $ | (1,672 | ) | $ | (4,461 | ) | ||||
Other comprehensive income (loss) before reclassifications | (1,310 | ) | — | 263 | (1,047 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | — | 1,384 | 1,384 | |||||||||||
Total other comprehensive income (loss), before tax | (1,310 | ) | — | 1,647 | 337 | ||||||||||
Tax effect | — | — | (659 | ) | (659 | ) | |||||||||
Total other comprehensive income (loss), net of tax | (1,310 | ) | — | 988 | (322 | ) | |||||||||
Balance, January 31, 2017 | (6,810 | ) | 2,711 | (684 | ) | (4,783 | ) | ||||||||
Other comprehensive income (loss) before reclassifications | 2,399 | — | 48 | 2,447 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | — | 1,091 | 1,091 | |||||||||||
Total other comprehensive income (loss), before tax | 2,399 | — | 1,139 | 3,538 | |||||||||||
Tax effect | — | — | (455 | ) | (455 | ) | |||||||||
Total other comprehensive income (loss), net of tax | 2,399 | — | 684 | 3,083 | |||||||||||
Balance, January 31, 2018 | (4,411 | ) | 2,711 | — | (1,700 | ) | |||||||||
Other comprehensive income (loss) before reclassifications | (640 | ) | — | — | (640 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | — | — | — | |||||||||||
Total other comprehensive income (loss), before tax | (640 | ) | — | — | (640 | ) | |||||||||
Tax effect | — | — | — | — | |||||||||||
Total other comprehensive income (loss), net of tax | (640 | ) | — | — | (640 | ) | |||||||||
Balance, January 31, 2019 | $ | (5,051 | ) | $ | 2,711 | $ | — | $ | (2,340 | ) |
(in thousands) | |||
Assets acquired: | |||
Cash | $ | 3,857 | |
Receivables | 5,340 | ||
Inventories | 21,725 | ||
Prepaid expenses and other | 887 | ||
Property and equipment | 3,512 | ||
Intangible assets | 1,944 | ||
Goodwill | 924 | ||
Other | 61 | ||
$ | 38,250 | ||
Liabilities assumed: | |||
Accounts payable | 1,553 | ||
Floorplan payable | 13,820 | ||
Deferred revenue | 85 | ||
Accrued expenses and other | 1,279 | ||
Long-term debt | 1,725 | ||
Deferred income taxes | 632 | ||
$ | 19,094 | ||
Net assets acquired | $ | 19,156 |
January 31, 2019 | January 31, 2018 | ||||||||||||||||||||||
Estimated Fair Value | Carrying Value | Face Value | Estimated Fair Value | Carrying Value | Face Value | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Senior convertible notes | $ | 45,644 | $ | 45,249 | $ | 45,644 | $ | 65,000 | $ | 62,819 | $ | 65,644 |
Year Ended January 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in thousands) | |||||||||||
Revenue | |||||||||||
Agriculture | $ | 726,793 | $ | 689,854 | $ | 734,283 | |||||
Construction | 301,989 | 293,860 | 317,126 | ||||||||
International | 232,723 | 208,892 | 150,288 | ||||||||
Total | $ | 1,261,505 | $ | 1,192,606 | $ | 1,201,697 | |||||
Income (Loss) Before Income Taxes | |||||||||||
Agriculture | $ | 16,799 | $ | (3,678 | ) | $ | (15,781 | ) | |||
Construction | (4,400 | ) | (7,278 | ) | (5,875 | ) | |||||
International | 5,160 | 2,205 | (469 | ) | |||||||
Segment income (loss) before income taxes | 17,559 | (8,751 | ) | (22,125 | ) | ||||||
Shared Resources | (1,405 | ) | (5,688 | ) | (588 | ) | |||||
Total | $ | 16,154 | $ | (14,439 | ) | $ | (22,713 | ) | |||
Total Impairment | |||||||||||
Agriculture | $ | 886 | $ | 175 | $ | 1,888 | |||||
Construction | 1,114 | 498 | 2,155 | ||||||||
International | 156 | — | 325 | ||||||||
Segment impairment | 2,156 | 673 | 4,368 | ||||||||
Shared Resources | — | — | 42 | ||||||||
Total | $ | 2,156 | $ | 673 | $ | 4,410 | |||||
Restructuring Costs | |||||||||||
Agriculture | $ | 441 | $ | 6,886 | $ | (120 | ) | ||||
Construction | (27 | ) | 2,093 | 60 | |||||||
International | — | 62 | — | ||||||||
Segment impairment | 414 | 9,041 | (60 | ) | |||||||
Shared Resources | 1,458 | 379 | |||||||||
Total | $ | 414 | $ | 10,499 | $ | 319 | |||||
Interest Income | |||||||||||
Agriculture | $ | 84 | $ | 164 | $ | 183 | |||||
Construction | 234 | 314 | 341 | ||||||||
International | 81 | 9 | 31 | ||||||||
Segment interest income | 399 | 487 | 555 | ||||||||
Shared Resources | (73 | ) | 9 | 12 | |||||||
Total | $ | 326 | $ | 496 | $ | 567 | |||||
Interest Expense | |||||||||||
Agriculture | $ | 4,272 | $ | 5,781 | $ | 11,201 | |||||
Construction | 6,308 | 7,750 | 10,196 | ||||||||
International | 3,313 | 2,510 | 2,884 | ||||||||
Segment interest expense | 13,893 | 16,041 | 24,281 | ||||||||
Shared Resources | (19 | ) | 958 | (2,416 | ) | ||||||
Total | $ | 13,874 | $ | 16,999 | $ | 21,865 | |||||
Year Ended January 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in thousands) | |||||||||||
Depreciation and Amortization | |||||||||||
Agriculture | $ | 4,997 | $ | 5,411 | $ | 6,128 | |||||
Construction | 13,652 | 14,297 | 15,288 | ||||||||
International | 1,804 | 1,366 | 1,394 | ||||||||
Segment depreciation and amortization | 20,453 | 21,074 | 22,810 | ||||||||
Shared Resources | 3,152 | 4,031 | 4,058 | ||||||||
Total | $ | 23,605 | $ | 25,105 | $ | 26,868 | |||||
Capital Expenditures | |||||||||||
Agriculture | $ | 2,473 | $ | 2,950 | $ | 1,585 | |||||
Construction | 7,012 | 20,080 | 5,480 | ||||||||
International | 1,944 | 1,332 | 898 | ||||||||
Segment capital expenditures | 11,429 | 24,362 | 7,963 | ||||||||
Shared Resources | 522 | 1,753 | 4,462 | ||||||||
Total | $ | 11,951 | $ | 26,115 | $ | 12,425 | |||||
January 31, 2019 | January 31, 2018 | ||||||||||
Total Assets | (in thousands) | ||||||||||
Agriculture | $ | 316,224 | $ | 400,017 | |||||||
Construction | 227,261 | 211,154 | |||||||||
International | 170,187 | 126,251 | |||||||||
Segment assets | 713,672 | 737,422 | |||||||||
Shared Resources | 78,766 | 22,886 | |||||||||
Total | $ | 792,438 | $ | 760,308 |
2019 | 2018 | ||||||||||||||||||||||||||||||
First quarter | Second quarter | Third quarter | Fourth quarter | First quarter | Second quarter | Third quarter | Fourth quarter | ||||||||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||||||||||||||
Revenue - As Previously Reported | 245,678 | 299,891 | 363,649 | n/a | 264,118 | 268,871 | 330,341 | 339,608 | |||||||||||||||||||||||
Corrections | (1,964 | ) | (2,660 | ) | (2,736 | ) | n/a | (3,057 | ) | (2,556 | ) | (2,489 | ) | (2,229 | ) | ||||||||||||||||
Revenue - As Corrected | 243,714 | 297,231 | 360,913 | 359,647 | 261,061 | 266,315 | 327,852 | 337,379 | |||||||||||||||||||||||
Gross Profit | 47,558 | 58,901 | 69,542 | 55,585 | 48,919 | 52,807 | 61,477 | 52,097 | |||||||||||||||||||||||
Net Income (Loss) | $ | (1,588 | ) | $ | 5,180 | $ | 10,776 | $ | (2,160 | ) | $ | (5,932 | ) | $ | (5,186 | ) | $ | 2,384 | $ | 1,685 | |||||||||||
Earnings (Loss) per Share-Basic | (0.07 | ) | 0.23 | 0.49 | (0.10 | ) | (0.27 | ) | (0.24 | ) | 0.11 | 0.08 | |||||||||||||||||||
Earnings (Loss) per Share-Diluted | (0.07 | ) | 0.23 | 0.48 | (0.10 | ) | (0.27 | ) | (0.24 | ) | 0.11 | 0.08 | |||||||||||||||||||
Year Ended January 31, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
As Previously Reported | Corrections | As Corrected | As Previously Reported | Corrections | As Corrected | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Revenue | |||||||||||||||||||||||
Equipment | $ | 804,361 | $ | 40,407 | $ | 844,768 | $ | 797,315 | $ | 40,722 | $ | 838,037 | |||||||||||
Parts | 222,404 | (19,173 | ) | 203,231 | 233,819 | (19,716 | ) | 214,103 | |||||||||||||||
Service | 117,318 | (28,524 | ) | 88,794 | 124,076 | (29,668 | ) | 94,408 | |||||||||||||||
Rental and other | 58,855 | (3,042 | ) | 55,813 | 57,870 | (2,721 | ) | 55,149 | |||||||||||||||
Total Revenue | 1,202,938 | (10,332 | ) | 1,192,606 | 1,213,080 | (11,383 | ) | 1,201,697 | |||||||||||||||
Cost of Revenue | |||||||||||||||||||||||
Equipment | 743,465 | 21,184 | 764,649 | 746,169 | 23,755 | 769,924 | |||||||||||||||||
Parts | 156,455 | (12,726 | ) | 143,729 | 164,020 | (14,808 | ) | 149,212 | |||||||||||||||
Service | 44,141 | (13,462 | ) | 30,679 | 46,284 | (14,794 | ) | 31,490 | |||||||||||||||
Rental and other | 43,577 | (5,328 | ) | 38,249 | 42,878 | (5,536 | ) | 37,342 | |||||||||||||||
Total Cost of Revenue | 987,638 | (10,332 | ) | 977,306 | 999,351 | (11,383 | ) | 987,968 | |||||||||||||||
Gross Profit | $ | 215,300 | $ | — | $ | 215,300 | $ | 213,729 | $ | — | $ | 213,729 |
Classification | Beginning Balance | Additions Charged to Expenses | Additions from Business Combinations | Deductions for Write-offs, Net of Recoveries | Foreign Currency Translation Adjustments | Ending Balance | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Valuation reserve deduction from receivables: | ||||||||||||||||||||||||
Year Ended January 31, 2019 | $ | 2,951 | $ | 835 | $ | 958 | $ | (1,173 | ) | $ | (43 | ) | $ | 3,528 | ||||||||||
Year Ended January 31, 2018 | 3,630 | 2,333 | — | (3,138 | ) | 126 | 2,951 | |||||||||||||||||
Year Ended January 31, 2017 | 3,591 | 3,399 | — | (3,428 | ) | 68 | 3,630 |
(a) | Documents filed as part of this report. |
(1) | Financial Statements. The following financial statements are included in Part II, Item 8 of this Annual Report on Form 10-K: |
(2) | Financial Statement Schedules. The following consolidated financial statement schedule should be read in conjunction with the consolidated financial statements and Report of Deloitte & Touche LLP on the consolidated financial statements included in Part II, Item 8 of this annual report on Form 10-K: |
(3) | Exhibits. See the Exhibit Index to our Form 10-K immediately following below: |
No. | Description | |
Certificate of Incorporation of the registrant, as amended (incorporated herein by reference to Exhibit 3.1 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on September 10, 2012, File No. 001-33866). | ||
Bylaws of the registrant, as amended (incorporated herein by reference to Exhibit 3.2 of the registrant's Annual Report on Form 10-K filed with the Commission on April 16, 2009, File No. 001-33866). | ||
Specimen Certificate representing shares of common stock of Titan Machinery Inc. (incorporated by reference to Exhibit 4.1 of the registrant's Amendment No. 6 to Registration Statement on Form S-1, Reg. No. 333-145526, filed with the Commission on December 3, 2007). | ||
Indenture, dated as of April 24, 2012, by and between the registrant and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 of the registrant's Current Report on Form 8-K filed with the Commission on April 24, 2012, File No. 001-33866). | ||
Amended and Restated Employment Agreement, dated March 6, 2013, between David Meyer and the registrant (incorporated herein by reference to Exhibit 10.2 of the registrant's Annual Report on Form 10-K filed with the Commission on April 10, 2013, File No. 001-33866).** | ||
Amendment dated March 1, 2014 to the Amended and Restated Employment Agreement, dated March 6, 2013, between David Meyer and the registrant (incorporated herein by reference to Exhibit 10.54 of the registrant's Annual Report on Form 10-K filed with the Commission on April 11, 2014).** | ||
Amended and Restated Employment Agreement, dated September 4, 2015, between Mark Kalvoda and the registrant (incorporated herein by reference to Exhibit 10.3 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on September 9, 2015).** | ||
Amendment dated September 1, 2016 to the Amended and Restated Employment Agreement, dated September 4, 2015 between Mark Kalvoda and the registrant (incorporated herein by reference to Exhibit 10.2 of the registrant’s Quarterly Report on Form 10-Q filed with the Commission on September 1, 2016).** | ||
Executive Employment Agreement, dated September 5, 2018, between Bryan J. Knutson and the registrant (incorporated herein by reference to Exhibit 10.1 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on September 6, 2018).** | ||
Agricultural Equipment Sales & Service Agreement, dated May 31, 2017, between CNH Industrial America LLC and the registrant (incorporated herein by reference to Exhibit 10.3 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on June 2, 2017). | ||
Amendment to the Agricultural Equipment Sales & Service Agreement, dated May 31, 2017, between CNH Industrial America LLC and the registrant (incorporated herein by reference to Exhibit 10.4 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on June 2, 2017). | ||
Construction Equipment Sales & Service Agreement, dated May 31, 2017, between CNH Industrial America LLC and the registrant (incorporated herein by reference to Exhibit 10.1 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on June 2, 2017). | ||
Amendment to the Construction Equipment Sales & Service Agreement, dated May 31, 2017, between CNH Industrial America LLC and the registrant (incorporated herein by reference to Exhibit 10.2 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on June 2, 2017). | ||
New Holland Equipment Sales & Service Agreement, dated May 31, 2017, between CNH Industrial America LLC and the registrant (incorporated herein by reference to Exhibit 10.5 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on June 2, 2017). | ||
Amendment to the New Holland Equipment Sales & Service Agreement, dated May 31, 2017, between CNH Industrial America LLC and the registrant (incorporated herein by reference to Exhibit 10.6 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on June 2, 2017). | ||
Dealer Security Agreement dated April 14, 2003 between New Holland North America, Inc. and the registrant (incorporated herein by reference to Exhibit 10.14 of the registrant's Amendment No. 2 to Registration Statement on Form S-1, Reg. No. 333-145526, filed with the Commission on October 10, 2007). | ||
Dealer Security Agreements between CNH America LLC and the registrant (incorporated herein by reference to Exhibit 10.15 of the registrant's Amendment No. 2 to Registration Statement on Form S-1, Reg. No. 333-145526, filed with the Commission on October 10, 2007). | ||
No. | Description | |
Amended and Restated Wholesale Floorplan Credit Facility and Security Agreement, dated November 13, 2007, between CNH Capital America LLC and the registrant (incorporated herein by reference to Exhibit 10.25 of the registrant's Amendment No. 5 to Registration Statement on Form S-1, Reg. No. 333-145526, filed with the Commission on November 27, 2007). | ||
Letter Agreement with CNH Capital America, LLC dated September 30, 2011, amending the November 13, 2007 Amended and Restated Wholesale Floorplan Credit Facility and Security Agreement (incorporated herein by reference to Exhibit 10.3 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on December 9, 2011, File No. 001-33866). | ||
Letter Agreement with CNH Capital America, LLC dated November 20, 2012, amending the November 13, 2007 Amended and Restated Wholesale Floorplan Credit Facility and Security Agreement (incorporated herein by reference to Exhibit 10.1 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on December 6, 2012, File No. 001-33866). | ||
Letter Agreement with CNH Capital America, LLC dated February 15, 2013, amending the November 13, 2007 Amended and Restated Wholesale Floorplan Credit Facility and Security Agreement (incorporated herein by reference to Exhibit 10.49 of the registrant's Annual Report on Form 10-K filed with the Commission on April 10, 2013, File No. 001-33866). | ||
Amendment dated December 8, 2014 to the Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement dated November 13, 2007 by and between the registrant and CNH Industrial Capital America LLC (incorporated herein by reference to Exhibit 10.2 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on December 10, 2014, File No. 001-33866). | ||
Second Amendment dated March 31, 2016 to the Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement dated November 13, 2007 by and between the registrant and CNH Industrial Capital America LLC (incorporated herein by reference to Exhibit 10.17.5 of the registrant's Annual Report on Form 10-K filed with the Commission on April 13, 2016). | ||
Amendment dated October 5, 2017 to the Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement dated November 13, 2007 by and between the registrant and CNH Industrial Capital America LLC (incorporated herein by reference to Exhibit 10.2 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on December 7, 2017). | ||
Amendment dated April 1, 2018 to the Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement dated November 13, 2007 by and between the registrant and CNH Industrial Capital America LLC (incorporated herein by reference to Exhibit 10.8.7 of the registrant's Annual Report on Form 10-K filed with the Commission on April 6, 2018). | ||
Amendment dated May 31, 2018 to the Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement dated November 13, 2007 by and between the registrant and CNH Industrial Capital America LLC (incorporated herein by reference to Exhibit 10.8.7 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on June 7, 2018). | ||
Amendment dated November 30, 2018 to the Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement dated November 13, 2007 by and between the registrant and CNH Industrial Capital America LLC (incorporated herein by reference to Exhibit 10.1 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on December 6, 2018). | ||
Amendment dated January 18, 2019 to the Amended and Restated Wholesale Floor Plan Credit Facility and Security Agreement dated November 13, 2007 by and between the registrant and CNH Industrial Capital America LLC. | ||
Second Amended and Restated Credit Agreement dated as of October 28, 2015 by and among the registrant, Wells Fargo Bank, National Association, and the Financial Institutions Party Thereto (incorporated by reference to Exhibit 10.1 of the registrant's Current Report on Form 8-K filed with the Commission on November 2, 2015). | ||
Amendment No. 1 to Second Amended and Restated Credit Agreement dated December 29, 2015 by and among the registrant, Wells Fargo Bank, National Association, and the Financial Institutions Party Thereto (incorporated herein by reference to Exhibit 10.18.1 of the registrant's Annual Report on Form 10-K filed with the Commission on April 13, 2016). | ||
Amendment No. 2 to Second Amended and Restated Credit Agreement dated March 25, 2016 by and among the registrant, Wells Fargo Bank, National Association, and the Financial Institutions Party Thereto (incorporated herein by reference to Exhibit 10.18.2 of the registrant's Annual Report on Form 10-K filed with the Commission on April 13, 2016). | ||
No. | Description | |
Amendment No. 3 to Second Amended and Restated Credit Agreement dated December 8, 2016 by and among the registrant, Wells Fargo Bank, National Association, and the Financial Institutions Party Thereto (incorporated herein by reference to Exhibit 10.17.3 of the registrant's Annual Report on Form 10-K filed with the Commission on April 7, 2017). | ||
Amendment No. 4 to Second Amended and Restated Credit Agreement dated March 1, 2017 by and among the registrant, Wells Fargo Bank, National Association, and the Financial Institutions Party Thereto (incorporated herein by reference to Exhibit 10.17.4 of the registrant's Annual Report on Form 10-K filed with the Commission on April 7, 2017). | ||
Amendment No. 5 to Second Amended and Restated Credit Agreement dated February 12, 2018 by and among the registrant, Wells Fargo Bank, National Association, and the Financial Institutions Party Thereto (incorporated herein by reference to Exhibit 10.9.5 of the registrant's Annual Report on Form 10-K filed with the Commission on April 6, 2018). | ||
Amendment No. 6 to Second Amended and Restated Credit Agreement dated December 28, 2018 by and among the registrant, Wells Fargo Bank, National Association, and the Financial Institutions Party Thereto. | ||
Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 of the registrant's Current Report on Form 8-K filed with the Commission on June 6, 2011, File No. 001-33866).** | ||
Form of Incentive Stock Option Agreement under the 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.22 of the registrant's Amendment No. 2 to Registration Statement on Form S-1, Reg. No. 333-145526, filed with the Commission on October 10, 2007).** | ||
Form of Non-Qualified Stock Option Agreement under the 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.23 of the registrant's Amendment No. 2 to Registration Statement on Form S-1, Reg. No. 333-145526, filed with the Commission on October 10, 2007).** | ||
Form of Restricted Stock Agreement under the 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.24 of the registrant's Amendment No. 2 to Registration Statement on Form S-1, Reg. No. 333-145526, filed with the Commission on October 10, 2007).** | ||
Titan Machinery Inc. 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 of the registrant's Current Report on Form 8-K filed with the Commission on June 3, 2014, File No. 001-33866).** | ||
Form of Titan Machinery Inc. Restricted Stock Agreement (for non-employee directors) under the 2014 Equity Incentive Plan, revised effective June 1, 2018.** | ||
Form of Titan Machinery Inc. Restricted Stock Agreement under the 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.3 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on June 5, 2014, File No. 001-33866).** | ||
Form of Titan Machinery Inc. Restricted Stock Agreement under the 2014 Equity Incentive Plan, revised effective June 1, 2018. ** | ||
Form of Titan Machinery Inc. Restricted Stock Unit Agreement under the 2014 Equity Incentive Plan, used for purposes of granting awards to European employees (incorporated herein by reference to Exhibit 10.2 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on September 9, 2014).** | ||
Form of Titan Machinery Inc. Restricted Stock Unit Agreement under the 2014 Equity Incentive Plan, used for purposes of granting awards to European employees, revised effective June 1, 2017. ** | ||
Form of Director and Officer Indemnification Agreement | ||
Titan Machinery Inc. Non-Employee Director Compensation Plan (incorporated herein by reference to Exhibit 10.2 of the registrant's Quarterly Report on Form 10-Q filed with the Commission on September 9, 2015).** | ||
Description of Titan Machinery Inc.’s Executive Cash Bonus Plan (incorporated herein by reference to Exhibit 10.34 of the registrant’s Annual Report on Form 10-K filed with the Commission on April 15, 2015)** | ||
Subsidiaries of Titan Machinery Inc. | ||
Consent of Deloitte & Touche LLP | ||
No. | Description | |
Power of Attorney | ||
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101* | The following materials from Titan Machinery Inc.'s Annual Report on Form 10-K for the year ended January 31, 2019 formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations for the fiscal years ended January 31, 2019, 2018 and 2017, (ii) the Consolidated Statements of Operations for the fiscal years ended January 31, 2019, 2018 and 2017, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended January 31, 2019, 2018 and 2017, (iv) the Consolidated Statements of Stockholders' Equity for the fiscal years ended January 31, 2019, 2018 and 2017, (v) the Consolidated Statements of Cash Flows for the fiscal years ended January 31, 2019, 2018 and 2017, and (vi) the Notes to the Consolidated Financial Statements. |
* | Filed herewith |
** | Indicates management contract or compensatory plan or arrangement. |
By | /s/ DAVID J. MEYER | By | /s/ MARK KALVODA | |||
David J. Meyer, Board Chair and Chief Executive Officer | Mark Kalvoda, Chief Financial Officer |
Signature | Title | Date | |
/s/ DAVID J. MEYER | Board Chair, Chief Executive Officer (principal executive officer) | April 5, 2019 | |
David J. Meyer | |||
/s/ MARK KALVODA | Chief Financial Officer (principal financial officer and principal accounting officer) | April 5, 2019 | |
Mark Kalvoda | |||
* | Director | ||
Tony Christianson | April 5, 2019 | ||
* | Director | ||
Stanley Dardis | April 5, 2019 | ||
* | Director | ||
Stan Erickson | April 5, 2019 | ||
* | Director | ||
Christine Hamilton | April 5, 2019 | ||
* | Director | ||
John Henderson | April 5, 2019 | ||
* | Director | ||
Jody Horner | April 5, 2019 | ||
* | Director | ||
Richard Mack | April 5, 2019 |
*By | /s/ MARK KALVODA | ||
Mark Kalvoda, Attorney-in-Fact |
(A) | the Board of Directors of the Company by a majority vote of Disinterested Directors, whether or not such majority constitutes a quorum; |
(B) | a committee of Disinterested Directors designated by majority vote of such Disinterested Directors, whether or not such majority constitutes a quorum; |
(C) | if there are no Disinterested Directors, Independent Counsel in a written opinion to the Board of Directors, or designated committee of the Board of Directors, with a copy to Indemnitee, which Independent Counsel shall be selected by majority vote of the Company’s directors at a meeting at which a quorum is present; or |
(D) | the Company’s stockholders, by a majority vote of those in attendance at a meeting at which a quorum is present. |
(ii) | If a Change of Control has occurred: |
(A) | if the Indemnitee so requests in writing, the Board of Directors of the Company by a majority vote of Disinterested Directors, whether or not such majority constitutes a quorum; or |
(B) | in all other situations, Independent Counsel in a written opinion to the Board of Directors, or designated committee of the Board of Directors, with a copy to Indemnitee, which Independent Counsel shall be selected by majority vote of the Company’s directors at a meeting at which a quorum is present, or a majority vote of the Disinterested Directors, or committee of Disinterested Directors. |
BORROWER: TITAN MACHINERY INC. By: Name: Title: |
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent, as a Lender and as Issuing Bank By: Name: Title: |
BANK OF AMERICA, N.A., as a Lender By: Name: Title: |
PNC BANK, NATIONAL ASSOCIATION, as a Lender By: Name: Title: |
REGIONS BANK, as a Lender By: Name: Title: |
COMPASS BANK, as a Lender By: Name: Title: |
SIEMENS FINANCIAL SERVICES, INC., as a Lender By: Name: Title: By: Name: Title: |
WOODFOREST NATIONAL BANK, as a Lender By: Name: Title: |
AGCOUNTRY FARM CREDIT SERVICES, PCA, as a Lender By: Name: Title: |
Vesting Dates | Shares |
April 1, 20__ | |
April 1, 20__ | |
April 1, 20__ | |
April 1, 20__ |
i. | Participant’s death; |
ii. | Participant’s employment is severed due to disability under the Company’s long-term disability plan; or |
iii. | Participant retires from the Company at age sixty-four (64) or older with at least five (5) years of service (or pursuant to early retirement with the consent of the Compensation Committee). |
(i) | tendering a cash payment. |
(ii) | authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Participant as a result of the vesting of the Restricted Stock; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the minimum amount of tax required to be withheld by law. |
Name | Ownership | Jurisdiction of Incorporation/ Organization | ||
NW Property Solutions LLC | 100% | North Dakota | ||
Titan European Holdings S.a.r.l. | 100% | Luxembourg | ||
Titan Machinery Ukraine LLC | 100% | Ukraine | ||
Titan Machinery D.o.o. Novi Sad | 100% | Serbia | ||
Titan Machinery Austria GmbH | 100% | Austria | ||
Titan Machinery Romania S.R.L. | 100% | Romania | ||
Titan Machinery Bulgaria AD | 100% | Bulgaria | ||
Titan Machinery Deutschland GmbH | 100% | Germany |
/s/ David J. Meyer David J. Meyer, Board Chair and CEO | /s/ Mark P. Kalvoda Mark P. Kalvoda, CFO |
/s/ Tony Christianson Tony Christianson, Director | /s/ Stanley Dardis Stanley Dardis, Director |
/s/ Stan Erickson Stan Erickson, Director | /s/ Christine Hamilton Christine Hamilton, Director |
/s/ John Henderson John Henderson, Director | /s/ Jody Horner Jody Horner, Director |
/s/ Richard Mack Richard Mack, Director |
1. | I have reviewed this report on Form 10-K of Titan Machinery Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting |
/s/ DAVID J. MEYER |
David J. Meyer |
Board Chair and Chief Executive Officer |
1. | I have reviewed this report on Form 10-K of Titan Machinery Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ MARK KALVODA |
Mark Kalvoda |
Chief Financial Officer |
/s/ DAVID J. MEYER |
David J. Meyer |
Board Chair and Chief Executive Officer |
/s/ MARK KALVODA |
Mark Kalvoda |
Chief Financial Officer |
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Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Mar. 29, 2019 |
Jul. 31, 2017 |
|
Document and Entity Information | |||
Entity Registrant Name | Titan Machinery Inc. | ||
Entity Central Index Key | 0001409171 | ||
Document Type | 10-K | ||
Document Period End Date | Jan. 31, 2019 | ||
Amendment Flag | false | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Current Fiscal Year End Date | --01-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 279.6 | ||
Entity Common Stock, Shares Outstanding | 22,213,855 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jan. 31, 2019 |
Jan. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for Doubtful Accounts Receivable, Current | $ 3,528 | $ 2,951 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, authorized shares | 45,000,000 | 45,000,000 |
Common stock, issued shares | 22,218,000 | 22,102,000 |
Common stock, outstanding shares | 22,218,000 | 22,102,000 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Net Income (Loss) Including Noncontrolling Interest | $ 12,182 | $ (7,049) | $ (14,535) |
Other Comprehensive Income (Loss) | |||
Foreign currency translation adjustments | (640) | 2,399 | (1,090) |
Total Other Comprehensive Income (Loss) | (640) | 3,083 | (102) |
Comprehensive Income (Loss) | 11,542 | (3,966) | (14,637) |
Comprehensive Loss Attributable to Noncontrolling Interest | (333) | ||
Comprehensive Income (Loss) Attributable To Titan Machinery Inc. | 11,542 | (3,966) | (14,304) |
Interest Rate Swap [Member] | |||
Other Comprehensive Income (Loss) | |||
Cash flow hedging instruments, net of tax | $ 0 | $ 684 | $ 988 |
BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES | BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES Nature of Business Titan Machinery Inc. and its subsidiaries (collectively, the "Company") are engaged in the retail sale, service and rental of agricultural and construction machinery through its stores in the United States and Europe. The Company's North American stores are located in Arizona, Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Wisconsin and Wyoming, and its European stores are located in Bulgaria, Germany, Romania, Serbia and Ukraine. Seasonality The agricultural and construction equipment businesses are highly seasonal, which causes the Company's quarterly results and cash flows to fluctuate during the year. The Company's customers generally purchase and rent equipment in preparation for, or in conjunction with, their busy seasons, which for farmers are the spring planting and fall harvesting seasons, and for Construction customers is dependent on weather seasons in their respective regions, which is typically the second and third quarters of the Company's fiscal year for much of its Construction footprint. The Company's parts and service revenues are typically highest during its customers' busy seasons as well, due to the increased use of their equipment during this time, which generates the need for more parts and service work. However, weather conditions impact the timing of our customers' busy times, which may cause the Company's quarterly financial results to differ between fiscal years. In addition, the fourth quarter typically is a significant period for equipment sales in the U.S. because of our customers’ year-end tax planning considerations, the timing of dealer incentives and the increase in availability of funds from completed harvests and construction projects. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant accounts, transactions and profits between the consolidated companies have been eliminated in consolidation. The Company's foreign subsidiaries have fiscal years ending on December 31 of each year, consistent with statutory reporting requirements in each of the respective countries. The accounts of the Company's foreign subsidiaries are consolidated as of December 31 of each year. See Note 27 - Subsequent Events for information regarding an acquisition in January 2019 which will be accounted for as a business combination in the Company's fiscal year ending January 31, 2020. No other events or transactions occurred related to these subsidiaries in January 2019 that would have materially affected the consolidated financial position, results of operations or cash flows. In June 2016, the Company acquired all of the outstanding ownership interest held by the noncontrolling interest holder of the Company's Bulgarian subsidiary. Total consideration, which amounted to $4.3 million, was in the form of the satisfaction of outstanding receivables owed to the Company by the noncontrolling interest holder. Subsequent to this acquisition, all of the Company's subsidiaries are wholly-owned. Reclassifications Certain reclassifications of amounts previously reported have been made to the accompanying consolidated balance sheets and consolidated statements of cash flows to maintain consistency and comparability between periods presented. These reclassifications had no impact on previously reported total assets or liabilities within the consolidated balance sheet or cash flows from operating, investing or financing activities within the consolidated statement of cash flows. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, particularly related to realization of inventory, impairment of long-lived assets, collectability of receivables, and income taxes. Concentrations of Credit Risk The Company's sales are to agricultural and construction equipment customers principally in the states and European countries in which its stores are located. The Company extends credit to its customers in the ordinary course of business and monitors its customers' financial condition to minimize its risks associated with trade receivables; however, the Company does not generally require collateral on trade receivables. The Company's cash balances are maintained in bank deposit accounts, which, at times, are in excess of federally insured limits. Concentrations in Operations The Company currently purchases new equipment, rental equipment and the related parts from a limited number of manufacturers. Although no change in suppliers is anticipated, the occurrence of such a change could cause a possible loss of sales and adversely affect operating results. The Company is the holder of authorized dealerships granted by CNH Industrial America, LLC and CNHI International SA (collectively referred to "CNH Industrial") whereby it has the right to act as an authorized dealer for the entity's equipment. The dealership authorizations and floorplan payable facilities can be canceled by the respective entity if the Company does not observe certain established guidelines and covenants. In addition, the Company believes that the following factors related to concentrations in suppliers, and in particular CNH Industrial, have a significant impact on its operating results: •CNH Industrial's product offerings, reputation and market share •CNH Industrial's product prices and incentive and discount programs •Supply of inventory from CNH Industrial
Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to collect in exchange for those goods or services. Shipping and handling costs are recorded as cost of revenue. Sales, value added and other taxes collected from our customers concurrent with our revenue activities are excluded from revenue. Equipment Revenue. Equipment revenue transactions include the sale of new and used agricultural and construction equipment. The Company satisfies its performance obligations and recognizes revenue at a point in time, primarily upon the delivery of the product. Once a product is delivered, the customer has physical possession of the asset, can direct the use of the asset, and has the significant risks and rewards of ownership of the asset. Equipment transactions often include both cash and noncash consideration. Cash consideration is paid directly by our customers or by third-party financial institutions financing our customer transactions. Noncash consideration is in the form of trade-in equipment assets. We assign a value to trade-in assets by estimating a future selling price, which we estimate based on relevant internal and third-party data, less a gross profit amount to be realized at the time the trade-in asset is sold and an estimate of any reconditioning work required to ready the asset for sale. Both cash and noncash consideration can be received prior to or after our performance obligation is satisfied. Any consideration received prior to the satisfaction of our performance obligation is recognized as deferred revenue. Receivables recognized for amounts not paid at the time our performance obligation is satisfied, including amounts due from third-party financial institutions, generally do not have established payment terms but are collected in relatively short time periods. For certain equipment sale transactions, the Company provides a residual value guarantee to CNH Industrial Capital in connection with a customer leasing arrangement in which we sell the equipment to CNH Industrial Capital, who simultaneously executes a leasing arrangement with our end-user customer. The amount of revenue recognized for the sale of the equipment asset is reduced by, and we recognize a corresponding liability equal to, our estimate of the amount that is probable of being paid under the guarantee discounted at a rate of interest to reflect the risk inherent in the liability. Also included in equipment revenue are net commissions earned for serving as the agent in facilitating sales of equipment assets we hold as consignee on behalf of the consignor, as well as net commissions earned for facilitating the sale of extended warranty protection plans provided by our suppliers or third-party insurance providers. We have elected, as a practical expedient, to recognize sales commissions earned on the sale of equipment inventory as an expense when incurred because the amortization period of this cost if it was otherwise capitalized would be less than one year. These costs are recorded in operating expenses in our consolidated statements of operations. Parts Revenue. We sell a broad range of maintenance and replacement parts for both equipment that we sell and other types of equipment. The Company satisfies its performance obligation and recognizes revenue at a point in time, upon delivery of the product to the customer. Once a product is delivered, the Company has a present right to payment, the customer has physical possession of the asset, can direct the use of the asset, and has the significant risks and rewards of ownership of the asset. In many cases, customers tender payment at the time of delivery. Balances not paid at the time of delivery are typically due in full within 30 days. Most parts are sold with a thirty-day right of return or exchange. Historically, parts returns have not been material. Parts revenue also includes the retail value of parts inventories consumed during the course of customer repair and maintenance services and services provided under manufacturer warranties. As further described below, we recognize revenue from these activities over time. Service Revenue. We provide repair and maintenance services, including repairs performed under manufacturer warranties, for our customer’s equipment. We recognize service and associated parts revenue of our repair and maintenance services over time as we transfer control of these goods and services over time. The Company recognizes revenue over time in the amount to which we have the right to invoice the customer as such an amount corresponds to the value of our performance completed to date. Generally, the Company has the right to invoice the customer for labor hours incurred and parts inventories consumed during the performance of the service arrangement. Customer invoicing most often occurs at the conclusion of our repair and maintenance services. Accordingly, we recognize unbilled receivables for the amount of unbilled labor hours incurred and parts inventories consumed under our repair and maintenance arrangements. Upon customer invoicing, unbilled receivables are reclassified to receivables. In many cases, customers tender payment at the completion of our work and the creation of the invoice. Balances not paid at the time of invoicing are typically due in full within 30 days. Other Revenue. Other revenues primarily consist of fees charged in connection with short-haul equipment delivery and pick-up services, in which revenue is recognized at a point in time when the service is completed, and Global Positioning System ("GPS") signal subscriptions, in which revenue is recognized on a straight-line basis over the subscription period. Rental Revenue. We rent equipment to our customers on a short-term basis for periods ranging from a few days to a few months. Rental revenue is recognized on a straight-line basis over the period of the related rental agreement. Revenue from rental equipment delivery and pick-up services is recognized when the service is performed. Manufacturer Incentives and Discounts The Company receives various manufacturer incentives and discounts, which are based on a variety of factors. Discounts and incentives related to the purchase of inventory are recognized as a reduction of inventory prices and recognized as a reduction of cost of revenue when the related inventory is sold. Other incentives, reflecting reimbursement of qualifying expenses, are recognized as a reduction of the related expense when earned. Receivables and Credit Policy Trade accounts receivable due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 to 90 days from the invoice date. Balances unpaid after the due date based on trade terms are considered past due and begin to accrue interest. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices. Trade accounts receivable due from manufacturers relate to discount programs, incentive programs and repair services performed on equipment with a remaining factory warranty. Trade accounts receivable due from finance companies primarily consist of contracts in transit with finance companies and balances due from credit card companies. These receivables do not generally have established payment terms but are collected in relatively short time periods. Unbilled receivables represent unbilled labor hours incurred and parts inventories consumed during the performance of service arrangements for our customers at their retail rates. The carrying amount of trade receivables is reduced by a valuation allowance that reflects management's best estimate of the amounts that will not be collected. Management reviews aged receivable balances and estimates the portion, if any, of the balance that will not be collected. Account balances are charged off after all appropriate means of collection have been exhausted and the potential for recovery is considered remote. Inventories New and used equipment are stated at the lower of cost (specific identification) or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. All new and used equipment inventories, including that which has been rented, are subject to periodic lower of cost or net realizable value evaluation that considers various factors including aging of equipment and market conditions. Equipment inventory values are adjusted whenever the carrying amount exceeds the net realizable value. Parts inventories are valued at the lower of average cost or net realizable value. The Company estimates its lower of cost or net realizable value adjustments on its parts inventories based on various factors including aging and sales of each type of parts inventory. Work in process represents costs incurred in the reconditioning and preparation for sale of our equipment inventories. Property and Equipment Property and equipment is carried at cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the estimated useful life of each asset, as summarized below:
Depreciation for income tax reporting purposes is computed using accelerated methods. Lessor Accounting The Company leases equipment from its rental fleet and equipment inventory to customers on operating leases over periods primarily less than one year. These leases require a minimum rental payment and contingent rental payment based on machine hours. Rental revenue totaled $50.7 million, $51.6 million and $50.5 million for the years ended January 31, 2019, 2018 and 2017. As of January 31, 2019, the Company had $111.2 million of rental fleet included in property and equipment and accumulated depreciation of $50.4 million. As of January 31, 2018, the Company had $123.4 million of rental fleet included in property and equipment and accumulated depreciation of $51.6 million. Goodwill Goodwill is recognized and initially measured as any excess of the acquisition-date consideration transferred in a business combination over the acquisition-date amounts recognized for the net identifiable assets acquired. Goodwill is not amortized but is tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not result in an impairment of goodwill. Impairment testing is performed at the reporting unit level. A reporting unit is defined as an operating segment or one level below an operating segment, referred to as a component. A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. After implementing new authoritative guidance regarding goodwill impairment on February 1, 2018, the goodwill impairment analysis is a single-step quantitative assessment that identifies both the existence of impairment and the amount of impairment loss by comparing the estimated fair value of a reporting unit to its carrying value, with any excess carrying value over the fair value being recognized as an impairment loss, limited to the total amount of goodwill allocated to that reporting unit (see the Recent Accounting Guidance section below for additional details regarding the amendment to goodwill impairment testing). The Company performs its annual goodwill impairment test as of December 31st of each year and has identified two reporting units that carry a goodwill balance. Intangible Assets Intangible assets with a finite life consist of customer relationships and covenants not to compete, and are carried at cost less accumulated amortization. The Company amortizes the cost of identified intangible assets on a straight-line basis over the expected period of benefit, which is generally three years for customer relationships and the contractual term for covenants not to compete, which range from five to ten years. Intangible assets with an indefinite life consist of distribution rights with manufacturers. Distribution rights are classified as an indefinite-lived intangible asset because the Company's distribution agreements continue indefinitely by their terms, or are routinely awarded or renewed without substantial cost or material modifications to the underlying agreements. Accordingly, the Company believes that its distribution rights intangible assets will contribute to its cash flows for an indefinite period, therefore the carrying amount of distribution rights is not amortized, but is tested for impairment annually, or more frequently upon the occurrence of certain events or when circumstances indicate that impairment may be present. The impairment test is a single-step assessment that identifies both the existence of impairment and the amount of impairment loss by comparing the estimated fair value of the asset to its carrying value, with any excess carrying value over the fair value being recognized as an impairment loss. The Company performs its annual impairment test as of December 31st of each year. Impairment of Long-Lived Assets The Company's long-lived assets consist of its intangible assets and property and equipment. These assets are reviewed for potential impairment when events or circumstances indicate that the carrying value may not be recoverable. Recoverability is measured by comparing the estimated future undiscounted cash flows of such assets to their carrying values. If the estimated undiscounted cash flows exceed the carrying value, the carrying value is considered recoverable and no impairment recognition is required. However, if the sum of the undiscounted cash flows is less than the carrying value of the asset, the second step of the impairment analysis must be performed to measure the amount of impairment, if any. The second step of the impairment analysis compares the estimated fair value of the long-lived asset to its carrying value and any amount by which the carrying value exceeds the fair value is recognized as an impairment charge. When reviewing long-lived assets for impairment, we group long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Long-lived assets deployed and used by individual store locations are reviewed for impairment at the individual store level. Other long-lived assets shared across stores within a segment or shared across segments are reviewed for impairment on a segment or consolidated level as appropriate. During the year ended January 31, 2019, the Company determined that certain events or circumstances, including a current period operating loss combined with historical losses and anticipated future operating losses, within certain of its stores was an indication that the long-lived assets of these stores may not be recoverable. The aggregate carrying value of such assets totaled $4.8 million. In light of these circumstances, the Company performed step one of the long-lived asset impairment analysis for these assets and concluded that the carrying value was not recoverable. Accordingly, the Company performed step two of the impairment analysis and estimated the fair value of the assets using an income approach. The Company recognized total impairment charges of $2.2 million, of which $0.9 million related to the Agriculture segment, $1.1 million related to the Construction segment, and $0.2 million related to the International segment. All impairment charges recognized are included in the Impairment of Long-Lived Assets amount in the consolidated statements of operations. We performed similar impairment analyses at the end of fiscal 2018 and 2017. The Company recognized impairment charges totaling $0.7 million on long-lived assets during the year ended January 31, 2018, of which $0.2 million related to the Agriculture segment and $0.5 million related to the Construction segment. The Company recognized impairment charges totaling $4.4 million on long-lived assets during the year ended January 31, 2017, of which $1.9 million related to the Agriculture segment, $2.2 million related to the Construction segment and $0.3 million related to the International segment. Construction of Leased Assets and Sale-Leaseback Accounting The Company from time to time performs construction projects on its store locations, which are recorded as property and equipment in the consolidated balance sheet during the construction period. Upon completion, these assets are either placed in service, at which point the depreciation of the asset commences, or are part of a sale-leaseback transaction with a third-party buyer/lessor. In certain other situations the Company enters into build-to-suit construction projects with third-party lessors. Under the applicable lease accounting rules, certain forms of lessee involvement in the construction of the leased asset deem the Company to be the owner of the leased asset during the construction period and requires capitalization of the lessor's total project costs on the consolidated balance sheet with the recognition of a corresponding financing obligation. Upon completion of a project for which the constructed assets are sold to a buyer/lessor or the completion of a capitalized build-to suit construction project, the Company performs a sale-leaseback analysis to determine if the asset and related financing obligation can be derecognized from the consolidated balance sheet. Certain provisions in a number of our lease agreements, primarily provisions regarding repurchase options, are deemed to be continuing involvement in the sold asset which precludes sale recognition. In such cases, the asset remains on the consolidated balance sheet under property and equipment and the proceeds received in the sale-leaseback transaction are recognized as a financing obligation under long-term debt in the consolidated balance sheet. Both the asset and the financing obligation are amortized over the lease term. In instances in which the Company has no continuing involvement in the sold asset, the criteria for sale recognition are met and the asset and any related financing obligation are derecognized from the consolidated balance sheet, and the lease is analyzed for proper accounting treatment as either an operating or capital lease. Exit and Disposal Costs Costs related to exit or disposal activities, including store closures, for the Company primarily include lease termination costs, employee termination benefits and other costs associated with moving assets and vacating the stores. The Company records a liability at the net present value of the remaining lease obligations, net of estimated sublease income, as of the date the Company ceases using the property, including removal of any Company assets. Any subsequent adjustments to that liability as a result of changes in estimates are recorded in the period incurred. The Company records a liability for employee termination costs on the date when management, with appropriate approval, has a formal plan, the plan identifies the number of employees by function with the expected date of termination, benefits for the employees have been identified, the plan is unlikely to be changed and the termination benefits have been communicated to the employees. Other related costs are expensed as incurred. Derivative Instruments In the normal course of business, the Company is subject to risk from adverse fluctuations in foreign currency exchange rates and benchmark interest rates. The Company may manage its market risk exposures through a program that includes the use of derivative instruments, primarily foreign exchange forward contracts and interest rate derivatives. The Company's objective in managing its exposure to market risk is to minimize the impact on earnings, cash flows and the consolidated balance sheet. The Company does not use derivative instruments for trading or speculative purposes. All outstanding derivative instruments are recognized in the consolidated balance sheet at fair value. The effect on earnings from recognizing the fair value of the derivative instrument depends on its intended use, the hedge designation, and the effectiveness in offsetting the exposure of the underlying hedged item. Changes in fair values of instruments designated to reduce or eliminate fluctuations in the fair values of recognized assets and liabilities and unrecognized firm commitments are reported currently in earnings along with the change in the fair value of the hedged items. Changes in the effective portion of the fair values of derivative instruments used to reduce or eliminate fluctuations in cash flows of forecasted transactions are reported in other comprehensive income (loss), a component of stockholders' equity. Amounts accumulated in other comprehensive income (loss) are reclassified to earnings when the related hedged items affect earnings or the anticipated transactions are no longer probable. Changes in the fair value of derivative instruments designated to reduce or eliminate fluctuations in the net investment of a foreign subsidiary are reported in other comprehensive income. Changes in the fair value of derivative instruments that are not designated as hedging instruments or do not qualify for hedge accounting treatment are reported currently in earnings. The cash flows related to derivative instruments that are accounted for as cash flow hedges are classified in the same category on the consolidated statements of cash flow as the cash flows from the items being hedged. For derivative instruments accounted for as hedging instruments, the Company formally designates and documents, at inception, the instrument as a hedge of a specific underlying exposure, the risk management objective and the manner by which the effectiveness of the hedging instrument will be evaluated. At each reporting period after inception, the Company evaluates the hedging instrument's effectiveness in reducing or eliminating the underlying hedged exposure. Any hedge ineffectiveness is recognized in earnings immediately. Income Taxes The Company uses the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that a portion or all of the deferred tax assets will not be realized. Changes in valuation allowances are included in its provision for income taxes in the period of the change. Deferred tax assets and liabilities are netted by taxing jurisdiction and presented as either a net asset or liability position, as applicable, on the consolidated balance sheets. The Company recognizes the financial statement benefit of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured as the largest amount that has a greater than 50% likelihood of being realized. Changes in the recognition or measurement of such positions are reflected in its provision for income taxes in the period of the change. The Company's policy is to recognize interest and penalties related to income tax matters within its provision for income taxes. Earnings (Loss) Per Share ("EPS") The Company uses the two-class method to calculate basic and diluted EPS. Unvested restricted stock awards are considered participating securities because they entitle holders to non-forfeitable rights to dividends during the vesting term. Under the two-class method, earnings of the Company are allocated between common stockholders and these participating securities based on the weighted-average number of shares of common stock and participating securities outstanding during the relevant period. Basic EPS is computed by dividing net income (loss) attributable to Titan Machinery Inc. common stockholders by the weighted-average number of shares of common stock outstanding during the relevant period. Diluted EPS is computed by dividing net income (loss) attributable to Titan Machinery Inc. common stockholders by the weighted-average number of shares of common stock outstanding after adjusting for potential dilution related to the conversion of all dilutive securities into common stock. All potentially dilutive securities were included in the computation of diluted EPS. All anti-dilutive securities were excluded from the computation of diluted EPS. The following table sets forth the calculation of basic and diluted EPS:
Advertising Costs Costs incurred for producing and distributing advertising are expensed as incurred. Advertising expense amounted to $2.1 million, $2.2 million and $2.9 million for the years ended January 31, 2019, 2018 and 2017. Stock-Based Compensation The Company accounts for stock-based compensation at the fair value of the related equity instrument over the applicable service or performance period. Beginning on February 1, 2017 with the adoption of Accounting Standards Update ("ASU") 2016-09, Compensation-Stock Compensation, the Company recognizes forfeitures as they occur. Comprehensive Income and Foreign Currency Matters For the Company, comprehensive income (loss) represents net income adjusted for foreign currency translation adjustments and unrealized gains or losses on cash flow hedging derivative instruments. For its foreign subsidiaries in which their local currency is their functional currency, assets and liabilities are translated into U.S. dollars at the balance sheet date exchange rate. Income and expenses are translated at average exchange rates for the year. Foreign currency translation adjustments are recorded directly as other comprehensive income (loss), a component of stockholders' equity. For its foreign subsidiaries in which the local currency is not the functional currency, prior to translation into U.S. dollars, amounts must first be remeasured from the local currency into the functional currency. Nonmonetary assets and liabilities are remeasured at historical exchange rates and monetary assets and liabilities are remeasured at the balance sheet date exchange rate. Income and expenses are remeasured at average exchange rates for the year. Foreign currency remeasurement adjustments are included in the statement of operations. The Company recognized, in interest income and other income (expense) in its consolidated statements of operations, a net foreign currency transaction loss of $0.9 million and $0.7 million for the fiscal years ended January 31, 2019 and 2017 and a net foreign currency transaction gain of $1.2 million for the fiscal year ended January 31, 2018. Business Combinations The Company accounts for business combinations by allocating the purchase price amongst the assets acquired, including identifiable intangible assets, and liabilities assumed based on the fair values of the acquired assets and assumed liabilities. The acquisition accounting is finalized during the measurement period, which may not exceed one year from the date of acquisition. During the measurement period the Company's accounting for the business combination transaction may be based on estimates due to various unknown factors present at the date of acquisition. Fair Value Measurements Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Three levels of inputs may be used to measure fair value: Level 1—Values derived from unadjusted quoted prices in active markets for identical assets and liabilities. Level 2—Values derived from observable inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets in markets that are not active. Level 3—Values derived from unobservable inputs for which there is little or no market data available, thereby requiring the reporting entity to develop its own assumptions. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Segment Reporting The Company operates its business in three reportable segments, the Agriculture, Construction and International segments. Recent Accounting Guidance Accounting guidance adopted In July 2015, the Financial Accounting Standards Board (the "FASB") amended authoritative guidance on accounting for the measurement of inventory, codified in ASC 330, Inventory. The amended guidance requires inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted this guidance on a prospective basis on February 1, 2017. Under the former guidance for measuring inventory, the Company recognized lower of cost-or-market adjustments using a definition of market value as net realizable value reduced by an allowance for a normal profit margin. Upon implementation of the new authoritative guidance, market is defined solely as net realizable value. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements. In March 2016, the FASB amended authoritative guidance on stock-based compensation through the issuance of ASU 2016-09 which is codified in ASC 718, Compensation - Stock Compensation. The amended guidance changes the accounting for certain aspects of share-based payments, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statements of cash flows. The Company adopted this guidance on February 1, 2017. Under the new guidance, the Company elected to account for forfeitures of share based instruments as they occur, as compared to the previous guidance under which the Company estimated the number of forfeitures. The Company applied the accounting change on a modified retrospective basis as a cumulative-effect adjustment to retained earnings as of February 1, 2017. The following table summarizes the impact to the Company’s consolidated balance sheet:
In January 2017, the FASB amended authoritative guidance on the subsequent accounting measurement of goodwill through the issuance of ASC 2017-04 which is codified in ASC 350, Intangibles-Goodwill and Other. The amended guidance simplified the goodwill impairment test by eliminating Step 2 of the test which required entities to estimate the implied fair value of goodwill of a reporting unit to determine the amount of impairment present. Under the new standard, goodwill impairment will be measured based on a single-step assessment and be equal to the amount by which a reporting unit's carrying value exceeds is fair value, not to exceed the carrying value of goodwill. The guidance is effective for the Company prospectively to impairment tests performed after January 31, 2020, with early adoption permitted. The Company elected to early adopt this guidance in the first quarter of fiscal 2019. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements. In May 2014, the FASB issued authoritative guidance on accounting for revenue recognition, codified in Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. This guidance is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company adopted ASC 606 as of February 1, 2018 using the modified retrospective method of adoption. Results for reporting periods beginning after February 1, 2018 are presented under the guidelines of ASC 606, while prior period amounts have not been adjusted and continue to be reported under the accounting standards in effect for those periods. Upon adoption of ASC 606, the Company did not recognize a cumulative effect adjustment of initially applying the standard as no material adjustments to contracts not completed as of the date of adoption were identified. The adoption of ASC 606 did not materially impact the amount of revenue recognized or any other financial statement line item as of and for the year ended January 31, 2019. The Company has included the additional disclosures required under ASC 606 in Notes 1, 2, 3 and 8. Accounting guidance not yet adopted In February 2016, the FASB amended authoritative guidance on leases, codified in ASC 842, Leases. The amended guidance requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The new standard also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted the new standard on February 1, 2019 and elected the prospective transition method which allows for the recognition of any cumulative-effective adjustments to the opening balance of retained earnings in the period of adoption. Prior period amounts will not be adjusted and will continue to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients afforded under the guidance. The package of practical expedients applies to leases that commenced prior to adoption of the new standard and permits an entity not to: 1) reassess whether existing or expired contracts are or contain a lease, 2) reassess the lease classification, and 3) reassess any initial direct costs for any existing leases. The Company did not elect the use of the hindsight practical expedient to determine the lease term, but rather used the lease term as defined under current leasing guidance to capitalize the right of use asset and lease liability upon adoption. The Company is nearly complete with its implementation efforts, which has included various procedures performed to identify the Company's portfolio of lease agreements, implementation of a new leasing software to meet the reporting and disclosure requirements of the standard, and an evaluation of our lease-related processes and and internal controls. The Company has identified new and updated existing internal controls and processes to ensure compliance with the new standard, but such modifications were not deemed to be material to our overall system of internal controls. This standard will have a material impact on our consolidated balance sheets due to the capitalization of a right-of-use asset and lease liability associated with our current operating leases in which we are the lessee, but it will not have a material impact on our consolidated statements of operations or cash flows. The Company estimates adoption of the standard on February 1, 2019 will result in the recognition of operating lease right-of-use assets and operating lease liabilities of approximately $100.0 million and $110.0 million, respectively, with a cumulative effective adjustment to retained earnings as of February 1, 2019 of approximately $5.0 million resulting from right-of-use asset impairment present on the date of adoption. Our rental fleet and equipment inventory rental activities in which we are the lessor in the transaction are also subject to ASC 842. The standard will not have a material impact on our consolidated balance sheets, statements of operations or cash flows for our lessor transactions. |
REVENUE (Notes) |
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Revenue from Contract with Customer [Text Block] | REVENUE The following table presents our revenue disaggregated by revenue source and segment:
Unbilled receivables amounted to $11.2 million and $11.0 million as of January 31, 2019 and January 31, 2018. Deferred revenue from contracts with customers amounted to $44.9 million and $30.1 million as of January 31, 2019 and January 31, 2018. Our deferred revenue most often increases in the fourth quarter of each fiscal year due to a higher level of customer down payments or prepayments and longer time periods between customer payment and delivery of the equipment asset, and the related recognition of equipment revenue, prior to its seasonal use. The increase in deferred revenue from January 31, 2018 to January 31, 2019 was primarily due to increased equipment sales activity, including prepayments and trade-in activity on pending equipment sale transactions in the fourth quarter of fiscal 2019. During the year ended January 31, 2019, the Company recognized substantially all of the revenue that was included in the deferred revenue balance as of January 31, 2018. No material amount of revenue was recognized during the year ended January 31, 2019 from performance obligations satisfied in previous periods. The Company has elected as a practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of service of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The contracts for which the practical expedient has been applied include (i) equipment revenue transactions, which do not have a stated contractual term, but are short-term in nature, and (ii) service revenue transactions, which also do not have a stated contractual term but are generally completed within 30 days and for such contracts we recognize revenue over time at the amount to which we have the right to invoice for services completed to date. |
RECEIVABLES |
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RECEIVABLES | RECEIVABLES
The Company recognized impairment losses on receivables arising from sales contracts with customers for the year ended January 31, 2019 of $0.5 million. Impairment losses on receivables arising from rental contracts amounted to $0.3 million for the year ended January 31, 2019. |
INVENTORIES |
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INVENTORIES | INVENTORIES
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PROPERTY AND EQUIPMENT |
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PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT
Depreciation expense amounted to $23.6 million, $25.0 million and $26.7 million for the years ended January 31, 2019, 2018 and 2017. The Company had assets related to sale-leaseback financing obligations and capital leases associated with real estate of store locations, which are included in the land, buildings and leasehold improvements balance above. Such assets had gross carrying values totaling $25.2 million and $23.5 million, and accumulated amortization balances totaling $5.8 million and $4.7 million, as of January 31, 2019 and 2018. |
INTANGIBLE ASSETS AND GOODWILL |
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INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL Definite-Lived Intangible Assets The following is a summary of definite-lived intangible assets as of January 31, 2019 and 2018:
During the year ended January 31, 2019, the Company acquired, through a business combination, a customer relationship intangible asset in the amount of $0.1 million, which will be amortized over a three year period. Amortization expense was $0.1 million for each of the three years ended January 31, 2019, 2018 and 2017. As of January 31, 2019, future amortization expense is expected to be as follows:
Indefinite-Lived Intangible Assets The Company's indefinite-lived intangible assets consist of distribution rights assets. The following is a summary of distribution rights assets by segment as of January 31, 2019 and 2018:
During the years ended January 31, 2019 and 2018, the Company acquired, primarily through business combinations, distribution rights intangible assets in the amount of $2.0 million and $0.2 million. The results of the Company's annual distribution rights impairment tests for the fiscal years ended January 31, 2019, 2018 and 2017 indicated that no impairment existed as of the test date. Goodwill Changes in the carrying amount of goodwill during the years ended January 31, 2019 and 2018 are as follows:
The results of the Company's annual goodwill impairment tests for the fiscal years ended January 31, 2019 and 2018 indicated that no goodwill impairment existed as of the test date. |
FLOORPLAN PAYABLE/LINES OF CREDIT |
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FLOORPLAN PAYABLE/LINES OF CREDIT | FLOORPLAN PAYABLE/LINES OF CREDIT Flooplan payable balances reflect amounts owed to manufacturers for equipment inventory purchases and amounts outstanding under our various floorplan line of credit facilities. In the consolidated statements of cash flows, the Company reports cash flows associated with manufacturer floorplan financing as operating cash flows and cash flows associated with non-manufacturer floorplan financing as financing cash flows. As of January 31, 2019, the Company had floorplan lines of credit totaling $640.0 million, which is primarily comprised of three significant floorplan lines of credit: (i) a $400.0 million credit facility with CNH Industrial, (ii) a $140.0 million line of credit with a group of banks led by Wells Fargo Bank, National Association (“Wells Fargo”), and (iii) a $45.0 million credit facility with DLL Finance LLC (“DLL Finance”). CNH Industrial Floorplan Payable Line of Credit As of January 31, 2019, the Company had a $400.0 million credit facility with CNH Industrial, of which $310.0 million is available for domestic financing and $90.0 million is available for European financing. The domestic financing facility offers financing for new and used equipment inventories. Available borrowings under the credit facility are reduced by outstanding floorplan payable balances and other acquisition-related financing arrangements with CNH Industrial. The credit facility charges interest at rates equal to the prime rate plus 2.0% for the financing of new and used equipment inventories and at the prime rate plus 3.25% for the financing of rental fleet assets. CNH Industrial offers periods of reduced interest rates and interest-free periods. Repayment terms vary, but generally payments are made from sales proceeds or rental revenue generated from the related inventories or rental fleet assets. Balances outstanding with CNH Industrial are secured by the inventory or rental fleet purchased with the floorplan proceeds. The European financing facility offers financing for new equipment inventories. Available borrowings under the credit facility are reduced by outstanding floorplan payable balances. Amounts outstanding are generally due approximately 75 days after the date of invoice by CNH Industrial. Generally, no interest is charged on outstanding balances. Amounts outstanding are secured by the inventory purchased with the floorplan proceeds. The CNH Industrial credit facility contains financial covenants that impose a maximum level of adjusted debt to tangible net worth of 3.50:1.00 and minimum fixed charge coverage ratio of 1.10:1.00. It also contains various restrictive covenants that require prior consent of CNH Industrial if the Company desires to engage in any acquisition of, consolidation or merger with, any other business entity in which the Company is not the surviving company; create subsidiaries; move any collateral outside of the U.S.; or sell, rent, lease or otherwise dispose or transfer any of the collateral, other than in the ordinary course of business. CNH Industrial’s consent is also required for the acquisition of any CNH Industrial dealership. In addition, the CNH Industrial credit facility restricts the Company's ability to incur any liens upon any substantial part of its assets. The credit facility automatically renews on August 31st of each year unless earlier terminated by either party. As of January 31, 2019, the Company was in compliance with the adjusted debt to tangible net worth and fixed charge coverage ratio financial covenants under this credit facility. During the year ended January 31, 2019, the CNH Industrial credit facility was amended various times to, among other things, decrease the available borrowings under the credit facility, from a combined capacity of $450.0 million to the current combined capacity of $400 million, to reallocate borrowing capacity between our domestic and European businesses, to modify the maximum level of adjusted debt to tangible net worth from 3.00:1.00 to the current maximum of 3.50:1.00, and to exclude from the minimum fixed charge cover ratio the pending pay-off of our Senior Convertible Notes in May 2019. Wells Fargo Credit Agreement - Floorplan Payable and Working Capital Lines of Credit As of January 31, 2019, the Company had a second amended and restated credit agreement with Wells Fargo (the "Wells Fargo Credit Agreement"), which provides for a $140.0 million wholesale floorplan line of credit (the "Floorplan Payable Line") and a $60.0 million working capital line of credit (the "Working Capital Line"). The amount available for borrowing under the Floorplan Payable Line is reduced by amounts outstanding thereunder, borrowing base calculations and outstanding standby letters of credit. The Wells Fargo Credit Agreement has a variable interest rate on outstanding balances and has a 0.25% to 0.375% non-usage fee on the average monthly unused amount and requires monthly payments of accrued interest. The Company elects at the time of any advance to choose a Base Rate Loan or a LIBOR Rate Loan. The LIBOR Rate is for the duration of one-month, two-month, or three-month LIBOR rate at the time of the loan, as chosen by the Company. The Base Rate is the greatest of (a) the Federal Funds Rate plus 0.5%, (b) the one-month LIBOR Rate plus 1%, and (c) the prime rate of interest announced, from time to time, within Wells Fargo. The applicable margin rate is determined based on excess availability under the Wells Fargo Credit Agreement and ranges from 0.75% to 1.5% for Base Rate Loans and 1.75% to 2.50% for LIBOR Rate Loans. The Wells Fargo Credit Agreement is secured by substantially all our assets and requires the Company to maintain a fixed charge coverage ratio of at least 1.10:1.00 if adjusted excess availability plus eligible cash collateral is less than 15% of the total amount of the credit facility. Based on our adjusted excess availability and cash collateral, we were not subject to the fixed charge coverage ratio as of January 31, 2019. The Wells Fargo Credit Agreement also includes various non-financial covenants, including, under certain conditions, restricting the Company’s ability to make certain cash payments, including for cash dividends and stock repurchases, restricting the Company’s ability to issue equity instruments, restricting the Company’s ability to complete acquisitions or divestitures, and limiting the Company's ability to incur new indebtedness. The provisions in the Wells Fargo Credit Agreement restricting the Company from making certain cash payments, including for cash dividends and stock repurchases, provide that no such payments may be made unless, (i) as of the date of such payment there is no default or event of default occurring and continuing, (ii) the amount remaining available to be borrowed by the Company under the Wells Fargo Credit Agreement is greater than twenty percent of the total borrowing capacity under the Wells Fargo Credit Agreement and (iii) the Company's fixed charge coverage ratio for the 12 month period most recently ended, on a pro-forma basis assuming that such proposed cash payment has been made, is at least 1.10 to 1.00. As of January 31, 2019, under these provisions of the Wells Fargo Credit Agreement, the Company had an unrestricted dividend availability of approximately $44.1 million. The maturity date of the Wells Fargo Credit Agreement was contingent upon the results of a maturity test that was performed on February 1, 2019, a date that was three months prior to the scheduled maturity date of the Company's outstanding Senior Convertible Notes. Pursuant to this test, the maturity date for the Wells Fargo Credit Agreement would be October 28, 2020 so long as (i) the Company's fixed charge coverage ratio for the 12 month period ended December 31, 2018 was at least 1.10 to 1.00 and (ii) a liquidity test, requiring that the Company have unrestricted cash on hand plus excess borrowing availability under the Wells Fargo Credit Agreement (on a pro-forma basis reflecting the Company’s repayment in full of its outstanding Senior Convertible Notes) in an amount that is greater than 20% of maximum credit amount under the facility, was met on February 1, 2019. If both financial tests were not satisfied on February 1, 2019, the Wells Fargo Credit Agreement would immediately mature and all amounts outstanding would become immediately due and payable in full. The Company satisfied the maturity test requirements on February 1, 2019, and therefore the maturity date of the Wells Fargo Credit Agreement is October 28, 2020. The Company’s available borrowings under the Wells Fargo Credit Agreement are reduced by the amount of outstanding Senior Convertible Notes until the notes are repaid in full on May 1, 2019. The Floorplan Payable Line is used to finance equipment inventory purchases. Amounts outstanding are recorded as floorplan payable, within current liabilities on the consolidated balance sheets, as the Company intends to repay amounts borrowed within one year. The Working Capital Line is used to finance rental fleet equipment and for general working capital requirements of the Company. Amounts outstanding are recorded as long-term debt, within long-term liabilities on the consolidated balance sheets, as the Company does not have the intention or obligation to repay amounts borrowed within one year. The balances outstanding on the Working Capital Line as of January 31, 2019 and 2018 are disclosed in Note 11. During the year ended January 31, 2019, the Wells Fargo Credit Agreement was amended various times to, among other things, modify the maturity testing date from November 1, 2018 to February 1, 2019, modify the maturity test calculation to those described above, modify certain limits to incur new indebtedness, provide for a one-time exception for lease obligations that will be recognized upon the adoption of the new leasing guidance effective for the Company on February 1, 2019, and to exclude from the minimum fixed charge cover ratio the pending pay-off of our Senior Convertible Notes in May 2019. DLL Finance Floorplan Payable Line of Credit As of January 31, 2019, the Company had a $45.0 million credit facility with DLL Finance, of which $36.5 million is available for domestic financing and $8.5 million is available for financing in certain of our European markets. The DLL Finance credit facility may be used to purchase or refinance new and used equipment inventory. Amounts outstanding for domestic financing bear interest on outstanding balances of three-month LIBOR plus an applicable margin of 3.00%. Amounts outstanding for European financing bear interest on outstanding balances of three-month EURIBOR plus an applicable margin of 2.10% to 2.50%. The credit facility allows for increase, decrease or termination of the facility by DLL Finance upon 90 days notice. The credit facility contains financial covenants that impose a maximum net leverage ratio of 3.50:1.00 and a minimum fixed charge coverage ratio of 1.10:1.00. The credit facility also requires the Company to obtain prior consent from DLL Finance if the Company desired to engage in any acquisition meeting certain financial thresholds. The balances outstanding with DLL Finance are secured by the inventory or rental fleet purchased with the floorplan proceeds. Repayment terms vary by individual notes, but generally payments are made from sales proceeds or rental revenue from the related inventories or rental fleet assets. As of January 31, 2019, the Company was in compliance with the net leverage ratio and fixed charge coverage ratio financial covenants under this credit facility. During the year ended January 31, 2019, the DLL Finance credit facility was amended to, among other things, increase the available borrowing capacity from $30.0 million to the current level of $45.0 million, to decrease the interest rate margin from 3.50% to the current 3.00%, to modify the maximum net leverage ratio from 2.50:1.00 to the current maximum of 3.50:1.00, and to exclude from the minimum fixed charge coverage ratio the pending pay-off of our Senior Convertible Notes in May 2019. Other Lines of Credit The Company’s other lines of credit include various floorplan and working capital lines of credit primarily offered by non-manufacturer financing entities. Interest charged on outstanding borrowings are generally variable rates of interest most often based on LIBOR or EURIBOR and include interest margins primarily ranging from 1.50% to 6.00%. Outstanding balances are generally secured by inventory and other current assets. In most cases these lines of credit have a one-year maturity, with an annual review process to extend the maturity date for an additional one-year period. As of January 31, 2019, the Company had a compensating balance arrangement under one of its European floorplan credit facilities which requires a minimum cash deposit to be maintained with the lender in the amount of $5.0 million for the term of the credit facility. Summary of Outstanding Amounts As of January 31, 2019 and 2018, the Company’s outstanding balance of floorplan payables and lines of credit consisted of the following:
As of January 31, 2019, the interest-bearing U.S floorplan payables carried various interest rates ranging from 4.77% to 6.30%, compared to a range of 4.06% and 6.50% as of January 31, 2018. As of January 31, 2019, foreign floorplan payables carried various interest rates primarily ranging from 0.94% to 8.51%, compared to a range of 0.92% to 7.58% as of January 31, 2018. As of January 31, 2019 and 2018, $151.7 million and $133.1 million of outstanding floorplan payables were non-interest bearing. |
DEFERRED REVENUE (Notes) |
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Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue Disclosure [Text Block] | DEFERRED REVENUE
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ACCRUED EXPENSES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES | ACCRUED EXPENSES & OTHER
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SENIOR CONVERTIBLE NOTES |
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SENIOR CONVERTIBLE NOTES | SENIOR CONVERTIBLE NOTES On April 24, 2012, the Company issued through a private offering $150 million of 3.75% Senior Convertible Notes (the "Senior Convertible Notes"). The Senior Convertible Notes bear interest at a rate of 3.75% per year, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2012. The Convertible Notes mature on May 1, 2019, unless earlier purchased by the Company, redeemed or converted. The Senior Convertible Notes are unsecured and unsubordinated obligations; rank equal in right of payment to the Company's existing and future unsecured indebtedness that is not subordinated; are effectively subordinated in right of payment to the Company's existing and future secured indebtedness; and are structurally subordinated to all existing and future indebtedness and liabilities of the Company's subsidiaries. The Senior Convertible Notes are initially convertible into the Company's common stock at a conversion rate of 23.1626 shares of common stock per $1,000 principal amount of convertible notes, with an initial effective conversion price of $43.17 per share of common stock. The conversion rate may be subject to adjustment upon the occurrence of certain specified events as provided in the indenture governing the Senior Convertible Notes, dated April 24, 2012 between the Company and Wells Fargo Bank, National Association, as trustee (the "Indenture"), but will not be adjusted for accrued but unpaid interest. Upon conversion of a Senior Convertible Note, the Company will settle the conversion obligation in cash up to the aggregate principal amount of the Senior Convertible Note being converted, and any conversion obligation in excess thereof will be settled in cash, shares of the Company's common stock, or a combination thereof, at the Company's election, subject to certain limitations as defined in the Indenture. Holders of the Senior Convertible Notes may convert their notes at the applicable conversion rate under any of the following circumstances:
Holders of the Senior Convertible Notes who convert their Senior Convertible Notes in connection with a make-whole fundamental change, as defined in the Indenture, may be entitled to a make-whole premium in the form of an increase to the conversion rate. In addition, upon the occurrence of a fundamental change, as defined in the Indenture, holders of the Senior Convertible Notes may require the Company to purchase all or a portion of their Senior Convertible Notes for cash at a price equal to 100% of the principal amount of the Senior Convertible Notes to be purchased plus any accrued but unpaid interest. The number of shares the Company may deliver upon conversion of the Senior Convertible Notes will be subject to certain limitations, and the Company is subject to certain other obligations and restrictions related to such share caps, as described in the Indenture. On or after May 6, 2015, the Company may redeem for cash all or a portion of the Senior Convertible Notes if the last reported sale price of the Company's common stock has been at least 120% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The Indenture provides for customary events of default, including, but not limited to, cross acceleration to certain other indebtedness of the Company and its subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding Senior Convertible Notes will become due and payable immediately without further action or notice. If any other event of default under the Indenture occurs or is continuing, the trustee or holders of at least 25% in aggregate principal amount of the then outstanding Senior Convertible Notes may declare all of the Senior Convertible Notes to be due and payable immediately. In accounting for the Senior Convertible Notes, the Company segregated the liability component of the instrument from the equity component. The liability component was measured by estimating the fair value of a non-convertible debt instrument that is similar in its terms to the Senior Convertible Notes. Fair value was estimated through discounting future interest and principal payments, an income approach, due under the Senior Convertible Notes at a discount rate of 7.00%, an interest rate equal to the estimated borrowing rate for similar non-convertible debt. The excess of the aggregate face value of the Senior Convertible Notes over the estimated fair value of the liability component is recognized as a debt discount which will be amortized over the expected life of the Senior Convertible Notes using the effective interest rate method. Amortization of the debt discount is recognized as non-cash interest expense. The equity component of the Senior Convertible Notes is measured as the residual difference between the aggregate face value of the Senior Convertible Notes and the estimated aggregate fair value of the liability component. The equity component will not be remeasured in subsequent periods provided that the component continues to meet the conditions necessary for equity classification. The transaction costs incurred in connection with the issuance of the Senior Convertible Notes were allocated to the liability and equity components based on their relative values. Transaction costs allocated to the liability component are being amortized using the effective interest rate method and recognized as non-cash interest expense over the expected term of the Senior Convertible Notes. Transaction costs allocated to the equity component reduced the value of the equity component recognized in stockholders' equity. As of January 31, 2019 and 2018, the Senior Convertible Notes consisted of the following:
During fiscal 2019, the Company repurchased an aggregate of $20.0 million face value ($19.4 million carrying value) of its Senior Convertible Notes with $20.0 million in cash. All consideration was attributed to the extinguishment of the liability and the Company recognized a pre-tax loss of $0.6 million on the repurchase. During fiscal 2018, the Company repurchased an aggregate of $30.1 million face value ($28.1 million carrying value) of its Senior Convertible Notes with $29.1 million in cash. Of the $29.1 million in total cash consideration, $28.1 million was attributed to the extinguishment of the liability and $1.0 million was attributed to the reacquisition of a portion of the equity component of the instrument. The Company recognized an immaterial net pre-tax gain on the extinguishment of the liability and recognized a $0.6 million after-tax reduction in additional paid-in capital from the reacquisition of the equity component. In total, the Company has repurchased an aggregate of $104.4 million face value ($96.6 million carrying value) of its Senior Convertible Notes with $95.1 million in cash. Gains and losses on repurchases are included in other interest expense in the Consolidated Statements of Operations. The Company recognized interest expense associated with its Senior Convertible Notes as follows:
As of January 31, 2019, the unamortized debt discount will be amortized over a remaining period of 3 months. The if-converted value as of January 31, 2019 does not exceed the principal balance of the Senior Convertible Notes. The effective interest rate of the liability component was equal to 7.3% for each of the statements of operations periods presented. |
LONG-TERM DEBT |
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LONG-TERM DEBT | LONG-TERM DEBT The following is a summary of long-term debt as of January 31, 2019 and 2018:
Long-term debt maturities are as follows:
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STORE CLOSINGS AND REALIGNMENT COST |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STORE CLOSINGS AND REALIGNMENT COSTS | RESTRUCTURING COSTS In February 2017, to better align the Company's cost structure and business in certain markets, the Company announced a dealership restructuring plan (the "Fiscal 2018 Restructuring Plan"), which resulted in the closure of one Construction location during the fourth quarter ended January 31, 2017 and the closure of 14 Agriculture locations during fiscal 2018. The Fiscal 2018 Restructuring Plan resulted in a reduction of expenses while allowing the Company to continue to provide a leading level of service to its customers. In total, over the term of the Fiscal 2018 Restructuring Plan, the Company recognized $13.9 million of restructuring charges consisting primarily of fixed asset impairment charges, lease termination costs and termination benefits. As of January 31, 2018, the Company had closed and fully exited all of these locations and had completed its Fiscal 2018 Restructuring Plan. In fiscal 2016, the Company carried out a restructuring plan that reduced the Company's headcount and resulted in the closure of four Agriculture stores and eight Construction stores. As of January 31, 2017, this restructuring plan was substantially complete. We incurred costs of $0.4 million, $10.5 million and $3.3 million during the years ended January 31, 2019, 2018 and 2017, related to these activities. Such costs are included in the restructuring costs and impairment of long-lived assets lines in the consolidated statements of operations. Restructuring costs associated with the Company's Fiscal 2018 Restructuring Plan are summarized in the following table:
Restructuring costs associated with the Company's fiscal 2016 restructuring plan are summarized in the following table:
Restructuring charges are summarized by segment in the following table:
A reconciliation of the beginning and ending exit cost liability balance associated with our Fiscal 2018 Restructuring Plan is as follows:
As of January 31, 2019 and January 31, 2018, $2.2 million and $4.8 million of the exit cost liability is included in other long-term liabilities and $0.2 million and $1.0 million is included in accrued expenses and other in the consolidated balance sheets. During the year ended January 31, 2019, the Company paid $3.0 million to terminate the real estate lease agreement for one of the Company's previously closed stores. The termination payment approximated the recorded lease accrual liability and therefore the impact to the consolidated statement of operations was not material. As circumstances warrant, the Company revises its assumptions regarding the timing and amount of estimated future cash flows associated with its cease-use lease liabilities of its closed store locations. During the year ended January 31, 2019, the Company recognized a restructuring expense of $0.4 million as the result of adjustments to its cease-use liabilities for certain of its closed stores. |
DERIVATIVE INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company holds derivative instruments for the purpose of minimizing exposure to fluctuations in foreign currency exchange rates and benchmark interest rates to which the Company is exposed in the normal course of its operations. Cash Flow Hedge The Company previously was party to an interest rate swap instrument which had a notional amount of $100.0 million, an effective date of September 30, 2014 and a maturity date of September 30, 2018. The objective of the instrument was to protect the Company from changes in benchmark interest rates to which the Company is exposed through certain of its variable interest rate credit facilities. The instrument provided for a fixed interest rate of 1.901% through the instrument's maturity date. The interest rate swap instrument was designated as a cash flow hedging instrument and accordingly changes in the effective portion of the fair value of the instrument have been recorded in other comprehensive income and only reclassified into earnings in the period(s) in which the related hedged item affects earnings or the anticipated underlying hedged transactions are no longer probable of occurring. In April 2017, the Company elected to terminate its outstanding interest rate swap instrument. The Company paid $0.9 million to terminate the instrument. This cash payment is presented as a financing cash outflow in the consolidated statements of cash flows. Derivative Instruments Not Designated as Hedging Instruments The Company uses foreign currency forward contracts to hedge the effects of fluctuations in exchange rates on outstanding intercompany loans. The Company does not formally designate and document such derivative instruments as hedging instruments; however, the instruments are an effective economic hedge of the underlying foreign currency exposure. Both the gain or loss on the derivative instrument and the offsetting gain or loss on the underlying intercompany loan are recognized in earnings immediately, thereby eliminating or reducing the impact of foreign currency exchange rate fluctuations on net income. The Company's foreign currency forward contracts generally have three-month maturities, maturing on the last day of each fiscal quarter. The notional value of outstanding foreign currency contracts as of January 31, 2019 and 2018 was $14.1 million and $14.4 million. As of January 31, 2019 and 2018, the fair value of the Company's outstanding derivative instruments was not material. Derivative instruments recognized as assets are recorded in prepaid expenses and other in the consolidated balance sheets, and derivative instruments recognized as liabilities are recorded in accrued expenses and other in the consolidated balance sheets. The following table sets forth the gains and losses recognized in other comprehensive income (loss) ("OCI") and income (loss) related to the Company’s derivative instruments for the years ended January 31, 2019, 2018 and 2017. All amounts included in income (loss) in the table below from derivatives designated as hedging instruments relate to reclassifications from accumulated other comprehensive income.
(a) No material hedge ineffectiveness has been recognized. The amounts show in income (loss) above are reclassification amounts from accumulated other comprehensive income (loss) and are recorded in Floorplan interest expense in the consolidated statements of operations (b) Amounts are included in Interest income and other income (expense) in the consolidated statements of operations During the year ended January 31, 2018, the Company reclassified $0.6 million of pre-tax accumulated losses on its interest rate swap instrument from accumulated other comprehensive income (loss) to income as the original forecasted interest payments, which served as the hedged item underlying the interest rate swap instrument, were no longer probable of occurring during the time period over which such transactions were previously anticipated to occur. As of January 31, 2018, the Company had no remaining pre-tax net unrealized losses associated with its interest rate swap cash flow hedging instrument. |
COMMITMENTS AND CONTINGENCIES |
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Jan. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | CONTINGENCIES AND GUARANTEES Guarantees The Company has provided residual value guarantees to CNH Industrial Capital in connection with certain customer leasing arrangements with CNH Industrial Capital. The Company, as guarantor, may be required to provide payment to CNH Industrial Capital at the termination of the lease agreement if the customer fails to exercise the purchase option under the leasing agreement and the proceeds CNH Industrial Capital receives upon disposition of the leased asset are less than the purchase option price as stipulated in the lease agreement. As of January 31, 2019, the maximum amount of residual value guarantees was approximately $4.2 million and the lease agreements have termination dates ranging from 2019 to 2022. As of January 31, 2019, the Company has recognized a liability of approximately $4.0 million based on its estimates of the likelihood and amount of residual value guarantees that will become payable at the termination dates of the underlying leasing agreements discounted at a rate of interest to reflect the risk inherent in the liability. As of January 31, 2019, the Company has recorded a current liability, recognized in accrued expenses and other in the consolidated balance sheets, of $2.1 million, and a long-term liability, recognized in other long-term liabilities in the consolidated balance sheets, of $1.9 million. As of January 31, 2019, the Company had $1.5 million of guarantees on customer financing with CNH Industrial Capital. In the event that the customer defaulted on the payments owed to CNH Industrial Capital, the Company as the guarantor would be required to make those payments and any accelerated indebtedness to CNH Industrial Capital. Upon such payment, the Company would be entitled to enforce normal creditor rights against the customer including collection action for monetary damages or re-possession of the collateral if CNH Industrial Capital has a perfected security interest. No liabilities associated with these guarantees are included in the consolidated balance sheets as of January 31, 2019 as the Company deems the probability of being required to make such payments to be remote. Litigation On October 11, 2017, the Romania Competition Council (“RCC”) initiated an administrative investigation of the Romanian Association of Manufacturers and Importers of Agricultural Machinery (“APIMAR”) and all its members, including Titan Machinery Romania. The RCC's investigation involves whether the APIMAR members engaged in anti-competitive practices in their sales of agricultural machinery not involving European Union ("EU") subvention funding programs, by referring to the published sales prices governing EU subvention funded transactions, which prices are mandatorily disclosed to and published by AFIR, a Romanian government agency that oversees the EU subvention funding programs in Romania. The investigation is in a preliminary stage and the Company is currently unable to predict its outcome or reasonably estimate any potential loss that may result from the investigation. The Company is engaged in proceedings incidental to the normal course of business. Due to their nature, such legal proceedings involve inherent uncertainties, including but not limited to, court rulings, negotiations between affected parties and governmental intervention. Based upon the information available to the Company and discussions with legal counsel, it is the Company's opinion that the outcome of the various legal actions and claims that are incidental to its business will not have a material impact on the financial position, results of operations or cash flows. Such matters, however, are subject to many uncertainties, and the outcome of any matter is not predictable with assurance. Insurance The Company has insurance policies with varying deductibility levels for property and casualty losses and is insured for losses in excess of these deductibles on a per claim and aggregate basis. The Company is primarily self-insured for health care claims for eligible participating employees. The Company has stop-loss coverage to limit its exposure to significant claims on a per claim and annual aggregate basis. The Company determines its liabilities for claims, including incurred but not reported losses, based on all relevant information, including actuarial estimates of claim liabilities. During fiscal 2017, the Company received $3.0 million of proceeds from its insurance carriers related to claims submitted for insurable events at two of its locations; $1.4 million of proceeds were reflected as investing cash inflows as such amounts were reimbursements associated with the Company's long-lived assets, while the remaining $1.6 million was included in cash flows from operating activities as the amounts were reimbursements associated with current assets, business interruption recoveries and cost reimbursements. In total, the Company recognized, as a reduction of operating expenses in its consolidated statements of operations, a gain of $2.0 million from insurance recoveries, of which $0.7 million arose from business interruption recoveries. Other Matters The Company is the lessee under many real estate leases in which it agrees to indemnify the lessor from certain liabilities arising as a result of the use of the leased premises, including environmental liabilities, or a breach of the lease by the lessee. Additionally, from time to time, the Company enters into agreements with third parties in connection with the sale of assets in which it agrees to indemnify the purchaser from certain liabilities or costs arising in connection with the assets. Also, in the ordinary course of business in connection with purchases or sales of goods and services, the Company enters into agreements that may contain indemnification provisions. In the event that an indemnification claim is asserted, the Company's liability would be limited by the terms of the applicable agreement. See additional information on operating lease commitments in Note 15. |
OPERATING LEASE COMMITMENTS |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
OPERATING LEASE COMMITMENTS | OPERATING LEASE COMMITMENTS The Company leases approximately 120 buildings under operating lease agreements as well as office equipment and vehicles under various operating lease agreements. Rent and lease expense under all operating leases totaled $18.6 million, $20.0 million and $21.3 million during the years ended January 31, 2019, 2018 and 2017. The leases expire at various dates through January 2031. Certain leases have fluctuating minimum lease payments. The Company recognizes lease expense on a straight-line basis over the expected term of the lease. Approximate future minimum lease payment commitments are as follows:
The Company's store lease agreements contain lease periods primarily ranging from automatically renewable month-to-month terms to 15 years in length. Certain of the lease agreements contain terms such as an option to purchase the property at fair value, renew or extend the lease for an additional period at the conclusion of the original lease term or automatically renew the lease term at the conclusion of the original lease period on a month-to-month or year-to-year basis. A majority of the leases provide for fixed monthly rental payments and require the Company to pay the real estate taxes on the properties for the lease periods. All of the leases require that the Company maintains public liability and personal property insurance on each of the leased premises, and a majority of the leases require the Company to indemnify the lessor in connection with any claims arising from the leased premises during its occupation of the property. Most of the leases prohibit assigning the lease agreements or subletting the leased premises without the prior written consent of the lessor. In most of the leases, the Company has been granted a right of first refusal or other options to purchase the property. |
RELATED PARTY TRANSACTIONS RELATED PARTY TRANSACTIONS |
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Jan. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 16 - RELATED PARTY TRANSACTIONS Effective February 1, 2017, the Company and Peter Christianson (our former President and former member of our Board of Directors), who is a brother of Tony Christianson (a member of our Board of Directors), agreed to terminate a consulting arrangement between the parties. During fiscal 2017, Mr. Peter Christianson received $0.5 million in fees, including group medical and dental coverage expenses as paid by the Company on behalf of Mr. Peter Christianson, from the Company under the terms of the consulting agreement. In connection with the termination, the Company agreed to pay Mr. Peter Christianson the sum of $0.7 million, payable in two equal installments in fiscal 2018 and fiscal 2019. All unvested stock options and shares of restricted stock held by Mr. Peter Christianson were allowed to vest as scheduled. As a result of the termination agreement, the Company recognized for fiscal 2018, a total of $0.8 million in termination costs, consisting of $0.7 million for future cash payments owed to Mr. Peter Christianson and $0.1 million for unvested shares of restricted stock. These termination costs are included in restructuring costs in the consolidated statements of operations. As of January 31, 2019, all amounts owed to Mr. Peter Christianson had been paid in full. Effective September 8, 2017, the Company sold a real estate asset that was primarily used for field training purposes to Stiklestad LLC for $1.8 million. All consideration related to the transaction was exchanged at closing on September 8, 2017, and there are no amounts owed to either party following that date. Stiklestad LLC is owned by members of the family of David Meyer, the Company's Chief Executive Officer. No gain or loss was recognized on the transaction and the Company believes that the selling price approximated fair value. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The components of income (loss) before income taxes for the years ended January 31, 2019, 2018 and 2017 consist of the following:
The provision for (benefit from) income taxes charged to income for the years ended January 31, 2019, 2018 and 2017 consists of the following:
The reconciliation of the statutory federal income tax rate to the Company's effective rate is as follows:
Deferred tax assets and liabilities consist of the following as of January 31, 2019 and 2018:
On December 22, 2017, the U.S. government enacted tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act made broad changes to the U.S. tax code, including, among other things, to 1) reduce the U.S. federal corporate tax rate from 35% to 21%; 2) generally eliminate U.S. federal income taxes on dividends from foreign subsidiaries; 3) institute a one-time transaction tax on certain unrepatriated earnings of an entity's foreign subsidiaries; 4) create a new provision designed to tax global intangible low-taxed income ("GILTI"); 5) creates a new limitation on deductible interest expense; and 6) modify the rules related to uses and limitations of net operating losses. The enactment of the Tax Act lowered the U.S. federal corporate tax rate from 35% to 21%, accordingly, for the fiscal year ended January 31, 2018, the Company had a blended corporate statutory tax rate of 33.8%, which is based on the number of days in the fiscal year before and after the enactment date. The Company recorded a net tax benefit of $1.8 million for the fiscal year ended January 31, 2018 as a result of remeasuring its domestic deferred tax assets, deferred tax liabilities and any valuation allowances based on the 21% corporate tax rate at which these deferred tax amounts are expected to reverse in the future. The Tax Act instituted a one-time transaction tax on previously untaxed accumulated and current earnings and profits of our foreign subsidiaries. The Company did not record a liability for the transaction tax because of a lack of accumulated earnings and profits, on a combined basis, of our foreign subsidiaries. The Tax Act requires that certain income (i.e., GILTI) earned by foreign subsidiaries must be included currently in gross income of the U.S. shareholder. The Company has elected to treat future GILTI inclusions as a current period expense when incurred. The changes in the Tax Act were broad and complex, because of this complexity, entities were allowed a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The Company completed its assessment of all aspects of the Tax Act during the year ended January 31, 2019. No material adjustments were recognized during the year ended January 31, 2019 as the Company completed its assessment of the Tax Act. As of January 31, 2019, the Company has recorded $60.7 million of net operating loss carryforwards within certain of its U.S. state and foreign jurisdictions; $12.6 million of net operating loss carryforwards are within foreign jurisdictions with unlimited carryforward periods, $8.7 million are within foreign jurisdictions that expire at various dates between the Company's fiscal years 2020 and 2024, and $39.4 million are within U.S. states that expire at various dates between the Company's fiscal years 2031 and 2038. In reviewing our deferred tax assets as of January 31, 2019 and 2018, we concluded that a partial valuation allowance for U.S. federal and state deferred tax assets, including state net operating losses, and a full valuation allowance for certain of our foreign deferred tax assets, including net operating losses, was warranted. In total, we have recognized a valuation allowance of $6.7 million and $7.7 million as of January 31, 2019 and 2018. The recognition of the valuation allowances for our U.S. and foreign deferred tax assets was based on the presence of historical losses and our expected future sources of taxable income, including the anticipated future reversal of our existing deferred tax assets and liabilities. During the fiscal year ended January 31, 2018, the Company concluded, based upon all available evidence, it was more likely than not that it would have sufficient future taxable income to realize the deferred tax assets of its Ukrainian subsidiary. As a result, the Company released the $3.5 million valuation allowance and recognized a corresponding benefit from income taxes in the consolidated statement of operations for the year ended January 31, 2018. The Company's conclusion regarding the realizability of such deferred tax assets was based on recent profitable operations in Ukraine resulting in a cumulative profit over the three-year period ending January 31, 2018, our projections of future profitability in Ukraine, the relative economic and political stability in Ukraine and the unlimited carryforward period of net operating losses in Ukraine. The Company files income tax returns in the U.S. federal jurisdiction and various states and foreign countries. It is no longer subject to income tax examinations by U.S. federal tax authorities for fiscal years ended prior to January 31, 2016 and state tax authorities for fiscal years ended prior to January 31, 2015. Certain foreign jurisdictions are no longer subject to income tax examinations for the calendar year periods ranging between 2012 and 2015, depending on the jurisdiction of the entity. During the fiscal year ended January 31, 2019, the Ukrainian taxing authorities completed their examination of our calendar year 2012 through 2015 Ukrainian income tax returns. As of January 31, 2019, the Company had accumulated undistributed earnings in non-U.S. subsidiaries of approximately $11.0 million. Upon repatriation of such earnings the Company could be subject to additional U.S. or foreign taxes. The Company has not recorded a deferred tax liability associated with these undistributed earnings as such earnings are to be reinvested outside of the U.S. indefinitely. It is not practicable to estimate the amount of additional tax that might be payable if such earnings were repatriated. |
CAPITAL STRUCTURE |
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Jan. 31, 2019 | |
Stockholders' Equity Note [Abstract] | |
CAPITAL STRUCTURE | CAPITAL STRUCTURE The Company's certificate of incorporation provides it with the authority to issue 50,000,000 shares of $0.00001 par value stock, consisting of 45,000,000 shares of common stock and 5,000,000 shares classified as undesignated. |
STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-Based Compensation Plans The Company has two stock-based compensation plans, the 2014 Equity Incentive Plan and the 2005 Equity Incentive Plan (collectively the "Plans"), to provide incentive compensation to participants for services that have been or will be performed for continuing as employees or members of the Board of Directors of the Company. Under these plans, which are approved by the stockholders of the Company, the Company may grant incentive stock options, non-qualified stock options and restricted stock for up to a maximum number of shares of common stock set forth in the Plans under all forms of awards. Shares issued for stock-based awards consist of authorized but unissued shares. The Plans authorize and make available 1,650,000 shares for equity awards. As of January 31, 2019, the Company has 755,278 shares authorized and available for future equity awards. Compensation cost arising from stock-based compensation and charged to operations was $2.7 million, $3.1 million and $2.1 million for the years ended January 31, 2019, 2018 and 2017. The related income tax benefit (net) was $0.8 million, $1.2 million and $0.8 million for the years ended January 31, 2019, 2018 and 2017. Stock Options The Company has previously granted stock options to employees and members of the Board of Directors of the Company. These stock options vested over a period of four to six years for employees and immediately for members of the Board of Directors, and had contractual terms of five to ten years. As of January 31, 2019, there were no outstanding or exercisable stock options. The following table summarizes stock option activity for the year ended January 31, 2019:
The aggregate intrinsic value of stock options exercised was immaterial for the years ended January 31, 2019 and 2017, and was $1.0 million for the year ended January 31, 2018. As of January 31, 2019, there was no unrecognized compensation cost related to stock options as all awards have fully vested. Restricted Stock Awards ("RSAs") The Company grants RSAs as part of its long-term incentive compensation to employees and members of the Board of Directors of the Company. The fair value of these awards is determined based on the closing market price of the Company's stock on the date of grant. The RSAs primarily vest over a period of three to six years for employees and over one year for members of the Board of Directors. The Company recognizes compensation expense ratably over the vesting period of the award. The restricted common stock underlying these awards are deemed issued and outstanding upon grant, and carry the same voting and dividend rights of unrestricted outstanding common stock. The following table summarizes RSA activity for the year ended January 31, 2019:
The weighted-average grant date fair value of RSAs granted was $17.22, $17.47 and $11.01 during the years ended January 31, 2019, 2018 and 2017. The total fair value of RSAs vested was $3.6 million, $3.6 million and $1.3 million during the years ended January 31, 2019, 2018 and 2017. As of January 31, 2019, there was $4.0 million of unrecognized compensation cost related to nonvested RSAs that is expected to be recognized over a weighted-average period of 1.9 years. Restricted Stock Units ("RSUs") The Company grants RSUs as part of its long-term incentive compensation to certain employees of the Company. The fair value of these awards is determined based on the closing market price of the Company's stock on the date of grant. The RSUs primarily vest over a period of three to six years. The Company recognizes compensation expense ratably over the vesting period of the award. The restricted common stock underlying these awards are not deemed issued or outstanding upon grant, and do not carry any voting or dividend rights. The following table summarizes RSU activity for the year ended January 31, 2019:
The weighted-average grant date fair value of RSUs granted was $17.58 and $10.69 during the years ended January 31, 2018 and 2017. As of January 31, 2019, there was $0.1 million of unrecognized compensation cost related to nonvested RSUs that is expected to be recognized over a weighted-average period of 1.7 years. During the year ended January 31, 2019, the Company modified certain of its RSU agreements to require the settlement of all future vested awards to be paid in cash in an amount equal to the number of vested awards multiplied by the stock price of the Company on the date of vesting. Due to the cash settlement provision, these awards became liability-classified share-based payments on the modification date. The accounting for this modification did not have a material impact on the Company's consolidated statement of operations or financial position. Long-Term Cash Incentive Awards The Company grants long-term cash incentive awards as part of its long-term incentive compensation to certain international employees of the Company. The awards vest over a period of approximately four years and entitle the award recipient to a cash payment on the vesting date equal to the number of vested shares multiplied by the stock price of the Company on the date of vesting. These awards are liability-classified share-based payment awards in which fair value of the award is remeasured at each period until the liability is settled. Fair value of these awards is determined based on the closing price of the Company's stock as of the end of each reporting period. Changes in the fair value of the liability are recognized as compensation cost over the requisite service period. The percentage of the fair value that is accrued as compensation cost at the end of each period is equal to the percentage of the requisite service that has been rendered at that date. The following table summarizes activity for long-term cash incentive awards for the year ended January 31, 2019:
The weighted-average grant date fair value of long-term cash incentive awards granted was $17.25 during the year ended January 31, 2019. As of January 31, 2019, based on the Company's stock price on that day, there was $0.2 million of unrecognized compensation cost related to nonvested awards that is expected to be recognized over a weighted-average period of 1.4 years. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (Notes) |
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Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following is a summary of the changes in accumulated other comprehensive income (loss), by component, for the fiscal years ended January 31, 2019, 2018 and 2017:
Income taxes are not provided for foreign currency translation adjustments arising from permanent investments in international subsidiaries. Reclassifications are made to avoid double counting in comprehensive income (loss) items that are also recorded as part of net income (loss). Reclassification amounts from cash flow hedging instruments for the years ended January 31, 2018 and 2017 are recorded in floorplan interest expense in the consolidated statements of operations. The tax effect of these reclassifications, recognized as a tax benefit in the amount of $0.4 million and $0.6 million for the years ended January 31, 2018 and 2017, are recorded in provision for (benefit from) income taxes in the consolidated statements of operations. |
EMPLOYEE BENEFIT PLANS |
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Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS The Company has a 401(k) profit-sharing plan ("401(k) Plan") for full-time employees at least 19 years of age. The Company matches 50% of the first 6% of participating employees' contributions. In addition, the Company may make a discretionary contribution to the 401(k) Plan as determined by the Board of Directors, with a maximum amount equal to the amount allowed under the IRS regulations. The Company recognized expense for contributions made to the 401(k) Plan totaling $2.7 million, $2.5 million and $2.5 million for the fiscal years ended January 31, 2019, 2018 and 2017. All amounts contributed during these years reflected matching contributions, as no discretionary contributions were made by the Company to the 401(k) Plan. |
BUSINESS COMBINATIONS |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATIONS | NOTE 22 - BUSINESS COMBINATIONS On July 2, 2018, the Company, through a newly created, wholly-owned German subsidiary, acquired all interests of two commonly-controlled companies, AGRAM Landtechnikvertrieb GmbH and AGRAM Landtechnik Rollwitz GmbH (collectively "AGRAM"), for $19.2 million in cash consideration. Founded in 1990, AGRAM is a CaseIH and Steyr dealership complex consisting of four agriculture dealership locations in the following cities of Germany: Altranft, Burkau, Gutzkow, and Rollwitz. Our acquisition of these entities provides the Company the opportunity to expand our international presence into the large, well-established German market. Following the acquisition, the legal name of AGRAM Landtechnikvertrieb GmbH was changed to Titan Machinery Deutschland GmbH ("Titan Deutschland") and a legal merger was completed merging the three German legal entities into a single entity with Titan Deutschland remaining as the surviving entity. The AGRAM acquisition has been accounted for under the acquisition method of accounting, which requires the Company to estimate the acquisition date fair value of the assets acquired and liabilities assumed. The fair value of the consideration paid exceeded the estimated fair value of the assets acquired and liabilities assumed, which resulted in the recognition of $0.9 million of goodwill. The recognition of goodwill arose from the acquisition of an assembled workforce and anticipated synergies within our International segment. The entire goodwill amount will be assigned to the International segment and is not expected to be deductible for income tax purposes. The Company recognized a customer relationship intangible asset in the amount of $0.1 million, which will be amortized over a three-year period, and recognized a distribution rights intangible asset in the amount of $1.8 million that is an indefinite-lived intangible asset not subject to amortization. The Company estimated the fair value of the customer relationship and distribution rights intangible assets using a multi-period excess earnings model, an income approach. All acquisition-related costs, which amounted to $0.2 million, have been expensed as incurred and recognized as operating expenses in the consolidated statement of operations. The allocation of the purchase price to assets acquired and liabilities assumed is as follows:
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FAIR VALUE OF FINANCIAL INSTRUMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS As of January 31, 2019 and 2018, the fair value of the Company's foreign currency contracts, which are either assets or liabilities measured at fair value on a recurring basis, was not material. These foreign currency contracts were valued using a discounted cash flow analysis, an income approach, utilizing readily observable market data as inputs, which is classified as a Level 2 fair value measurement. The Company also valued certain long-lived assets at fair value on a non-recurring basis as of January 31, 2019, October 31, 2018 and January 31, 2018 as part of its long-lived asset impairment testing. The estimated fair value of such assets as of January 31, 2019, October 31, 2018 and January 31, 2018 was $0.9 million, $0.7 million and $0.9 million. Fair value was determined by utilizing an income approach incorporating both observable and unobservable inputs, and are deemed to be Level 3 fair value inputs. The most significant unobservable inputs include forecasted net cash generated from the use of the assets and the discount rate applied to such cash flows to arrive at a fair value estimate. In addition, in certain instances the Company estimated the fair value of long-lived assets to approximate zero as no future cash flows were assumed to be generated from the use of such assets and the expected sales values were deemed to be nominal. All such fair value measurements were based on unobservable inputs and thus are Level 3 fair value inputs. The Company also has financial instruments that are not recorded at fair value in its consolidated financial statements. The carrying amount of cash, receivables, payables, short-term debt and other current liabilities approximates fair value because of the short maturity and/or frequent repricing of those instruments, which are Level 2 fair value inputs. Based upon current borrowing rates with similar maturities, which are Level 2 fair value inputs, the carrying value of long-term debt approximates the fair value as of January 31, 2019 and 2018. The following table provides details on the Senior Convertible Notes as of January 31, 2019 and 2018. The difference between the face value and the carrying value of these notes is the result of the allocation between the debt and equity components, and unamortized debt issuance costs (see Note 10). Fair value of the Senior Convertible Notes was estimated based on Level 2 fair value inputs.
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION AND OPERATING RESULTS | SEGMENT INFORMATION AND OPERATING RESULTS The Company has three reportable segments: Agriculture, Construction and International. The Company's segments are determined based on management structure, which is organized based on types of products sold and geographic areas, as described in the following paragraphs. The operating results for each segment are reported separately to the Company's Chief Executive Officer to make decisions regarding the allocation of resources, to assess the Company's operating performance and to make strategic decisions. The Company's Agriculture segment sells, services, and rents machinery, and related parts and attachments, for uses ranging from large-scale farming to home and garden use in North America. This segment also includes ancillary sales and services related to agricultural activities and products such as equipment transportation, Global Positioning System ("GPS") signal subscriptions and finance and insurance products. The Company's Construction segment sells, services, and rents machinery, and related parts and attachments, for uses ranging from heavy construction to light industrial machinery use to customers in North America. This segment also includes ancillary sales and services related to construction activities such as equipment transportation, GPS signal subscriptions and finance and insurance products. The Company’s International segment sells, services, and rents machinery, and related parts and attachments, for uses ranging from large-scale farming and construction to home and garden use to customers in Eastern Europe. Revenue generated from sales to customers outside of the United States was $232.7 million, $208.9 million and $150.3 million for the years ended January 31, 2019, 2018 and 2017. As of January 31, 2019 and 2018, $12.3 million and $4.8 million of the Company's long-lived assets were held in its European subsidiaries. The Company retains various unallocated income/(expense) items and assets at the general corporate level, which the Company refers to as "Shared Resources" in the table below. Shared Resource assets primarily consist of cash and property and equipment. Revenue between segments is immaterial. Certain financial information for each of the Company's business segments is set forth below. All revenue amounts shown below are presented on an as corrected basis following the correction of an immaterial error identified in previously issued financial statements. Refer to Note 26 for additional details.
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SELECTED QUARTERLY FINANCIAL DATA (Unaudited) |
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SELECTED QUARTERLY FINANCIAL DATA (Unaudited) | SELECTED QUARTERLY FINANCIAL DATA (Unaudited) The following reflects selected quarterly financial information for fiscal years 2019 and 2018 (see Note 26 for a discussion of the correction of an immaterial error to previously reported amounts of quarterly revenue for the first three quarters of fiscal 2019 and all quarterly periods of fiscal 2018).
In the fourth quarter of fiscal 2018, the Company recognized a net benefit from income taxes of $5.3 million consisting of the net benefit of $1.8 million from remeasuring domestic deferred tax assets and liabilities at the new federal statutory tax rate of 21% following enactment of the Tax Act on December 22, 2017, and a benefit of $3.5 million from the release of the valuation allowance previously recognized for deferred tax assets of our Ukrainian subsidiary. Further details of these tax matters are discussed in Note 17. |
IMMATERIAL RESTATEMENT (Notes) |
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Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quantifying Prior Year Misstatements Corrected in Current Year Financial Statements [Table Text Block] | IMMATERIAL RESTATEMENT OF PRIOR PERIOD FINANCIAL STATEMENTS The Company identified an immaterial error within its quarterly financial statements for the quarterly periods ended April 30, 2018, July 31, 2018 and October 31, 2018 of fiscal 2019, within its quarterly and annual financial statements for the fiscal year ended January 31, 2018, and within its annual financial statements for the fiscal year ended January 31, 2017. The identified error was the result of incorrectly eliminating certain internal parts and service transactions. The adjustments to correct for this error reduce total revenue and cost of revenue by less than 1.5% for each quarterly and annual period and impact the amounts of previously reported equipment, parts, service and rental and other revenue and cost of revenue amounts, but have no impact on total gross profit, operating or net income, earnings per share, or the consolidated balance sheets or statements of cash flows. Management of the Company has evaluated all relevant quantitative and qualitative factors and has concluded that the error is not material to the results of operations for any previously reported quarterly or annual period. The Company has restated its accompanying statements of operations to correct for this immaterial error for the fiscal years ended January 31, 2018 and 2017, and the interim financial information for the quarterly periods in fiscal 2019 and 2018 presented within Note 25 - Selected Quarterly Financial Data. Included below is a summary of the previously reported amounts of revenue and cost of revenue, the impact of correcting for this immaterial error and the as-corrected amounts for the fiscal years ended January 31, 2018 and 2017:
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SUBSEQUENT EVENTS |
12 Months Ended |
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Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On January 1, 2019, the Company, through its German subsidiary, acquired certain assets of ESB Agrartechnik GmbH ("ESB"). ESB is a full-service agriculture equipment dealership in Eastern Germany. Our acquisition of ESB further expands our presence in the German market. The total consideration transferred for the acquired business was $3.0 million paid in cash. The business assets acquired consisted of $1.5 million in inventory, $0.8 million of other tangible assets, and $0.7 million of intangible assets. Due to the limited time since the acquisition, the estimated fair values of acquired assets are provisional estimates, but are based on the best information currently available. These provisional estimates are subject to change as the Company completes all remaining steps in finalizing the purchase price allocation. Acquisition-related transaction costs were not material. This acquisition was recognized in the fiscal year ending January 31, 2020 as the acquisition occurred within our International Segment in which all entities maintain a calendar year reporting period. In March 2019, the Company completed an assessment of its Enterprise Resource Planning ("ERP") application and concluded that the Company will begin the process to prepare for conversion to a new ERP application in fiscal 2020, with an anticipated implementation of the new ERP application in the first half of fiscal 2021. The Company has entered into a software licensing agreement with a third-party ERP provider. The new ERP application deploys the latest data-driven and mobile-enabled sales and support tools to improve employee efficiency and deliver an enhanced customer experience. Beginning in March 2019, the Company will prospectively adjust the useful life of its current ERP application such that it is fully amortized upon its replacement in fiscal 2021. The Company will amortize the remaining net book value of $8.7 million on a straight-line basis over the remaining estimated period of use. |
Schedule II-Valuation and Qualifying Accounts and Reserves |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule II-Valuation and Qualifying Accounts and Reserves | Schedule II—Valuation and Qualifying Accounts and Reserves Titan Machinery Inc.
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BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business | Nature of Business Titan Machinery Inc. and its subsidiaries (collectively, the "Company") are engaged in the retail sale, service and rental of agricultural and construction machinery through its stores in the United States and Europe. The Company's North American stores are located in Arizona, Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Wisconsin and Wyoming, and its European stores are located in Bulgaria, Germany, Romania, Serbia and Ukraine. |
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Seasonality | Seasonality The agricultural and construction equipment businesses are highly seasonal, which causes the Company's quarterly results and cash flows to fluctuate during the year. The Company's customers generally purchase and rent equipment in preparation for, or in conjunction with, their busy seasons, which for farmers are the spring planting and fall harvesting seasons, and for Construction customers is dependent on weather seasons in their respective regions, which is typically the second and third quarters of the Company's fiscal year for much of its Construction footprint. The Company's parts and service revenues are typically highest during its customers' busy seasons as well, due to the increased use of their equipment during this time, which generates the need for more parts and service work. However, weather conditions impact the timing of our customers' busy times, which may cause the Company's quarterly financial results to differ between fiscal years. In addition, the fourth quarter typically is a significant period for equipment sales in the U.S. because of our customers’ year-end tax planning considerations, the timing of dealer incentives and the increase in availability of funds from completed harvests and construction projects. |
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Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant accounts, transactions and profits between the consolidated companies have been eliminated in consolidation. The Company's foreign subsidiaries have fiscal years ending on December 31 of each year, consistent with statutory reporting requirements in each of the respective countries. The accounts of the Company's foreign subsidiaries are consolidated as of December 31 of each year. See Note 27 - Subsequent Events for information regarding an acquisition in January 2019 which will be accounted for as a business combination in the Company's fiscal year ending January 31, 2020. No other events or transactions occurred related to these subsidiaries in January 2019 that would have materially affected the consolidated financial position, results of operations or cash flows. In June 2016, the Company acquired all of the outstanding ownership interest held by the noncontrolling interest holder of the Company's Bulgarian subsidiary. Total consideration, which amounted to $4.3 million, was in the form of the satisfaction of outstanding receivables owed to the Company by the noncontrolling interest holder. Subsequent to this acquisition, all of the Company's subsidiaries are wholly-owned. |
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Reclassifications | Reclassifications |
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Estimates | Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, particularly related to realization of inventory, impairment of long-lived assets, collectability of receivables, and income taxes. |
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Concentrations of Credit Risk | Concentrations of Credit Risk The Company's sales are to agricultural and construction equipment customers principally in the states and European countries in which its stores are located. The Company extends credit to its customers in the ordinary course of business and monitors its customers' financial condition to minimize its risks associated with trade receivables; however, the Company does not generally require collateral on trade receivables. The Company's cash balances are maintained in bank deposit accounts, which, at times, are in excess of federally insured limits. |
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Concentrations in Operations | Concentrations in Operations The Company currently purchases new equipment, rental equipment and the related parts from a limited number of manufacturers. Although no change in suppliers is anticipated, the occurrence of such a change could cause a possible loss of sales and adversely affect operating results. The Company is the holder of authorized dealerships granted by CNH Industrial America, LLC and CNHI International SA (collectively referred to "CNH Industrial") whereby it has the right to act as an authorized dealer for the entity's equipment. The dealership authorizations and floorplan payable facilities can be canceled by the respective entity if the Company does not observe certain established guidelines and covenants. In addition, the Company believes that the following factors related to concentrations in suppliers, and in particular CNH Industrial, have a significant impact on its operating results: •CNH Industrial's product offerings, reputation and market share •CNH Industrial's product prices and incentive and discount programs •Supply of inventory from CNH Industrial
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Receivables and Credit Policy | eceivables and Credit Policy Trade accounts receivable due from customers are uncollateralized customer obligations due under normal trade terms requiring payment within 30 to 90 days from the invoice date. Balances unpaid after the due date based on trade terms are considered past due and begin to accrue interest. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice or, if unspecified, are applied to the earliest unpaid invoices. Trade accounts receivable due from manufacturers relate to discount programs, incentive programs and repair services performed on equipment with a remaining factory warranty. Trade accounts receivable due from finance companies primarily consist of contracts in transit with finance companies and balances due from credit card companies. These receivables do not generally have established payment terms but are collected in relatively short time periods. Unbilled receivables represent unbilled labor hours incurred and parts inventories consumed during the performance of service arrangements for our customers at their retail rates. The carrying amount of trade receivables is reduced by a valuation allowance that reflects management's best estimate of the amounts that will not be collected. Management reviews aged receivable balances and estimates the portion, if any, of the balance that will not be collected. Account balances are charged off after all appropriate means of collection have been exhausted and the potential for recovery is considered remote. |
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Inventories | nventories New and used equipment are stated at the lower of cost (specific identification) or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. All new and used equipment inventories, including that which has been rented, are subject to periodic lower of cost or net realizable value evaluation that considers various factors including aging of equipment and market conditions. Equipment inventory values are adjusted whenever the carrying amount exceeds the net realizable value. Parts inventories are valued at the lower of average cost or net realizable value. The Company estimates its lower of cost or net realizable value adjustments on its parts inventories based on various factors including aging and sales of each type of parts inventory. Work in process represents costs incurred in the reconditioning and preparation for sale of our equipment inventories. |
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Property and Equipment | roperty and Equipment Property and equipment is carried at cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the estimated useful life of each asset, as summarized below:
Depreciation for income tax reporting purposes is computed using accelerated methods. |
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Intangible Assets | ntangible Assets Intangible assets with a finite life consist of customer relationships and covenants not to compete, and are carried at cost less accumulated amortization. The Company amortizes the cost of identified intangible assets on a straight-line basis over the expected period of benefit, which is generally three years for customer relationships and the contractual term for covenants not to compete, which range from five to ten years. Intangible assets with an indefinite life consist of distribution rights with manufacturers. Distribution rights are classified as an indefinite-lived intangible asset because the Company's distribution agreements continue indefinitely by their terms, or are routinely awarded or renewed without substantial cost or material modifications to the underlying agreements. Accordingly, the Company believes that its distribution rights intangible assets will contribute to its cash flows for an indefinite period, therefore the carrying amount of distribution rights is not amortized, but is tested for impairment annually, or more frequently upon the occurrence of certain events or when circumstances indicate that impairment may be present. The impairment test is a single-step assessment that identifies both the existence of impairment and the amount of impairment loss by comparing the estimated fair value of the asset to its carrying value, with any excess carrying value over the fair value being recognized as an impairment loss. The Company performs its annual impairment test as of December 31st of each year |
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Impairment of Long-Lived Assets | mpairment of Long-Lived Assets The Company's long-lived assets consist of its intangible assets and property and equipment. These assets are reviewed for potential impairment when events or circumstances indicate that the carrying value may not be recoverable. Recoverability is measured by comparing the estimated future undiscounted cash flows of such assets to their carrying values. If the estimated undiscounted cash flows exceed the carrying value, the carrying value is considered recoverable and no impairment recognition is required. However, if the sum of the undiscounted cash flows is less than the carrying value of the asset, the second step of the impairment analysis must be performed to measure the amount of impairment, if any. The second step of the impairment analysis compares the estimated fair value of the long-lived asset to its carrying value and any amount by which the carrying value exceeds the fair value is recognized as an impairment charge. When reviewing long-lived assets for impairment, we group long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Long-lived assets deployed and used by individual store locations are reviewed for impairment at the individual store level. Other long-lived assets shared across stores within a segment or shared across segments are reviewed for impairment on a segment or consolidated level as appropriate. During the year ended January 31, 2019, the Company determined that certain events or circumstances, including a current period operating loss combined with historical losses and anticipated future operating losses, within certain of its stores was an indication that the long-lived assets of these stores may not be recoverable. The aggregate carrying value of such assets totaled $4.8 million. In light of these circumstances, the Company performed step one of the long-lived asset impairment analysis for these assets and concluded that the carrying value was not recoverable. Accordingly, the Company performed step two of the impairment analysis and estimated the fair value of the assets using an income approach. The Company recognized total impairment charges of $2.2 million, of which $0.9 million related to the Agriculture segment, $1.1 million related to the Construction segment, and $0.2 million related to the International segment. All impairment charges recognized are included in the Impairment of Long-Lived Assets amount in the consolidated statements of operations. We performed similar impairment analyses at the end of fiscal 2018 and 2017. The Company recognized impairment charges totaling $0.7 million on long-lived assets during the year ended January 31, 2018, of which $0.2 million related to the Agriculture segment and $0.5 million related to the Construction segment. The Company recognized impairment charges totaling $4.4 million on long-lived assets during the year ended January 31, 2017, of which $1.9 million related to the Agriculture segment, $2.2 million related to the Construction segment and $0.3 million related to the International segment. |
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Derivative Instruments | erivative Instruments In the normal course of business, the Company is subject to risk from adverse fluctuations in foreign currency exchange rates and benchmark interest rates. The Company may manage its market risk exposures through a program that includes the use of derivative instruments, primarily foreign exchange forward contracts and interest rate derivatives. The Company's objective in managing its exposure to market risk is to minimize the impact on earnings, cash flows and the consolidated balance sheet. The Company does not use derivative instruments for trading or speculative purposes. All outstanding derivative instruments are recognized in the consolidated balance sheet at fair value. The effect on earnings from recognizing the fair value of the derivative instrument depends on its intended use, the hedge designation, and the effectiveness in offsetting the exposure of the underlying hedged item. Changes in fair values of instruments designated to reduce or eliminate fluctuations in the fair values of recognized assets and liabilities and unrecognized firm commitments are reported currently in earnings along with the change in the fair value of the hedged items. Changes in the effective portion of the fair values of derivative instruments used to reduce or eliminate fluctuations in cash flows of forecasted transactions are reported in other comprehensive income (loss), a component of stockholders' equity. Amounts accumulated in other comprehensive income (loss) are reclassified to earnings when the related hedged items affect earnings or the anticipated transactions are no longer probable. Changes in the fair value of derivative instruments designated to reduce or eliminate fluctuations in the net investment of a foreign subsidiary are reported in other comprehensive income. Changes in the fair value of derivative instruments that are not designated as hedging instruments or do not qualify for hedge accounting treatment are reported currently in earnings. The cash flows related to derivative instruments that are accounted for as cash flow hedges are classified in the same category on the consolidated statements of cash flow as the cash flows from the items being hedged. For derivative instruments accounted for as hedging instruments, the Company formally designates and documents, at inception, the instrument as a hedge of a specific underlying exposure, the risk management objective and the manner by which the effectiveness of the hedging instrument will be evaluated. At each reporting period after inception, the Company evaluates the hedging instrument's effectiveness in reducing or eliminating the underlying hedged exposure. Any hedge ineffectiveness is recognized in earnings immediately. |
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Earnings Per Share | arnings (Loss) Per Share ("EPS") The Company uses the two-class method to calculate basic and diluted EPS. Unvested restricted stock awards are considered participating securities because they entitle holders to non-forfeitable rights to dividends during the vesting term. Under the two-class method, earnings of the Company are allocated between common stockholders and these participating securities based on the weighted-average number of shares of common stock and participating securities outstanding during the relevant period. Basic EPS is computed by dividing net income (loss) attributable to Titan Machinery Inc. common stockholders by the weighted-average number of shares of common stock outstanding during the relevant period. Diluted EPS is computed by dividing net income (loss) attributable to Titan Machinery Inc. common stockholders by the weighted-average number of shares of common stock outstanding after adjusting for potential dilution related to the conversion of all dilutive securities into common stock. All potentially dilutive securities were included in the computation of diluted EPS. All anti-dilutive securities were excluded from the computation of diluted EPS. The following table sets forth the calculation of basic and diluted EPS:
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Revenue Recognition | REVENUE The following table presents our revenue disaggregated by revenue source and segment:
Unbilled receivables amounted to $11.2 million and $11.0 million as of January 31, 2019 and January 31, 2018. Deferred revenue from contracts with customers amounted to $44.9 million and $30.1 million as of January 31, 2019 and January 31, 2018. Our deferred revenue most often increases in the fourth quarter of each fiscal year due to a higher level of customer down payments or prepayments and longer time periods between customer payment and delivery of the equipment asset, and the related recognition of equipment revenue, prior to its seasonal use. The increase in deferred revenue from January 31, 2018 to January 31, 2019 was primarily due to increased equipment sales activity, including prepayments and trade-in activity on pending equipment sale transactions in the fourth quarter of fiscal 2019. During the year ended January 31, 2019, the Company recognized substantially all of the revenue that was included in the deferred revenue balance as of January 31, 2018. No material amount of revenue was recognized during the year ended January 31, 2019 from performance obligations satisfied in previous periods. The Company has elected as a practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of service of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The contracts for which the practical expedient has been applied include (i) equipment revenue transactions, which do not have a stated contractual term, but are short-term in nature, and (ii) service revenue transactions, which also do not have a stated contractual term but are generally completed within 30 days and for such contracts we recognize revenue over time at the amount to which we have the right to invoice for services completed to date. |
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Advertising Costs | dvertising Costs Costs incurred for producing and distributing advertising are expensed as incurred. Advertising expense amounted to $2.1 million, $2.2 million and $2.9 million for the years ended January 31, 2019, 2018 and 2017. |
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Comprehensive Income and Foreign Currency Matters | omprehensive Income and Foreign Currency Matters For the Company, comprehensive income (loss) represents net income adjusted for foreign currency translation adjustments and unrealized gains or losses on cash flow hedging derivative instruments. For its foreign subsidiaries in which their local currency is their functional currency, assets and liabilities are translated into U.S. dollars at the balance sheet date exchange rate. Income and expenses are translated at average exchange rates for the year. Foreign currency translation adjustments are recorded directly as other comprehensive income (loss), a component of stockholders' equity. For its foreign subsidiaries in which the local currency is not the functional currency, prior to translation into U.S. dollars, amounts must first be remeasured from the local currency into the functional currency. Nonmonetary assets and liabilities are remeasured at historical exchange rates and monetary assets and liabilities are remeasured at the balance sheet date exchange rate. Income and expenses are remeasured at average exchange rates for the year. Foreign currency remeasurement adjustments are included in the statement of operations. The Company recognized, in interest income and other income (expense) in its consolidated statements of operations, a net foreign currency transaction loss of $0.9 million and $0.7 million for the fiscal years ended January 31, 2019 and 2017 and a net foreign currency transaction gain of $1.2 million for the fiscal year ended January 31, 2018. |
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Business Combinations | usiness Combinations The Company accounts for business combinations by allocating the purchase price amongst the assets acquired, including identifiable intangible assets, and liabilities assumed based on the fair values of the acquired assets and assumed liabilities. The acquisition accounting is finalized during the measurement period, which may not exceed one year from the date of acquisition. During the measurement period the Company's accounting for the business combination transaction may be based on estimates due to various unknown factors present at the date of acquisition. |
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Segment Reporting | egment Reporting The Company operates its business in three reportable segments, the Agriculture, Construction and International segments. |
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Recent Accounting Guidance | Recent Accounting Guidance Accounting guidance adopted In July 2015, the Financial Accounting Standards Board (the "FASB") amended authoritative guidance on accounting for the measurement of inventory, codified in ASC 330, Inventory. The amended guidance requires inventory to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company adopted this guidance on a prospective basis on February 1, 2017. Under the former guidance for measuring inventory, the Company recognized lower of cost-or-market adjustments using a definition of market value as net realizable value reduced by an allowance for a normal profit margin. Upon implementation of the new authoritative guidance, market is defined solely as net realizable value. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements. In March 2016, the FASB amended authoritative guidance on stock-based compensation through the issuance of ASU 2016-09 which is codified in ASC 718, Compensation - Stock Compensation. The amended guidance changes the accounting for certain aspects of share-based payments, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statements of cash flows. The Company adopted this guidance on February 1, 2017. Under the new guidance, the Company elected to account for forfeitures of share based instruments as they occur, as compared to the previous guidance under which the Company estimated the number of forfeitures. The Company applied the accounting change on a modified retrospective basis as a cumulative-effect adjustment to retained earnings as of February 1, 2017. The following table summarizes the impact to the Company’s consolidated balance sheet:
In January 2017, the FASB amended authoritative guidance on the subsequent accounting measurement of goodwill through the issuance of ASC 2017-04 which is codified in ASC 350, Intangibles-Goodwill and Other. The amended guidance simplified the goodwill impairment test by eliminating Step 2 of the test which required entities to estimate the implied fair value of goodwill of a reporting unit to determine the amount of impairment present. Under the new standard, goodwill impairment will be measured based on a single-step assessment and be equal to the amount by which a reporting unit's carrying value exceeds is fair value, not to exceed the carrying value of goodwill. The guidance is effective for the Company prospectively to impairment tests performed after January 31, 2020, with early adoption permitted. The Company elected to early adopt this guidance in the first quarter of fiscal 2019. The adoption of this guidance did not have a material effect on the Company's consolidated financial statements. In May 2014, the FASB issued authoritative guidance on accounting for revenue recognition, codified in Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. This guidance is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The Company adopted ASC 606 as of February 1, 2018 using the modified retrospective method of adoption. Results for reporting periods beginning after February 1, 2018 are presented under the guidelines of ASC 606, while prior period amounts have not been adjusted and continue to be reported under the accounting standards in effect for those periods. Upon adoption of ASC 606, the Company did not recognize a cumulative effect adjustment of initially applying the standard as no material adjustments to contracts not completed as of the date of adoption were identified. The adoption of ASC 606 did not materially impact the amount of revenue recognized or any other financial statement line item as of and for the year ended January 31, 2019. The Company has included the additional disclosures required under ASC 606 in Notes 1, 2, 3 and 8. Accounting guidance not yet adopted In February 2016, the FASB amended authoritative guidance on leases, codified in ASC 842, Leases. The amended guidance requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The new standard also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The Company adopted the new standard on February 1, 2019 and elected the prospective transition method which allows for the recognition of any cumulative-effective adjustments to the opening balance of retained earnings in the period of adoption. Prior period amounts will not be adjusted and will continue to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients afforded under the guidance. The package of practical expedients applies to leases that commenced prior to adoption of the new standard and permits an entity not to: 1) reassess whether existing or expired contracts are or contain a lease, 2) reassess the lease classification, and 3) reassess any initial direct costs for any existing leases. The Company did not elect the use of the hindsight practical expedient to determine the lease term, but rather used the lease term as defined under current leasing guidance to capitalize the right of use asset and lease liability upon adoption. The Company is nearly complete with its implementation efforts, which has included various procedures performed to identify the Company's portfolio of lease agreements, implementation of a new leasing software to meet the reporting and disclosure requirements of the standard, and an evaluation of our lease-related processes and and internal controls. The Company has identified new and updated existing internal controls and processes to ensure compliance with the new standard, but such modifications were not deemed to be material to our overall system of internal controls. This standard will have a material impact on our consolidated balance sheets due to the capitalization of a right-of-use asset and lease liability associated with our current operating leases in which we are the lessee, but it will not have a material impact on our consolidated statements of operations or cash flows. The Company estimates adoption of the standard on February 1, 2019 will result in the recognition of operating lease right-of-use assets and operating lease liabilities of approximately $100.0 million and $110.0 million, respectively, with a cumulative effective adjustment to retained earnings as of February 1, 2019 of approximately $5.0 million resulting from right-of-use asset impairment present on the date of adoption. Our rental fleet and equipment inventory rental activities in which we are the lessor in the transaction are also subject to ASC 842. The standard will not have a material impact on our consolidated balance sheets, statements of operations or cash flows for our lessor transactions. |
BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of calculation of basic and diluted earnings per share | he following table sets forth the calculation of basic and diluted EPS:
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Summary of estimated useful life of property and equipment | epreciation and amortization are computed on a straight-line basis over the estimated useful life of each asset, as summarized below:
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Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] |
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REVENUE (Tables) |
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Disaggregation of Revenue [Table Text Block] | REVENUE The following table presents our revenue disaggregated by revenue source and segment:
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RECEIVABLES (Tables) |
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Schedule of receivables |
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INVENTORIES (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory |
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PROPERTY AND EQUIPMENT (Tables) |
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Schedule of property and equipment | epreciation and amortization are computed on a straight-line basis over the estimated useful life of each asset, as summarized below:
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INTANGIBLE ASSETS AND GOODWILL (Tables) |
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Schedule of Goodwill [Table Text Block] | Changes in the carrying amount of goodwill during the years ended January 31, 2019 and 2018 are as follows:
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Summary of intangible assets with finite lives | The following is a summary of definite-lived intangible assets as of January 31, 2019 and 2018:
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Schedule of expected future amortization expense | of January 31, 2019, future amortization expense is expected to be as follows:
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Schedule of Indefinite-Lived Intangible Assets | The Company's indefinite-lived intangible assets consist of distribution rights assets. The following is a summary of distribution rights assets by segment as of January 31, 2019 and 2018:
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DEFERRED REVENUE (Tables) |
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Deferred Revenue, by Arrangement, Disclosure [Table Text Block] | DEFERRED REVENUE
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ACCRUED EXPENSES (Tables) |
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Schedule of accrued expenses |
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SENIOR CONVERTIBLE NOTES (Tables) - Senior Convertible Notes |
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Schedule of convertible notes | As of January 31, 2019 and 2018, the Senior Convertible Notes consisted of the following:
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Senior Convertible Notes Interest Expense | The Company recognized interest expense associated with its Senior Convertible Notes as follows:
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LONG-TERM DEBT (Tables) - Long-Term Debt (excluding senior convertible notes) |
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Jan. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of long-term debt | The following is a summary of long-term debt as of January 31, 2019 and 2018:
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Schedule of long-term debt maturities | Long-term debt maturities are as follows:
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STORE CLOSINGS AND REALIGNMENT COST (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Costs by Type of Cost |
Restructuring costs associated with the Company's fiscal 2016 restructuring plan are summarized in the following table:
Restructuring charges are summarized by segment in the following table:
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Restructuring Reserve Rollforward | A reconciliation of the beginning and ending exit cost liability balance associated with our Fiscal 2018 Restructuring Plan is as follows:
As of January 31, 2019 and January 31, 2018, $2.2 million and $4.8 million of the exit cost liability is included in other long-term liabilities and $0.2 million and $1.0 million is included in accrued expenses and other in the consolidated balance sheets. During the year ended January 31, 2019, the Company paid $3.0 million to terminate the real estate lease agreement for one of the Company's previously closed stores. The termination payment approximated the recorded lease accrual liability and therefore the impact to the consolidated statement of operations was not material. As circumstances warrant, the Company revises its assumptions regarding the timing and amount of estimated future cash flows associated with its cease-use lease liabilities of its closed store locations. During the year ended January 31, 2019, the Company recognized a restructuring expense of $0.4 million as the result of adjustments to its cease-use liabilities for certain of its closed stores. |
DERIVATIVE INSTRUMENTS (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of derivative instruments outstanding | he fair value of the Company's outstanding derivative instruments was not material. Derivative instruments recognized as assets are recorded in prepaid expenses and other in the consolidated balance sheets, and derivative instruments recognized as liabilities are recorded in accrued expenses and other in the consolidated balance sheets. |
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Schedule of gains and losses recognized on derivative instruments | The following table sets forth the gains and losses recognized in other comprehensive income (loss) ("OCI") and income (loss) related to the Company’s derivative instruments for the years ended January 31, 2019, 2018 and 2017. All amounts included in income (loss) in the table below from derivatives designated as hedging instruments relate to reclassifications from accumulated other comprehensive income.
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OPERATING LEASE COMMITMENTS (Tables) |
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of minimum future lease payments | Approximate future minimum lease payment commitments are as follows:
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INCOME TAXES (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax | The components of income (loss) before income taxes for the years ended January 31, 2019, 2018 and 2017 consist of the following:
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Schedule of provision for income taxes charged to income | The provision for (benefit from) income taxes charged to income for the years ended January 31, 2019, 2018 and 2017 consists of the following:
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Schedule of reconciliation of statutory federal income tax rate to the Company's effective rate | The reconciliation of the statutory federal income tax rate to the Company's effective rate is as follows:
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Schedule of net deferred tax assets and liabilities | eferred tax assets and liabilities consist of the following as of January 31, 2019 and 2018:
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STOCK-BASED COMPENSATION (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] | The following table summarizes activity for long-term cash incentive awards for the year ended January 31, 2019:
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Summary of stock option activity | The following table summarizes stock option activity for the year ended January 31, 2019:
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Schedule of restricted stock award activity | The following table summarizes RSA activity for the year ended January 31, 2019:
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Summary of restricted stock unit activity | The following table summarizes RSU activity for the year ended January 31, 2019:
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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) |
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Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following is a summary of the changes in accumulated other comprehensive income (loss), by component, for the fiscal years ended January 31, 2019, 2018 and 2017:
Income taxes are not provided for foreign currency translation adjustments arising from permanent investments in international subsidiaries. Reclassifications are made to avoid double counting in comprehensive income (loss) items that are also recorded as part of net income (loss). Reclassification amounts from cash flow hedging instruments for the years ended January 31, 2018 and 2017 are recorded in floorplan interest expense in the consolidated statements of operations. The tax effect of these reclassifications, recognized as a tax benefit in the amount of $0.4 million and $0.6 million for the years ended January 31, 2018 and 2017, are recorded in provision for (benefit from) income taxes in the consolidated statements of operations. |
FAIR VALUE OF FINANCIAL INSTRUMENTS Tables (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements, Recurring and Nonrecurring | As of January 31, 2019 and 2018, the fair value of the Company's foreign currency contracts, which are either assets or liabilities measured at fair value on a recurring basis, was not material. These foreign currency contracts were valued using a discounted cash flow analysis, an income approach, utilizing readily observable market data as inputs, which is classified as a Level 2 fair value measurement. |
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Fair Value of Senior Convertible Notes | The following table provides details on the Senior Convertible Notes as of January 31, 2019 and 2018. The difference between the face value and the carrying value of these notes is the result of the allocation between the debt and equity components, and unamortized debt issuance costs (see Note 10). Fair value of the Senior Convertible Notes was estimated based on Level 2 fair value inputs.
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SEGMENT INFORMATION AND OPERATING RESULTS (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial information of business segments | Certain financial information for each of the Company's business segments is set forth below. All revenue amounts shown below are presented on an as corrected basis following the correction of an immaterial error identified in previously issued financial statements. Refer to Note 26 for additional details.
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SELECTED QUARTERLY FINANCIAL DATA (Unaudited) (Tables) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly financial information | The following reflects selected quarterly financial information for fiscal years 2019 and 2018 (see Note 26 for a discussion of the correction of an immaterial error to previously reported amounts of quarterly revenue for the first three quarters of fiscal 2019 and all quarterly periods of fiscal 2018).
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IMMATERIAL RESTATEMENT (Tables) |
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Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Changes and Error Corrections [Text Block] | Included below is a summary of the previously reported amounts of revenue and cost of revenue, the impact of correcting for this immaterial error and the as-corrected amounts for the fiscal years ended January 31, 2018 and 2017:
|
BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Details 5) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Lessor Accounting | |||
Property and equipment, net | $ 278,876 | $ 285,290 | |
Accumulated depreciation | $ 139,926 | 134,243 | |
Rental fleet equipment | |||
Lessor Accounting | |||
Maximum lease period | 1 year | ||
Rental revenue | $ 50,700 | 51,600 | $ 50,500 |
Property and equipment, net | 111,200 | 123,400 | |
Accumulated depreciation | $ 50,400 | $ 51,600 |
BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Details 6) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019
USD ($)
segment
|
Jan. 31, 2018
USD ($)
|
Jan. 31, 2017
USD ($)
|
|
Advertising Costs | |||
Advertising Expense | $ | $ 2.1 | $ 2.2 | $ 2.9 |
Segment Reporting | |||
Number of Reportable Segments | segment | 3 |
BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES (Details 7) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Comprehensive Income and Foreign Currency Matters | |||
Net foreign currency transaction gain (loss) | $ 0.9 | $ (1.2) | $ 0.7 |
REVENUE Deferred Revenue (Details) - USD ($) $ in Thousands |
Jan. 31, 2019 |
Jan. 31, 2018 |
---|---|---|
Deferred Revenue Arrangement [Line Items] | ||
Deferred Revenue | $ 46,409 | $ 32,324 |
Deferred Revenue from Contracts with Customers [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred Revenue | 44,893 | 30,139 |
Deferred Revenue from Operating Leases and Rental Contracts [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Deferred Revenue | $ 1,516 | $ 2,186 |
RECEIVABLES (Details) - USD ($) $ in Thousands |
Jan. 31, 2019 |
Jan. 31, 2018 |
---|---|---|
Receivables | ||
Trade accounts receivable | $ 81,028 | $ 63,623 |
Less allowance for doubtful accounts | (3,528) | (2,951) |
Receivables, net | 77,500 | 60,672 |
impairment losses from Sales Contracts [Member] | ||
Receivables | ||
Trade accounts receivable | 500 | |
Due from customers | ||
Receivables | ||
Trade accounts receivable | 38,827 | 25,396 |
Due from finance companies | ||
Receivables | ||
Trade accounts receivable | 10,265 | 8,906 |
Due from manufacturers | ||
Receivables | ||
Trade accounts receivable | 12,950 | 8,805 |
Unbilled Revenues [Member] | ||
Receivables | ||
Unbilled Receivables, Current | 11,222 | 10,967 |
Accounts Receivable [Member] | ||
Receivables | ||
Trade accounts receivable | 6,386 | 7,571 |
Unbilled Receivables from Operating Leases and Rental Contracts [Member] | ||
Receivables | ||
Trade accounts receivable | 828 | 847 |
impairment losses from Rental Contracts [Member] | ||
Receivables | ||
Trade accounts receivable | 300 | |
Accounts Receivable [Member] | ||
Receivables | ||
Trade accounts receivable | $ 550 | $ 1,131 |
INVENTORIES (Details) - USD ($) $ in Thousands |
Jan. 31, 2019 |
Jan. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
New equipment | $ 258,081 | $ 258,559 |
Used equipment | 158,951 | 141,450 |
Parts and attachments | 72,760 | 71,110 |
Work in process | 1,299 | 1,348 |
Inventories | $ 491,091 | $ 472,467 |
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2017 |
|
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | $ 278,876 | $ 285,290 | |
Less accumulated depreciation | (139,926) | (134,243) | |
Property and equipment, net | 138,950 | 151,047 | |
Capital Leased Assets, Gross | 25,200 | 23,500 | |
Capital Leases, Accumulated Depreciation | (5,800) | (4,700) | |
Depreciation expense | 23,600 | 25,000 | $ 26,700 |
Rental fleet equipment | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 111,164 | 123,430 | |
Machinery and equipment | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 21,646 | 22,025 | |
Vehicles | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 42,330 | 37,741 | |
Furniture and fixtures | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 40,645 | 39,851 | |
Land, buildings, and leasehold improvements | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | $ 63,091 | $ 62,243 |
INTANGIBLE ASSETS AND GOODWILL (Details) - USD ($) $ in Thousands |
12 Months Ended | 36 Months Ended | |
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2019 |
Jan. 31, 2018 |
|
INTANGIBLE ASSETS | |||
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | $ 10 | $ 10 | |
Finite-lived Intangible Assets Acquired | $ 100 | ||
Finite-Lived Intangible Assets, Remaining Amortization Period | 3 years | ||
Cost | $ 312 | 312 | $ 440 |
Accumulated Amortization | (157) | (157) | (369) |
Net | 155 | 155 | 71 |
Amortization expense | 100 | ||
Covenants not to compete | |||
INTANGIBLE ASSETS | |||
Cost | 200 | 200 | 440 |
Accumulated Amortization | (138) | (138) | (369) |
Net | 62 | 62 | 71 |
Customer relationships | |||
INTANGIBLE ASSETS | |||
Cost | 112 | 112 | 0 |
Accumulated Amortization | (19) | (19) | 0 |
Net | $ 93 | $ 93 | $ 0 |
INTANGIBLE ASSETS AND GOODWILL (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Goodwill [Line Items] | |||
Goodwill | $ 1,161 | $ 250 | $ 0 |
Goodwill, Acquired During Period | 924 | 250 | |
Goodwill, Foreign Currency Translation Gain (Loss) | (13) | 0 | |
Future amortization expense | |||
2017 | 60 | ||
2018 | 48 | ||
2019 | 26 | ||
2020 | 8 | ||
2021 | 3 | ||
Net | 155 | 71 | |
Agricultural Sector [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 250 | 250 | 0 |
Goodwill, Acquired During Period | 0 | 250 | |
Goodwill, Foreign Currency Translation Gain (Loss) | 0 | 0 | |
Construction | |||
Goodwill [Line Items] | |||
Goodwill | 0 | 0 | 0 |
Goodwill, Acquired During Period | 0 | 0 | |
Goodwill, Foreign Currency Translation Gain (Loss) | 0 | 0 | |
International [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 911 | 0 | $ 0 |
Goodwill, Acquired During Period | 924 | 0 | |
Goodwill, Foreign Currency Translation Gain (Loss) | $ (13) | $ 0 |
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands |
Jan. 31, 2019 |
Jan. 31, 2018 |
---|---|---|
Payables and Accruals [Abstract] | ||
Compensation | $ 19,661 | $ 16,413 |
Sales, payroll, real estate and value added taxes | 4,698 | 4,448 |
Interest | 905 | 1,148 |
Insurance | 2,083 | 3,004 |
Other | 4,081 | 4,216 |
Total accrued expenses | 35,091 | 31,863 |
Taxes Payable | 1,574 | 2,419 |
Liabilities for Guarantees on Long-Duration Contracts, Guaranteed Benefit Liability, Net | $ 2,089 | $ 215 |
LONG-TERM DEBT (Details 2) - USD ($) $ in Thousands |
Jan. 31, 2019 |
Jan. 31, 2018 |
---|---|---|
Minimum Lease Payments | ||
2017 | $ 5,271 | |
2018 | 5,276 | |
2019 | 4,969 | |
2020 | 4,126 | |
2021 | 3,087 | |
Thereafter | 18,070 | |
Total | 40,799 | |
Interest | ||
2017 | 2,797 | |
2018 | 2,500 | |
2019 | 2,342 | |
2020 | 1,971 | |
2021 | 1,344 | |
Thereafter | 4,426 | |
Total | 15,380 | |
Present Value of Minimum Lease Payments | ||
2017 | 2,474 | |
2018 | 2,776 | |
2019 | 2,627 | |
2020 | 2,155 | |
2021 | 1,743 | |
Thereafter | 13,644 | |
Total | 25,419 | |
Other Long-Term Debt | ||
2017 | 866 | |
2018 | 683 | |
2019 | 397 | |
2020 | 397 | |
2021 | 397 | |
Thereafter | 993 | |
Total | 3,733 | |
Total Present Value of Minimum Lease Payments and Other Long-Term Debt | ||
2017 | 3,340 | |
2018 | 3,459 | |
2019 | 3,024 | |
2020 | 2,552 | |
2021 | 2,140 | |
Thereafter | 14,637 | |
Long term debt | $ 29,152 | $ 36,152 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Other Commitments [Line Items] | |||
Contractual Obligation | $ 4,200 | ||
Other Commitment | 4,000 | ||
Other Commitment, Due in Second and Third Year | 1,900 | ||
Other Commitment, Due in Next Twelve Months | 2,100 | ||
Guarantees on customer financing | 1,500 | ||
ProceedsFromInsuranceSettlement | $ 3,000 | ||
Proceeds from Insurance Settlement, Investing Activities | $ 0 | $ 0 | 1,431 |
Proceeds from Insurance Settlement, Operating Activities | 1,600 | ||
Insured Event, Gain (Loss) | 2,000 | ||
Gain on Business Interruption Insurance Recovery | $ 700 |
OPERATING LEASE COMMITMENTS (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019
USD ($)
unit
|
Jan. 31, 2018
USD ($)
|
Jan. 31, 2017
USD ($)
|
|
Operating Leased Assets | |||
Rent and lease expense | $ 18,600 | $ 20,000 | $ 21,300 |
Minimum future lease payments | |||
2017 | 20,117 | ||
2018 | 18,786 | ||
2019 | 17,994 | ||
2020 | 17,117 | ||
2021 | 16,143 | ||
Thereafter | 68,409 | ||
Total | $ 158,566 | ||
Maximum | |||
Minimum future lease payments | |||
Lease term | 15 years | ||
Building | |||
Operating Leased Assets | |||
Number of buildings leased | unit | 120 |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Oct. 31, 2018 |
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | $ 0.7 | $ 0.5 | |
Due to Related Parties | 0.8 | ||
Amount of Transactions | $ 1.8 | ||
Unvested Shares of Restricted Stock [Member] | |||
Related Party Transaction [Line Items] | |||
Related Party Transaction, Expenses from Transactions with Related Party | $ 0.1 |
INCOME TAXES INCOME TAXES (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Operating Loss Carryforwards [Line Items] | |||
Undistributed earnings in non-U.S. subsidiaries | $ 11,000 | $ 11,000 | |
Net operating loss carryforwards | 60,700 | 60,700 | |
Valuation Allowances | 6,727 | 6,727 | $ 7,717 |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | 3,500 | 5,300 | |
Foreign Tax Authority | |||
Operating Loss Carryforwards [Line Items] | |||
OperatingLossCarryforwardIndefinite | 12,600 | 12,600 | |
OperatingLossCarryforwardsLimited | 8,700 | 8,700 | |
Domestic Tax Authority | |||
Operating Loss Carryforwards [Line Items] | |||
OperatingLossCarryforwardsLimited | 39,400 | 39,400 | |
Valuation Allowances | $ 6,700 | $ 6,700 | $ 7,700 |
CAPITAL STRUCTURE (Details) - $ / shares |
Jan. 31, 2019 |
Jan. 31, 2018 |
Jun. 01, 2012 |
---|---|---|---|
Stockholders' Equity Note [Abstract] | |||
Shares authorized for issuance | 50,000,000 | ||
Par value of shares authorized (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 |
Common stock, authorized shares | 45,000,000 | 45,000,000 | 45,000,000 |
Undesignated shares authorized | 5,000,000 |
EMPLOYEE BENEFIT PLANS (Details) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019
USD ($)
yr
|
Jan. 31, 2018
USD ($)
|
Jan. 31, 2017
USD ($)
|
|
401(k) profit sharing plan | |||
Minimum age of employees considered as an eligibility criteria for the employee benefit plan | yr | 19 | ||
Employer matching contribution as a percentage of employee's contribution | 50.00% | ||
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay | 6.00% | ||
Contributions to the plan | $ | $ 2.7 | $ 2.5 | $ 2.5 |
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands |
Jan. 31, 2019 |
Jan. 31, 2018 |
---|---|---|
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Face value of senior convertible notes | $ 45,644 | $ 65,644 |
Fair value | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Senior convertible notes | 45,644 | 65,000 |
Carrying value | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Senior convertible notes | $ 45,249 | $ 62,819 |
FAIR VALUE OF FINANCIAL INSTRUMENTS ASSETS AND LIABILITIES MEASURED ON A NONRECURRING BASIS (Details 2) - USD ($) $ in Millions |
Jan. 31, 2019 |
Oct. 31, 2018 |
Jan. 31, 2018 |
---|---|---|---|
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Carrying Value of Long-Lived Assets Analyzed for Impairment | $ 0.9 | $ 0.7 | $ 0.9 |
SEGMENT INFORMATION AND OPERATING RESULTS (Details) $ in Millions |
12 Months Ended | |
---|---|---|
Jan. 31, 2019
USD ($)
segment
|
Jan. 31, 2018
USD ($)
|
|
Revenue and long-lived assets | ||
Number of Reportable Segments | segment | 3 | |
European subsidiaries | ||
Revenue and long-lived assets | ||
Long-lived assets | $ | $ 12.3 | $ 4.8 |
SELECTED QUARTERLY FINANCIAL DATA (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2019 |
Oct. 31, 2018 |
Jul. 31, 2018 |
Apr. 30, 2018 |
Jan. 31, 2018 |
Oct. 31, 2017 |
Jul. 31, 2017 |
Apr. 30, 2017 |
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue, Previously Reported | $ 363,649 | $ 299,891 | $ 245,678 | $ 339,608 | $ 330,341 | $ 268,871 | $ 264,118 | $ 1,202,938 | $ 1,213,080 | ||
Quarterly Financial Information, Quarterly Charges and Credits, Amount Reconciling to Previously Reported Results | (2,736) | (2,660) | (1,964) | (2,229) | (2,489) | (2,556) | (3,057) | ||||
Revenue, As Corrected | $ 359,647 | 360,913 | 297,231 | 243,714 | 337,379 | 327,852 | 266,315 | 261,061 | |||
Gross Profit | 55,585 | 69,542 | 58,901 | 47,558 | 52,097 | 61,477 | 52,807 | 48,919 | $ 231,588 | 215,300 | 213,729 |
Net Income (Loss) Including Noncontrolling Interest | 12,182 | (7,049) | (14,535) | ||||||||
Net Income (Loss) Attributable to Titan Machinery Inc. | $ (2,160) | $ 10,776 | $ 5,180 | $ (1,588) | $ 1,685 | $ 2,384 | $ (5,186) | $ (5,932) | $ 12,182 | $ (7,049) | $ (14,179) |
Earnings (Loss) per share - basic (in dollars per share) | $ (0.10) | $ 0.49 | $ 0.23 | $ (0.07) | $ 0.08 | $ 0.11 | $ (0.24) | $ (0.27) | $ 0.55 | $ (0.32) | $ (0.65) |
Earnings (Loss) per Share-Diluted (in dollars per share) | $ (0.10) | $ 0.48 | $ 0.23 | $ (0.07) | $ 0.08 | $ 0.11 | $ (0.24) | $ (0.27) | $ 0.55 | $ (0.32) | $ (0.65) |
Impairment | $ 2,156 | $ 673 | $ 4,410 | ||||||||
Valuation Allowance Recognized | $ 3,500 | 5,300 | |||||||||
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount | $ 1,800 | ||||||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | (33.80%) | (35.00%) |
SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands |
Jan. 31, 2019 |
Jan. 01, 2019 |
Jul. 02, 2018 |
---|---|---|---|
Subsequent Event [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | $ 21,725 | $ 1,500 | |
Capitalized Computer Software, Net | 8,700 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other | 61 | 800 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | $ 1,944 | 700 | |
Cash Consideration Paid [Domain] | |||
Subsequent Event [Line Items] | |||
Payments to Acquire Businesses, Gross | $ 3,000 | $ 19,200 |
Schedule II-Valuation and Qualifying Accounts and Reserves (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2017 |
|
Changes in valuation and qualifying accounts and reserves | |||
Business Combination, Separately Recognized Transactions, Additional Disclosures, Acquisition Costs | $ 958 | $ 0 | $ 0 |
Valuation reserve deduction from receivables | |||
Changes in valuation and qualifying accounts and reserves | |||
Beginning Balance | 2,951 | 3,630 | 3,591 |
Additions Charged to Expenses | 835 | 2,333 | 3,399 |
Deductions for Write-offs, Net of Recoveries | (1,173) | (3,138) | (3,428) |
Foreign Currency Translation Adjustment | (43) | 126 | 68 |
Ending Balance | $ 3,528 | $ 2,951 | $ 3,630 |
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