EX-99 2 ex99.htm PRESS RELEASE DATED FEBRUARY 24, 2006 PRESS RELEASE DATED FEBRUARY 24, 2006
 
Exhibit 99
 

TITAN INTERNATIONAL, INC. REPORTS FOURTH QUARTER AND YEAR-END RESULTS


 
Quincy, IL. - Titan International, Inc. (NYSE: TWI)
February 24, 2006
 
 
Fourth quarter highlights:

·  
On December 28, 2005, Titan Tire Corporation, a subsidiary of Titan International, Inc., acquired The Goodyear Tire & Rubber Company’s North American farm tire assets. Titan Tire purchased the assets of Goodyear’s North American farm tire business for approximately $100 million in cash proceeds. The assets purchased include Goodyear’s North American farm inventory and plant, property and equipment located in Freeport, Illinois. The company funded the acquisition through an increase in its revolving credit facility.

·  
Net sales remained near $100 million in Titan’s 2005 fourth quarter, as compared to a strong fourth quarter in 2004. The net sales of $96.6 million this quarter compare to $105.9 million in the fourth quarter of last year.

·  
Despite rising energy and raw materials costs, gross profit remained a positive $6.7 million in the quarter. This compares to $13.1 million in fourth quarter 2004.

·  
Interest expense for the fourth quarter of 2005 was $1.9 million, a 26% decrease from the $2.6 million recorded in the fourth quarter of 2004.

Statement of Chief Executive Officer:
 
“Titan achieved another consecutive year of strong sales and profits. Our employees have worked hard, and it is paying off,” said Titan Chairman and CEO Maurice Taylor Jr. “The company is growing and expanding. Our acquisition of Goodyear’s North American farm tire assets provides great opportunity for the future, and the best selection of American made and owned products in off-highway wheel and tire assemblies for our customers.”

Year-to-date highlights:

·  
Year-to-date net sales increased $9.0 million, or 2%, to $470.1 million when compared to 2004 year-to-date net sales of $461.1 million, excluding Titan Europe. Recorded 2004 year-to-date net sales were $510.6 million, including $49.4 million of Titan Europe sales.



·  
Interest expense for the year was $8.6 million, a 47% decrease as compared to the $16.2 million recorded in 2004.

Financial overview:

Titan International, Inc. reported net sales of $96.6 million for fourth quarter of 2005, a reduction of 9% compared to $105.9 million for the previous year’s quarter. Net sales for 2005 were $470.1 million, up 2% from $461.1 million for 2004 on a pro forma basis, adjusted for the sale of Titan Europe in April 2004. Reported sales for 2004 were $510.6 million.

Loss from operations was $(17.3) million in the fourth quarter of 2005, as compared to $(1.0) million in fourth quarter 2004. Loss from operations without the Dyneer legal charge was $(2.1) million for the fourth quarter of 2005. Income from operations was $12.0 million for the year ended December 31, 2005, and $33.3 million for the year ended December 31, 2004. Income from operations without the Dyneer legal charge was $27.2 million for 2005.

The State Court of California allowed the disbursement of the $24.5 million of restricted cash funds held in the Vehicular Technologies case in the fourth quarter of 2005. Titan recognized the Dyneer legal charge for the judgment of approximately $15.2 million for this case.

The income tax benefit was $13.9 million for both three and twelve months ending December 31, 2005. As a result of the anticipated utilization of net operating loss carryforward in connection with its future Federal income tax filings, the company recorded a tax benefit of $13.9 million as a result of the reversal of the company’s valuation allowance.

Net loss for the fourth quarter was $(5.5) million, as compared to $(1.3) million in the fourth quarter of 2004. Net income for the year ended December 31, 2005 and 2004 was $11.0 million and $11.1 million respectively.

Basic loss per share and fully diluted earnings per share were $(.28) for the fourth quarter of 2005 and $(.08) per share for the fourth quarter of 2004.

Year-to-date 2005 basic earnings per share were $.61, compared to $.62 per share for the year-to-date 2004. Year-to-date 2005 fully diluted earnings per share were $.60, compared to $.61 per share for the year-to-date 2004.

Inventories and net property, plant and equipment increased substantially at December 31, 2005, as compared to 2004 as the result of Titan’s Goodyear North American farm tire acquisition. The acquisition added approximately $55 million of property, plant and equipment, and approximately $45 million of inventory and supplies.

Form 10-K:

For additional information and Management’s Discussion and Analysis of Financial Condition and Results of Operations, see the company’s Form 10-K filed with the Securities and Exchange Commission on February 24, 2006.


Cash merger offer:

On October 11, 2005, the Company received an offer from One Equity Partners LLC (One Equity), a private equity affiliate of JPMorgan Chase & Co., indicating One Equity’s interest in acquiring Titan International, Inc., in a cash merger for $18.00 per share of Titan common stock. A Special Committee of the Board of Directors of Titan was formed to pursue discussions with One Equity. The offer is subject to reaching a definitive agreement with the customary conditions, due diligence, financing, both One Equity and Titan board approvals and Titan’s stockholders’ approval. There can be no assurance that any agreement will be completed. Mr. Richard M. Cashin Jr., one of Titan’s directors, is also the Managing Partner of One Equity. Mr. Maurice M. Taylor Jr., Chief Executive Officer and Chairman of the Board of Directors of Titan, is expected to participate with One Equity Partners. Additionally, Mr. Mitchell I. Quain and Mr. Anthony L. Soave, also directors of Titan, may participate.

The Special Committee consists of Mr. Erwin H. Billig, Mr. Edward J. Campbell and Mr. Albert J. Febbo. No member of the Special Committee is participating with One Equity in the cash merger offer. The Special Committee hired counsel and a financial advisor. The financial advisor is Jefferies & Company, Inc. Anyone who is interested in submitting a competing offer to Titan’s Special Committee may do so by contacting Jefferies & Company, Inc. at the address of 520 Madison Avenue, New York, N.Y., 10019. The telephone number is (212) 284-2300 and the fax number is (212) 284-2114.

Safe harbor statement:

This press release includes forward-looking statements that involve risks and uncertainties, including risks as detailed in Titan International, Inc.’s periodic filings with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31, 2005. The Company cautions that any forward-looking statements included in this press release are subject to a number of risks and uncertainties and the Company undertakes no obligation to publicly update or revise any forward-looking statements.

Company description:
 
QUINCY, Ill.—Titan International, Inc. (NYSE: TWI), a holding company, owns subsidiaries that supply wheels, tires and assemblies for off-highway equipment used in agricultural, earthmoving/construction, and consumer (i.e. all terrain vehicles and trailers) applications.



Titan International, Inc.
Consolidated Statements of Operations (Unaudited)
For the three and twelve months ended December 31, 2005 and 2004




Amounts in thousands except earnings per share data.
  
Three Months Ended
Twelve Months Ended
 
December 31, 
December 31,
     
2005
 
 
2004
 
 
2005
 
 
2004
  
Net sales
  
$
96,583
  
$
105,920
  
$
470,133
  
$
510,571
  
Cost of sales
    
89,929
    
92,830
    
405,923
    
431,071
  
Gross profit
    
6,654
    
13,090
    
64,210
    
79,500
  
                           
Selling, general & administrative expenses
    
7,775
    
8,455
    
31,433
    
36,040
  
Research & development expenses
    
239
    
345
    
837
    
1,875
  
Dyneer legal charge
    
15,205
    
0
    
15,205
    
0
  
Idled assets marketed for sale depreciation
    
744
    
5,275
    
4,736
    
5,275
  
Goodwill impairment on Titan Europe
    
0
    
0
    
0
    
2,988
  
(Loss) income from operations
    
(17,309
)
  
(985
)
  
11,999
    
33,322
  
                           
Interest expense
    
(1,894
)
  
(2,561
)
  
(8,617
)
  
(16,159
)
Noncash convertible debt conversion charge
    
0
    
0
    
(7,225
)
  
0
  
Debt termination expense
    
0
    
0
    
0
    
(3,654
)
Other (expense) income
    
(265
)
  
1,046
    
958
    
1,706
  
(Loss) income before income taxes
    
(19,468
)
  
(2,500
)
  
(2,885
)
  
15,215
  
                           
(Benefit) provision for income taxes
    
(13,927
)
  
(1,207
)
  
(13,927
)
  
4,108
  
                           
Net (loss) income
  
$
(5,541
)
$
(1,293
)
$
11,042
  
$
11,107
  
                           
(Loss) earnings per common share:
                          
Basic
  
$
(.28
)
$
(.08
)
$
.61
  
$
.62
  
Diluted
    
(.28
)
  
(.08
)
  
.60
    
.61
  
                           
Average common shares outstanding:
                          
Basic
    
19,487
    
16,326
    
18,053
    
17,798
  
Diluted
    
19,487
    
16,326
    
18,284
    
21,574
  

Segment Information
Revenues from external customers (Unaudited)
Amounts in thousands
  
Three Months Ended
  
Twelve Months Ended
  
 
  
December 31, 
December 31,
     
2005
 
 
2004
 
 
2005
 
 
2004
  
Agricultural
  
$
65,488
  
$
62,652
  
$
310,361
  
$
316,235
  
Earthmoving/Construction
    
25,817
    
35,751
    
131,982
    
160,297
  
Consumer
    
5,278
    
7,517
    
27,790
    
34,039
  
Total
  
$
96,583
  
$
105,920
  
$
470,133
  
$
510,571
  



Consolidated Condensed Balance Sheets (Unaudited)
Amounts in thousands
          
   
December 31, 
    
December 31,
  
Assets
    
2005
    
2004
  
Current assets:
              
Cash & cash equivalents
  
$
592
  
$
1,130
  
Accounts receivable
    
47,112
    
52,781
  
Inventories
    
122,692
    
84,658
  
Deferred income taxes
    
20,141
    
6,711
  
Prepaid & other current assets
    
15,630
    
9,388
  
Total current assets
    
206,167
    
154,668
  
               
Property, plant & equipment, net
    
140,382
    
80,644
  
Idled assets marketed for sale
    
18,267
    
31,245
  
Investment in Titan Europe Plc
    
48,467
    
30,040
  
Restricted cash deposits
    
0
    
24,500
  
Goodwill
    
11,702
    
11,702
  
Other assets
    
15,771
    
21,367
  
Total assets
  
$
440,756
  
$
354,166
  
               
Liabilities & stockholders’ equity
              
Current liabilities:
              
Short-term debt (including current portion of long-term debt)
  
$
11,995
  
$
217
  
Accounts payable
    
24,435
    
26,733
  
Other current liabilities
    
11,753
    
12,820
  
Total current liabilities
    
48,183
    
39,770
  
               
Long-term debt
    
190,464
    
169,688
  
Deferred income taxes
    
13,581
    
9,164
  
Other long-term liabilities
    
20,715
    
28,663
  
Stockholders’ equity
    
167,813
    
106,881
  
Total liabilities & stockholders’ equity
  
$
440,756
  
$
354,166
  


Contact: Courtney Leeser, Communications Coordinator
(217) 221-4489