UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended: June 30, 2015

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12936

TITAN INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	36-3228472
(State of Incorporation)	(I.R.S. Employer Identification No.)

2701 Spruce Street, Quincy, IL 62301

(Address of principal executive offices, including Zip Code)

(217) 228-6011

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ	Accelerated filer ¨
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o  No þ

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

	Shares Outstanding at
Class	July 20, 2015
Common stock, $0.0001 par value per share	53,807,043

TITAN INTERNATIONAL, INC.

TABLE OF CONTENTS

		Page
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Condensed Statements of Operations for the Three and Six Months Ended June 30, 2015 and 2014	1
	Consolidated Condensed Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2015 and 2014	2
	Consolidated Condensed Balance Sheets as of June 30, 2015, and December 31, 2014	3
	Consolidated Condensed Statement of Changes in Equity for the Six Months Ended June 30, 2015	4
	Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014	5
	Notes to Consolidated Condensed Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
Part II.	Other Information
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 6.	Exhibits	42
	Signatures	42

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TITAN INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

(All amounts in thousands, except per share data)

	Three months ended						Six months ended
	June 30,						June 30,
	2015			2014			2015			2014
Net sales	$	376,067		$	523,731		$	778,126		$	1,062,671
Cost of sales	325,014			468,161			684,279			955,124
Mining asset impairment and inventory writedown	—			34,797			—			34,797
Gross profit	51,053			20,773			93,847			72,750
Selling, general and administrative expenses	37,848			42,835			73,522			86,711
Research and development expenses	2,779			3,575			5,865			7,671
Royalty expense	2,895			3,830			6,120			7,571
Income (loss) from operations	7,531			(29,467		)	8,340			(29,203		)
Interest expense	(8,642		)	(8,926		)	(17,398		)	(18,185		)
Other income	6,906			6,335			15,189			6,851
Income (loss) before income taxes	5,795			(32,058		)	6,131			(40,537		)
Provision (benefit) for income taxes	1,515			(7,167		)	2,911			(10,518		)
Net income (loss)	4,280			(24,891		)	3,220			(30,019		)
Net loss attributable to noncontrolling interests	(2,491		)	(4,380		)	(3,783		)	(11,671		)
Net income (loss) attributable to Titan	$	6,771		$	(20,511	)	$	7,003		$	(18,348	)
Earnings (loss) per common share:
Basic	$	.13		$	(.38	)	$	.13		$	(.34	)
Diluted	$	.12		$	(.38	)	$	.13		$	(.34	)
Average common shares and equivalents outstanding:
Basic	53,686			53,486			53,674			53,478
Diluted	59,489			53,486			53,858			53,478
Dividends declared per common share:	$	.005		$	.005		$	.010		$	.010

See accompanying Notes to Consolidated Financial Statements.

1

TITAN INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(All amounts in thousands)

	Three months ended
	June 30,
	2015			2014
Net income (loss)	$	4,280		$	(24,891	)
Currency translation adjustment, net	4,436			7,826
Pension liability adjustments, net of tax of $(706) and $(123), respectively	1,488			28
Comprehensive income (loss)	10,204			(17,037		)
Net comprehensive loss attributable to noncontrolling interests	(1,904		)	(1,062		)
Comprehensive income (loss) attributable to Titan	$	12,108		$	(15,975	)

	Six months ended
	June 30,
	2015			2014
Net income (loss)	$	3,220		$	(30,019	)
Currency translation adjustment, net	(40,950		)	8,214
Pension liability adjustments, net of tax of $(806) and $(506), respectively	1,497			745
Comprehensive loss	(36,233		)	(21,060		)
Net comprehensive loss attributable to noncontrolling interests	(4,917		)	(13,245		)
Comprehensive loss attributable to Titan	$	(31,316	)	$	(7,815	)

See accompanying Notes to Consolidated Financial Statements.

2

TITAN INTERNATIONAL, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

(All amounts in thousands, except share data)

	June 30,			December 31,
Assets	2015			2014
Current assets
Cash and cash equivalents	$	187,484		$	201,451
Accounts receivable, net	224,689			199,378
Inventories	306,087			331,432
Deferred income taxes	13,972			23,435
Prepaid and other current assets	74,786			80,234
Total current assets	807,018			835,930
Property, plant and equipment, net	483,407			527,414
Deferred income taxes	18,303			15,623
Other assets	111,686			116,757
Total assets	$	1,420,414		$	1,495,724
Liabilities and Equity
Current liabilities
Short-term debt	$	25,068		$	26,233
Accounts payable	135,758			146,305
Other current liabilities	121,967			129,018
Total current liabilities	282,793			301,556
Long-term debt	495,273			496,503
Deferred income taxes	3,524			18,582
Other long-term liabilities	84,330			89,025
Total liabilities	865,920			905,666
Equity
Titan stockholders' equity
Common stock ($0.0001 par value, 120,000,000 shares authorized, 55,253,092 issued, 53,792,342 outstanding)	—			—
Additional paid-in capital	563,227			562,367
Retained earnings	132,472			126,007
Treasury stock (at cost, 1,460,750 and 1,504,064 shares, respectively)	(13,508		)	(13,897		)
Treasury stock reserved for deferred compensation	(1,075		)	(1,075		)
Accumulated other comprehensive loss	(150,923		)	(112,630		)
Total Titan stockholders’ equity	530,193			560,772
Noncontrolling interests	24,301			29,286
Total equity	554,494			590,058
Total liabilities and equity	$	1,420,414		$	1,495,724

See accompanying Notes to Consolidated Financial Statements.

3

TITAN INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

(All amounts in thousands, except share data)

	Number of common shares	Additional paid-in capital			Retained earnings			Treasury stock			Treasury stock  reserved for deferred compensation			Accumulated other comprehensive income (loss)			Total Titan Equity			Noncontrolling interest			Total Equity
Balance January 1, 2015	53,749,028	$	562,367		$	126,007		$	(13,897	)	$	(1,075	)	$	(112,630	)	$	560,772		$	29,286		$	590,058
Net income (loss)					7,003												7,003			(3,783		)	3,220
Currency translation adjustment, net of tax														(39,816		)	(39,816		)	(1,134		)	(40,950		)
Pension liability adjustments, net of tax														1,497			1,497						1,497
Dividends on common stock					(538		)										(538		)				(538		)
Exercise of stock options	12,500	32						112									144						144
Dissolution of subsidiary														26			26			(68		)	(42		)
Stock-based compensation		1,339															1,339						1,339
Tax benefit related to stock-based compensation		(538		)													(538		)				(538		)
Issuance of treasury stock under 401(k) plan	30,814	27						277									304						304
Balance June 30, 2015	53,792,342	$	563,227		$	132,472		$	(13,508	)	$	(1,075	)	$	(150,923	)	$	530,193		$	24,301		$	554,494

See accompanying Notes to Consolidated Financial Statements.

4

TITAN INTERNATIONAL, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

(All amounts in thousands)

	Six months ended June 30,
Cash flows from operating activities:	2015			2014
Net income (loss)	$	3,220		$	(30,019	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	36,604			46,815
Mining asset impairment	—			23,242
Mining inventory writedown	—			11,555
Deferred income tax provision	(5,602		)	(18,269		)
Stock-based compensation	1,339			2,143
Excess tax benefit from stock-based compensation	538			45
Issuance of treasury stock under 401(k) plan	304			332
(Increase) decrease in assets:
Accounts receivable	(37,149		)	(28,989		)
Inventories	8,721			(3,046		)
Prepaid and other current assets	2,868			36,061
Other assets	(688		)	(4,050		)
Increase (decrease) in liabilities:
Accounts payable	4,423			15,017
Other current liabilities	(1,988		)	4,937
Other liabilities	(4,748		)	(12,719		)
Net cash provided by operating activities	7,842			43,055
Cash flows from investing activities:
Capital expenditures	(22,505		)	(30,883		)
Acquisition of additional interest	—			(13,395		)
Decrease in restricted cash deposits	—			14,268
Other	2,708			3,241
Net cash used for investing activities	(19,797		)	(26,769		)
Cash flows from financing activities:
Proceeds from borrowings	13,239			6,217
Payment on debt	(8,517		)	(53,393		)
Proceeds from exercise of stock options	144			141
Excess tax benefit from stock-based compensation	(538		)	(45		)
Payment of financing fees	—			(33		)
Dividends paid	(538		)	(536		)
Net cash provided by (used for) financing activities	3,790			(47,649		)
Effect of exchange rate changes on cash	(5,802		)	4,957
Net decrease in cash and cash equivalents	(13,967		)	(26,406		)
Cash and cash equivalents, beginning of period	201,451			189,360
Cash and cash equivalents, end of period	$	187,484		$	162,954
Supplemental information:
Interest paid	$	20,063		$	20,695
Income taxes paid, net of refunds received	$	(884	)	$	6,454

See accompanying Notes to Consolidated Financial Statements.

5

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

1. ACCOUNTING POLICIES

In the opinion of Titan International, Inc. (Titan or the Company), the accompanying unaudited consolidated condensed financial statements contain all adjustments, which are normal and recurring in nature and necessary for a fair statement of the Company's financial position as of June 30, 2015, and the results of operations and cash flows for the three and six months ended June 30, 2015 and 2014.

Accounting policies have continued without significant change and are described in the Description of Business and Significant Accounting Policies contained in the Company's 2014 Annual Report on Form 10-K. These interim financial statements have been prepared pursuant to the Securities and Exchange Commission's rules for Form 10-Q's and, therefore, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2014 Annual Report on Form 10-K.

Sales

Sales and revenues are presented net of sales taxes and other related taxes.

Fair value of financial instruments

The Company records all financial instruments, including cash and cash equivalents, accounts receivable, notes receivable, accounts payable, other accruals and notes payable at cost, which approximates fair value due to their short term or stated rates.  Investments in marketable equity securities are recorded at fair value.  The 6.875% senior secured notes due 2020 (senior secured notes due 2020) and 5.625% convertible senior subordinated notes due 2017 (convertible notes) are carried at cost of $400.0 million and $60.2 million at June 30, 2015, respectively. The fair value of the senior secured notes due 2020 at June 30, 2015, as obtained through an independent pricing source, was approximately $367.0 million.

Cash dividends

The Company declared cash dividends of $.005 and $0.010 per share of common stock for each of the three and six months ended June 30, 2015, and 2014. The second quarter 2015 cash dividend of $.005 per share of common stock was paid July 15, 2015, to stockholders of record on June 30, 2015.

Use of estimates

The policies utilized by the Company in the preparation of the financial statements conform to accounting principles generally accepted in the United States of America and require management to make estimates, assumptions and judgments that affect the reported amount of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual amounts could differ from these estimates and assumptions.

Reclassification

Certain amounts from prior years have been reclassified to conform to the current year's presentation. Reclassifications included changes in classification from selling, general and administrative to cost of sales of $1.8 million and $4.4 million for the three and six months ended June 30, 2014, respectively.

Recently Issued Accounting Standards

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs." This update amends existing guidance to require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company is currently assessing the impact that adopting this new accounting guidance will have on the Company's consolidated financial statements.

6

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

2. MINING ASSET IMPAIRMENT AND INVENTORY WRITEDOWN

In the second quarter of 2014, the Company recorded an asset impairment and inventory writedown of $23.2 million and $11.6 million, respectively. The impairment was recorded on machinery, equipment and molds used to produce giant mining tires. Mining products are included in the Company's earthmoving/construction segment. In the second quarter of 2014, several large mining equipment manufacturers significantly decreased their sales forecast for mining equipment. The Company's sales of mining product were deteriorating at an accelerated pace. Therefore, the company tested mining related assets for impairment in the second quarter of 2014. The fair value of the mining equipment was determined using a cost and market approach. The inventory writedown was to adjust the value of mining product inventory to estimated market value.

3. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following (amounts in thousands):

	June 30, 2015			December 31, 2014
Accounts receivable	$	228,672		$	205,084
Allowance for doubtful accounts	(3,983		)	(5,706		)
Accounts receivable, net	$	224,689		$	199,378

Accounts receivable are reduced by an allowance for doubtful accounts which is based on historical losses.

4. INVENTORIES

Inventories consisted of the following (amounts in thousands):

	June 30, 2015			December 31, 2014
Raw material	$	93,612		$	119,989
Work-in-process	39,904			41,073
Finished goods	179,758			179,998
	313,274			341,060
Adjustment to LIFO basis	(7,187		)	(9,628		)
	$	306,087		$	331,432

At June 30, 2015, approximately 9% of the Company's inventories were valued under the last-in, first-out (LIFO) method. At December 31, 2014, approximately 11% of the Company's inventories were valued under the LIFO method. The remaining inventories were valued under the first-in, first-out (FIFO) method or average cost method. All inventories are valued at lower of cost or market.

7

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consisted of the following (amounts in thousands):

	June 30, 2015			December 31, 2014
Land and improvements	$	53,584		$	60,012
Buildings and improvements	218,628			223,989
Machinery and equipment	582,573			585,318
Tools, dies and molds	99,625			103,353
Construction-in-process	35,868			38,653
	990,278			1,011,325
Less accumulated depreciation	(506,871		)	(483,911		)
	$	483,407		$	527,414

Depreciation on fixed assets for the six months ended June 30, 2015 and 2014, totaled $34.0 million and $43.8 million, respectively.

Included in the total building and improvements are capital leases of $3.8 million and $4.1 million at June 30, 2015, and December 31, 2014, respectively. Included in the total of machinery and equipment are capital leases of $33.7 million and $37.7 million at June 30, 2015, and December 31, 2014, respectively.

6. GOODWILL AND INTANGIBLE ASSETS

Changes in goodwill consisted of the following (amounts in thousands):

	2015								2014
			Earthmoving/								Earthmoving/
	Agricultural		Construction		Consumer				Agricultural		Construction		Consumer
	Segment		Segment		Segment		Total		Segment		Segment		Segment			Total
Goodwill, January 1	$	—	$	—	$	—	$	—	$	24,540	$	14,898	$	2,637		$	42,075
Foreign currency translation	—		—		—		—		252		642		(70		)	824
Goodwill, June 30	$	—	$	—	$	—	$	—	$	24,792	$	15,540	$	2,567		$	42,899

The Company reviews goodwill for impairment during the fourth quarter of each annual reporting period, and whenever events and circumstances indicate that the carrying values may not be recoverable. In the fourth quarter of 2014, the recoverability of all goodwill was evaluated by estimating future discounted cash flows. The Company recorded a noncash charge for the impairment of goodwill in the amount of $36.6 million on both a pre-tax and after-tax basis. The charge included $11.4 million of earthmoving/construction goodwill related to the acquisition of Titan Australia; $9.6 million of agricultural goodwill related to the acquisition of the Latin America farm tire business; and $15.6 million of goodwill related to the acquisition of Voltyre-Prom. The Voltyre-Prom goodwill included $11.0 million in the agricultural segment, $2.6 million in the earthmoving/construction segment, and $2.0 million in the consumer segment.

8

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

The components of intangible assets consisted of the following (amounts in thousands):

	Weighted- Average Useful Lives (in Years)	June 30, 2015		December 31, 2014
Amortizable intangible assets:
Customer relationships	12.0	14,057		14,958
Patents, trademarks and other	8.5	16,047		15,907
Total at cost		30,104		30,865
Less accumulated amortization		(8,779	)	(7,176	)
		21,325		23,689

Amortization related to intangible assets for the six months ended June 30, 2015 and 2014, totaled $1.8 million and $2.3 million, respectively. Intangible assets are included as a component of other assets in the consolidated condensed balance sheet.

The estimated aggregate amortization expense at June 30, 2015, is as follows (amounts in thousands):

July 1 - December 31, 2015	$	1,468
2016	2,443
2017	2,324
2018	2,324
2019	2,324
Thereafter	10,442
	$	21,325

7. WARRANTY

Changes in the warranty liability consisted of the following (amounts in thousands):

	2015			2014
Warranty liability, January 1	$	28,144		$	33,134
Provision for warranty liabilities	5,558			9,422
Warranty payments made	(7,171		)	(9,975		)
Warranty liability, June 30	$	26,531		$	32,581

The Company provides limited warranties on workmanship of its products in all market segments.  The majority of the Company’s products have a limited warranty that ranges from zero to ten years, with certain products being prorated after the first year.  The Company calculates a provision for warranty expense based on past warranty experience.  Warranty accruals are included as a component of other current liabilities on the Consolidated Condensed Balance Sheets.

9

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

8. REVOLVING CREDIT FACILITY AND LONG-TERM DEBT

Long-term debt consisted of the following (amounts in thousands):

	June 30, 2015		December 31, 2014
6.875% senior secured notes due 2020	$	400,000	$	400,000
5.625% convertible senior subordinated notes due 2017	60,161		60,161
Titan Europe credit facilities	43,140		42,291
Other debt	14,563		17,013
Capital leases	2,477		3,271
	520,341		522,736
Less amounts due within one year	25,068		26,233
	$	495,273	$	496,503

Aggregate maturities of long-term debt at June 30, 2015, were as follows (amounts in thousands):

July 1 - December 31, 2015	$	17,803
2016	31,271
2017	66,849
2018	1,134
2019	1,066
Thereafter	402,218
	$	520,341

6.875% senior secured notes due 2020

The Company’s 6.875% senior secured notes (senior secured notes due 2020) are due October 2020. These notes are secured by the land and buildings of the following subsidiaries of the Company:  Titan Tire Corporation, Titan Tire Corporation of Bryan, Titan Tire Corporation of Freeport and Titan Wheel Corporation of Illinois. The Company's senior secured notes due 2020 outstanding balance was $400.0 million at June 30, 2015.

5.625% convertible senior subordinated notes due 2017

The Company’s 5.625% convertible senior subordinated notes (convertible notes) are due January 2017.   The initial base conversion rate for the convertible notes is 93.0016 shares of Titan common stock per $1,000 principal amount of convertible notes, equivalent to an initial base conversion price of approximately $10.75 per share of Titan common stock.  If the price of Titan common stock at the time of determination exceeds the base conversion price, the base conversion rate will be increased by an additional number of shares (up to 9.3002 shares of Titan common stock per $1,000 principal amount of convertible notes) as determined pursuant to a formula described in the indenture.  The base conversion rate will be subject to adjustment in certain events.  The Company’s convertible notes balance was $60.2 million at June 30, 2015.

Titan Europe credit facilities

The Titan Europe credit facilities contain borrowings from various institutions totaling $43.1 million at June 30, 2015. Maturity dates on this debt range from less than one year to nine years and interest rates range from 5% to 6.9%. The Titan Europe facilities are secured by the assets of its subsidiaries in Italy, Spain, Germany and Brazil.

Revolving credit facility

The Company’s $150 million revolving credit facility (credit facility) with agent Bank of America, N.A. has a December 2017 termination date and is collateralized by the accounts receivable and inventory of certain Titan domestic subsidiaries.  Titan's availability under this domestic facility may be less than $150 million as a result of eligible accounts receivable and inventory balances at certain of its domestic subsidiaries. At June 30, 2015, the amount available was $97.5 million as a result of the Company's decrease in sales which impacted both accounts receivable and inventory balances. During the first six months of 2015 and at June 30, 2015, there were no borrowings under the credit facility.

10

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

Other Debt

Other debt is comprised of working capital loans for the Sao Paulo, Brazil manufacturing facility totaling $14.6 million at June 30, 2015.

9. DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses financial derivatives to mitigate its exposure to volatility in foreign currency exchange rates. These derivative financial instruments are recognized at fair value. The Company has not designated these financial instruments as hedging instruments. Any gain or loss on the re-measurement of the fair value is recorded as an offset to currency exchange gain/loss. For the three months ended June 30, 2015, the Company recorded currency exchange loss of $1.4 million related to these derivatives. For the six months ended June 30, 2015, the Company recorded currency exchange gain of $3.1 million related to these derivatives.

10. LEASE COMMITMENTS

The Company leases certain buildings and equipment under operating leases.  Certain lease agreements provide for renewal options, fair value purchase options, and payment of property taxes, maintenance and insurance by the Company. 

At June 30, 2015, future minimum rental commitments under noncancellable operating leases with initial terms of at least one year were as follows (amounts in thousands):

July 1 - December 31, 2015	$	3,925
2016	6,035
2017	3,000
2018	2,259
2019	1,666
Thereafter	1,044
Total future minimum lease payments	$	17,929

At June 30, 2015, the Company had assets held as capital leases with a net book value of $9.2 million included in property, plant and equipment. Total future capital lease obligations relating to these leases are as follows (amounts in thousands):

July 1 - December 31, 2015	$	771
2016	942
2017	464
2018	177
2019	107
Thereafter	9
Total future capital lease obligation payments	2,470
Less amount representing interest	(55		)
Present value of future capital lease obligation payments	$	2,415

11. EMPLOYEE BENEFIT PLANS

The Company has three frozen defined benefit pension plans covering certain employees or former employees of three U.S. subsidiaries. The Company also has pension plans covering certain employees of several foreign subsidiaries. The Company also sponsors four 401(k) retirement savings plans in the U.S. and a number of defined contribution plans at foreign subsidiaries. The Company contributed approximately $2.2 million to the pension plans during the six months ended June 30, 2015 and expects to contribute approximately $2.6 million to the pension plans during the remainder of 2015.

11

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

The components of net periodic pension cost consisted of the following (amounts in thousands):

	Three months ended						Six months ended
	June 30,						June 30,
	2015			2014			2015			2014
Service cost	$	179		$	193		$	351		$	402
Interest cost	1,306			1,426			2,530			2,847
Expected return on assets	(1,531		)	(1,501		)	(3,050		)	(3,003		)
Amortization of unrecognized prior service cost	34			34			68			68
Amortization of net unrecognized loss	729			758			1,458			1,516
Net periodic pension cost	$	717		$	910		$	1,357		$	1,830

12. VARIABLE INTEREST ENTITIES

The Company holds a variable interest in three joint ventures for which the Company is the primary beneficiary. Two of the joint ventures operate distribution facilities which primarily distribute mining products. One of these facilities is located in Canada and the other is located in Australia. The Company’s variable interest in these joint ventures relates to sales of Titan product to these entities, consigned inventory and working capital loans. The third joint venture is the consortium which owns Voltyre-Prom, a leading producer of agricultural and industrial tires in Volgograd, Russia. Titan is acting as operating partner with responsibility for Voltyre-Prom’s daily operations. The Company has also provided working capital loans to Voltyre-Prom.

As the primary beneficiary of these variable interest entities (VIEs), the entities’ assets, liabilities and results of operations are included in the Company’s consolidated financial statements. The other equity holders’ interests are reflected in “Net loss attributable to noncontrolling interests” in the consolidated condensed statements of operations and “Noncontrolling interests” in the consolidated condensed balance sheets.

The following table summarizes the carrying amount of the entities’ assets and liabilities included in the Company’s consolidated condensed balance sheets at June 30, 2015 and December 31, 2014 (amounts in thousands):

	June 30, 2015		December 31, 2014
Cash and cash equivalents	$	11,297	$	8,861
Inventory	10,103		9,645
Other current assets	17,183		18,115
Property, plant and equipment, net	34,229		36,353
Other noncurrent assets	7,490		8,016
Total assets	80,302		80,990
Current liabilities	11,379		11,659
Noncurrent liabilities	3,114		7,448
Total liabilities	14,493		19,107

All assets in the above table can only be used to settle obligations of the consolidated VIE, to which the respective assets relate. Liabilities are nonrecourse obligations. Amounts presented in the table above are adjusted for intercompany eliminations.

12

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

13. ROYALTY EXPENSE

The Company has a trademark license agreement with Goodyear to manufacture and sell certain tires in North America and Latin America under the Goodyear name.  The North American and Latin American farm tire royalties were prepaid for seven years as part of the 2011 Goodyear Latin American farm tire acquisition. In May 2012, the Company and Goodyear entered into an agreement under which Titan will sell certain non-farm tire products directly to third party customers and pay a royalty to Goodyear. Royalty expenses recorded were $2.9 million and $3.8 million for the quarters ended June 30, 2015 and 2014, respectively. Royalty expenses were $6.1 million and $7.6 million for the six months ended June 30, 2015 and 2014, respectively.

14. OTHER INCOME

Other income consisted of the following (amounts in thousands):

	Three months ended				Six months ended
	June 30,				June 30,
	2015		2014		2015		2014
Currency exchange gain	$	3,647	$	3,747	$	9,613	$	2,050
Interest income	956		288		1,564		640
Wheels India Limited equity income	867		532		860		950
Other income	706		787		1,571		1,250
Discount amortization on prepaid royalty	472		756		1,083		1,530
Building rental income	258		225		498		431
	$	6,906	$	6,335	$	15,189	$	6,851

During the second quarter of 2015, the Company identified a subsidiary investment which was improperly classified as an intercompany liability. As a result of the correction of this item, the Company reclassified currency translation in other comprehensive income to currency exchange gain in other income. The three and six months ended June 30, 2015, included $5.7 million and $3.1 million, respectively, in currency exchange gain related to this correction. Titan concluded that these amounts are immaterial to the consolidated financial statements for the three and six months ended June 30, 2015.

15. INCOME TAXES

The Company recorded income tax expense of $1.5 million and $2.9 million for the three and six months ended June 30, 2015, respectively, as compared to a benefit from income taxes of $(7.2) million and $(10.5) million for the three and six months ended June 30, 2014. The Company's effective income tax rate was 47% and 26% for the six months ended June 30, 2015 and 2014, respectively.

The Company's 2015 income tax expense and rate differs from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of certain foreign jurisdictions that incurred a full valuation allowance on deferred tax assets created by current year projected losses and foreign income taxed in the U.S. offset by net discrete benefits related to a U.S. check the box election and tax law enactments.

The Company's 2014 income tax benefit and rate differs from the amount of income tax determined by applying the U.S. Federal income tax rate to pre-tax income primarily as a result of state income tax expense, unrecognized tax benefits, foreign earnings, and domestic production activities deduction.

13

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

16. EARNINGS PER SHARE

Earnings per share (EPS) were as follows (amounts in thousands, except per share data):

	Three months ended
	June 30, 2015					June 30, 2014
	Titan net income		Weighted- average shares	Per share  amount		Titan net loss			Weighted- average shares	Per share  amount
Basic earnings per share	$	6,771	53,686	$	0.13	$	(20,511	)	53,486	$	(0.38	)
Effect of stock options/trusts	—		208			—			—
Effect of convertible notes	609		5,595			—			—
Diluted earnings per share	$	7,380	59,489	$	0.12	$	(20,511	)	53,486	$	(0.38	)

	Six months ended
	June 30, 2015					June 30, 2014
	Titan net income		Weighted- average shares	Per share  amount		Titan net loss			Weighted- average shares	Per share  amount
Basic earnings per share	$	7,003	53,674	$	0.13	$	(18,348	)	53,478	$	(0.34	)
Effect of stock options/trusts	—		184			—			—
Diluted earnings per share	$	7,003	53,858	$	0.13	$	(18,348	)	53,478	$	(0.34	)

The effect of stock options/trusts has been excluded for the three and six months ended June 30, 2014, as the effect would have been antidilutive. The weighted average share amount excluded was 0.3 million shares.

The effect of convertible notes has been excluded for the three months ended June 30, 2014, and the six months ended June 30, 2015 and 2014, as the effect would have been antidilutive. The weighted average share amount excluded for convertible notes totaled 5.8 million shares for the three and six months ended June 30, 2014, and 5.6 million shares for the six months ended June 30, 2015.

17. LITIGATION

The Company is a party to routine legal proceedings arising out of the normal course of business.  Although it is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss, the Company believes at this time that none of these actions, individually or in the aggregate, will have a material adverse effect on the consolidated financial condition, results of operations or cash flows of the Company.  However, due to the difficult nature of predicting unresolved and future legal claims, the Company cannot anticipate or predict the material adverse effect on its consolidated financial condition, results of operations or cash flows as a result of efforts to comply with, or its liabilities pertaining to, legal judgments.

14

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

18. SEGMENT INFORMATION

The table below presents information about certain operating results of segments as reviewed by the chief executive officer of the Company for the three and six months ended June 30, 2015 and 2014 (amounts in thousands):

	Three months ended						Six months ended
	June 30,						June 30,
	2015			2014			2015			2014
Revenues from external customers
Agricultural	$	194,998		$	285,274		$	407,999		$	602,440
Earthmoving/construction	135,658			163,961			278,142			316,901
Consumer	45,411			74,496			91,985			143,330
	$	376,067		$	523,731		$	778,126		$	1,062,671
Gross profit
Agricultural	$	34,989		$	41,338		$	63,263		$	86,493
Earthmoving/construction	12,853			(23,559		)	23,498			(20,018		)
Consumer	3,748			3,810			7,896			7,686
Unallocated corporate	(537		)	(816		)	(810		)	(1,411		)
	$	51,053		$	20,773		$	93,847		$	72,750
Income (loss) from operations
Agricultural	$	25,652		$	28,078		$	44,556		$	58,619
Earthmoving/construction	124			(38,235		)	(1,738		)	(49,329		)
Consumer	(848		)	(1,814		)	(1,092		)	(3,374		)
Unallocated corporate	(17,397		)	(17,496		)	(33,386		)	(35,119		)
Income from operations	7,531			(29,467		)	8,340			(29,203		)
Interest expense	(8,642		)	(8,926		)	(17,398		)	(18,185		)
Other income, net	6,906			6,335			15,189			6,851
Income (loss) before income taxes	$	5,795		$	(32,058	)	$	6,131		$	(40,537	)

Assets by segment were as follows (amounts in thousands):

	June 30, 2015		December 31, 2014
Total assets
Agricultural	$	500,918	$	508,741
Earthmoving/construction	557,037		591,553
Consumer	162,922		175,475
Unallocated corporate	199,537		219,955
	$	1,420,414	$	1,495,724

15

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

19. FAIR VALUE MEASUREMENTS

Accounting standards for fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers are defined as:

Level 1 – Quoted prices in active markets for identical instruments.

Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable.

Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Assets and liabilities measured at fair value on a recurring basis consisted of the following (amounts in thousands):

	June 30, 2015										December 31, 2014
	Total			Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3
Contractual obligation investments	$	10,174		$	10,174	$	—		$	—	$	9,840		$	9,840	$	—		$	—
Derivative financial instruments asset	3,689			—		3,689			—		1,068			—		1,068			—
Preferred stock	250			—		—			250		250			—		—			250
Derivative financial instruments liability	(20		)	—		(20		)	—		(43		)	—		(43		)	—
Total	$	14,093		$	10,174	$	3,669		$	250	$	11,115		$	9,840	$	1,025		$	250

The following table presents the changes during the periods presented in Titan's Level 3 investments that are measured at fair value on a recurring basis (amounts in thousands):

	Preferred stock
Balance at December 31, 2014	$	250
Total realized and unrealized gains and losses	—
Balance as of June 30, 2015	$	250

20. RELATED PARTY TRANSACTIONS

The Company sells products and pays commissions to companies controlled by persons related to the chief executive officer of the Company.  The related party is Mr. Fred Taylor, Mr. Maurice Taylor’s brother.  The companies which Mr. Fred Taylor is associated with that do business with Titan include the following:  Blackstone OTR, LLC; FBT Enterprises; Green Carbon, INC; and OTR Wheel Engineering.  Sales of Titan products to these companies were approximately $0.8 million and $1.5 million for the three and six months ended June 30, 2015, respectively, as compared to $0.8 million and $1.4 million for the three and six months ended June 30, 2014. Titan had trade receivables due from these companies of approximately $0.3 million at June 30, 2015, and approximately $0.2 million at December 31, 2014.  On other sales referred to Titan from the above manufacturing representative companies, commissions were approximately $0.5 million and $1.1 million for the three and six months ended June 30, 2015, respectively, as compared to $0.6 million and $1.3 million for the three and six months ended June 30, 2014. Titan had purchases from these companies of approximately $2.1 million for the three and six months ended June 30, 2015.

The Company has a 34.2% equity stake in Wheels India Limited, a company incorporated in India and listed on the National Stock Exchange in India. The Company had trade payables due to Wheels India of approximately $0.0 million and $0.1 million at June 30, 2015, and December 31, 2014, respectively.

16

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

21. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss consisted of the following (amounts in thousands):

	Currency Translation Adjustments			Unrecognized Losses and Prior Service Cost			Total
Balance at April 1, 2015	$	(130,210	)	$	(26,050	)	$	(156,260	)
Currency translation adjustments	3,849			—			3,849
Defined benefit pension plan entries:
Amortization of unrecognized losses and prior
service cost, net of tax of $(706)	—			1,488			1,488
Balance at June 30, 2015	$	(126,361	)	$	(24,562	)	$	(150,923	)

	Currency Translation Adjustments			Unrecognized Losses and Prior Service Cost			Total
Balance at January 1, 2015	$	(86,571	)	$	(26,059	)	$	(112,630	)
Currency translation adjustments	(39,790		)	—			(39,790		)
Defined benefit pension plan entries:
Amortization of unrecognized losses and prior
service cost, net of tax of $(806)	—			1,497			1,497
Balance at June 30, 2015	$	(126,361	)	$	(24,562	)	$	(150,923	)

22. SUBSIDIARY GUARANTOR FINANCIAL INFORMATION

The Company's 6.875% senior secured notes due 2020 and 5.625% convertible senior subordinated notes are guaranteed by the following 100% owned subsidiaries of the Company: Titan Tire Corporation, Titan Tire Corporation of Bryan, Titan Tire Corporation of Freeport, and Titan Wheel Corporation of Illinois. The note guarantees are full and unconditional, joint and several obligations of the guarantors. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The following condensed consolidating financial statements are presented using the equity method of accounting. Certain sales and marketing expenses recorded by non-guarantor subsidiaries have not been allocated to the guarantor subsidiaries.

17

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

(Amounts in thousands)	Consolidating Condensed Statements of Operations For the Three Months Ended June 30, 2015
	Titan  Intl., Inc. (Parent)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	173,334		$	202,733		$	—		$	376,067
Cost of sales	207			141,328			183,479			—			325,014
Gross profit (loss)	(207		)	32,006			19,254			—			51,053
Selling, general and administrative expenses	2,617			16,757			18,474			—			37,848
Research and development expenses	—			805			1,974			—			2,779
Royalty expense	—			1,832			1,063			—			2,895
Income (loss) from operations	(2,824		)	12,612			(2,257		)	—			7,531
Interest expense	(8,094		)	(1		)	(547		)	—			(8,642		)
Intercompany interest income (expense)	248			—			(248		)	—			—
Other income (expense)	(393		)	3			7,296			—			6,906
Income (loss) before income taxes	(11,063		)	12,614			4,244			—			5,795
Provision (benefit) for income taxes	(5,787		)	4,796			2,506			—			1,515
Equity in earnings of subsidiaries	9,556			—			3,535			(13,091		)	—
Net income (loss)	4,280			7,818			5,273			(13,091		)	4,280
Net loss noncontrolling interests	—			—			(2,491		)	—			(2,491		)
Net income (loss) attributable to Titan	$	4,280		$	7,818		$	7,764		$	(13,091	)	$	6,771

(Amounts in thousands)	Consolidating Condensed Statements of Operations For the Three Months Ended June 30, 2014
	Titan  Intl., Inc. (Parent)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net sales	$	—		$	244,664		$	279,067		$	—	$	523,731
Cost of sales	303			241,915			260,740			—		502,958
Gross profit (loss)	(303		)	2,749			18,327			—		20,773
Selling, general and administrative expenses	2,388			17,611			22,836			—		42,835
Research and development expenses	72			1,214			2,289			—		3,575
Royalty expense	—			1,926			1,904			—		3,830
Income (loss) from operations	(2,763		)	(18,002		)	(8,702		)	—		(29,467		)
Interest expense	(8,255		)	—			(671		)	—		(8,926		)
Intercompany interest income (expense)	1,618			—			(1,618		)	—		—
Other income (expense)	1,192			103			5,040			—		6,335
Income (loss) before income taxes	(8,208		)	(17,899		)	(5,951		)	—		(32,058		)
Provision (benefit) for income taxes	69			(6,437		)	(799		)	—		(7,167		)
Equity in earnings of subsidiaries	(16,614		)	—			(18,004		)	34,618		—
Net income (loss)	(24,891		)	(11,462		)	(23,156		)	34,618		(24,891		)
Net loss noncontrolling interests	—			—			(4,380		)	—		(4,380		)
Net income (loss) attributable to Titan	$	(24,891	)	$	(11,462	)	$	(18,776	)	$	34,618	$	(20,511	)

18

TITAN INTERNATIONAL, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

(Amounts in thousands)	Consolidating Condensed Statements of Operations For the Six Months Ended June 30, 2015
	Titan  Intl., Inc. (Parent)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net sales	$	—		$	367,307		$	410,819		$	—		$	778,126
Cost of sales	438			309,279			374,562			—			684,279
Gross profit (loss)	(438		)	58,028			36,257			—			93,847
Selling, general and administrative expenses	5,251			32,136			36,135			—			73,522
Research and development expenses	—			1,805			4,060			—			5,865
Royalty expense	—			3,756			2,364			—			6,120
Loss from operations	(5,689		)	20,331			(6,302		)	—			8,340
Interest expense	(16,209		)	(1		)	(1,188		)	—			(17,398		)
Intercompany interest income (expense)	390			—			(390		)	—			—
Other income (expense)	5,004			(376		)	10,561			—			15,189
Income (loss) before income taxes	(16,504		)	19,954			2,681			—			6,131
Provision (benefit) for income taxes	(3,398		)	7,489			(1,180		)	—			2,911
Equity in earnings of subsidiaries	16,326			—			3,372			(19,698		)	—
Net income (loss)	3,220			12,465			7,233			(19,698		)	3,220
Net loss noncontrolling interests	—			—			(3,783		)	—			(3,783		)
Net income (loss) attributable to Titan	$	3,220		$	12,465		$	11,016		$	(19,698	)	$	7,003

(Amounts in thousands)	Consolidating Condensed Statements of Operations For the Six Months Ended June 30, 2014
	Titan  Intl., Inc. (Parent)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net sales	$	—		$	508,622		$	554,049		$	—	$	1,062,671
Cost of sales	513			470,154			519,254			—		989,921
Gross profit (loss)	(513		)	38,468			34,795			—		72,750
Selling, general and administrative expenses	4,032			36,601			46,078			—		86,711
Research and development expenses	72			3,367			4,232			—		7,671
Royalty expense	—			3,774			3,797			—		7,571
Income (loss) from operations	(4,617		)	(5,274		)	(19,312		)	—		(29,203		)
Interest expense	(16,517		)	—			(1,668		)	—		(18,185		)
Intercompany interest income (expense)	3,302			—			(3,302		)	—		—
Other income (expense)	1,534			48			5,269			—		6,851
Income (loss) before income taxes	(16,298		)	(5,226		)	(19,013		)	—		(40,537		)
Provision (benefit) for income taxes	(5,971		)	(1,627		)	(2,920		)	—		(10,518		)
Equity in earnings of subsidiaries	(19,692		)	—			(18,881		)	38,573		—
Net income (loss)	(30,019		)	(3,599		)	(34,974		)	38,573		(30,019		)
Net loss noncontrolling interests	—			—			(11,671		)	—		(11,671		)
Net income (loss) attributable to Titan	$	(30,019	)	$	(3,599	)	$	(23,303	)	$	38,573	$	(18,348	)

19