ex99_2.htm

	Nine months ended
	September 30,
	2010			2009
Net sales	$	648,922		$	581,083
Cost of sales		560,986			524,304
Gross profit (loss)		87,936			56,779
Selling, general & administrative expenses		36,008			34,409
Research and development expenses		5,039			5,016
Royalty expense		6,809			6,123
Income (loss) from operations		40,080			11,231
Interest expense		(19,713	)		(11,819	)
Gain (loss) on note repurchase		(3,195	)		1,398
Other income		307			1,302
Income (loss) before income taxes		17,479			2,112
Income tax provision (benefit)		6,817			274
Net income (loss)	$	10,662		$	1,838
Earnings (loss) per common share:
Basic	$	.31		$	.05
Diluted		.30			.05
Average common shares outstanding:
Basic		34,819			34,692
Diluted		51,740			35,251

	September 30,			December 31,
Assets	2010			2009
Current assets
Cash and cash equivalents	$	159,315		$	229,182
Accounts receivable		114,140			67,513
Inventories		135,976			110,136
Deferred income taxes		3,065			11,108
Prepaid and other current assets		20,826			27,277
Total current assets		433,322			445,216

Property, plant and equipment, net		248,689			254,461
Deferred income taxes		1,671			7,253
Other assets		44,012			29,533

Total assets	$	727,694		$	736,463

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	47,135		$	24,246
Other current liabilities		43,886			45,826
Total current liabilities		91,021			70,072

Long-term debt		312,448			366,300
Other long-term liabilities		38,431			38,138
Total liabilities		441,900			474,510

Stockholders’ equity
Common stock (no par, 120,000,000 shares authorized, 37,475,288 issued)		30			30
Additional paid-in capital		299,862			299,519
Retained earnings		26,509			16,377
Treasury stock (at cost, 2,127,428 and 2,214,347 shares, respectively)		(19,494	)		(20,274	)
Treasury stock reserved for contractual obligations		(2,936	)		(5,393	)
Accumulated other comprehensive loss		(18,177	)		(28,306	)
Total stockholders’ equity		285,794			261,953

Total liabilities and stockholders’ equity	$	727,694		$	736,463

	Number of common shares		Common Stock		Additional paid-in capital			Retained earnings			Treasury stock			Treasury stock reserved for contractual obligations			Accumulated other comprehensive income (loss)			Total

Balance January 1, 2010		#35,260,941	$	30	$	299,519		$	16,377		$	(20,274	)	$	(5,393	)	$	(28,306	)	$	261,953

Comprehensive income:
Net income									10,662												10,662
Pension liability adjustments, net of tax																		1,724			1,724
Unrealized gain on investment, net of tax																		8,405			8,405
Comprehensive income																					20,791
Dividends on common stock									(530	)											(530	)
Exercise of stock options		45,000				(163	)					404									241
Contractual obligation transactions						501									2,457						2,958
Issuance of treasury stock under 401(k) plan		41,919				5						376									381

Balance September 30, 2010		#35,347,860	$	30	$	299,862		$	26,509		$	(19,494	)	$	(2,936	)	$	(18,177	)	$	285,794

	Nine months ended
	September 30,
	2010			2009
Cash flows from operating activities:
Net income	$	10,662		$	1,838
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		27,617			24,759
Deferred income tax provision		8,043			550
(Gain) loss on note repurchase		3,195			(1,398	)
Excess tax benefit from stock options exercised		0			(86	)
Issuance of treasury stock under 401(k) plan		382			398
(Increase) decrease in assets:
Accounts receivable		(46,627	)		46,326
Inventories		(25,840	)		22,473
Prepaid and other current assets		6,451			(2,236	)
Other assets		(458	)		(1,753	)
Increase (decrease) in liabilities:
Accounts payable		22,889			(40,483	)
Other current liabilities		(1,740	)		(5,070	)
Other liabilities		3,074			6,330
Net cash provided by operating activities		7,648			51,648

Cash flows from investing activities:
Capital expenditures		(20,056	)		(36,482	)
Acquisition of shares of Titan Europe Plc		0			(2,399	)
Other		91			1,030
Net cash used for investing activities		(19,965	)		(37,851	)

Cash flows from financing activities:
Repurchase of senior notes		(56,674	)		(4,726	)
Payment on debt		0			(25,000	)
Proceeds from exercise of stock options		240			1,142
Excess tax benefit from stock options exercised		0			86
Payment of financing fees		(586	)		(1,070	)
Dividends paid		(530	)		(527	)
Net cash used for financing activities		(57,550	)		(30,095	)

Net decrease in cash and cash equivalents		(69,867	)		(16,298	)

Cash and cash equivalents at beginning of period		229,182			61,658

Cash and cash equivalents at end of period	$	159,315		$	45,360

In the opinion of Titan International, Inc. (Titan or the Company), the accompanying unaudited consolidated condensed financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly the Company’s financial position as of September 30, 2010, the results of operations for the nine months ended September 30, 2010 and 2009, and cash flows for the nine months ended September 30, 2010 and 2009.

Accounting policies have continued without significant change and are described in the Description of Business and Significant Accounting Policies contained in the Company’s 2009 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 2009 Annual Report on Form 10-K. Certain amounts from prior periods have been reclassified to conform to the current period financial presentation.

The Company records financial instruments, including cash and cash equivalents, accounts receivable, notes receivable, accounts payable and other accruals at cost, which approximates fair value. Investments in marketable equity securities are recorded at fair value. The senior unsecured 8% notes due January 2012 (senior unsecured notes) and convertible senior subordinated 5.625% notes due 2017 (convertible notes) are carried at cost of $139.9 million and $172.5 million at September 30, 2010, respectively. The fair value of these notes at September 30, 2010, as obtained through independent pricing sources, was approximately $148.3 million for the senior unsecured notes and approximately $263.7 million for the convertible notes.

Inventories were $136.0 million at September 30, 2010, and $110.1 million at December 31, 2009. At September 30, 2010, cost is determined using the first-in, first-out (FIFO) method for approximately 69% of inventories and the last-in, first-out (LIFO) method for approximately 31% of the inventories. At December 31, 2009, the FIFO method was used for approximately 74% of inventories and LIFO was used for approximately 26% of the inventories. Included in the inventory balances were reserves for slow-moving and obsolete inventory of $2.1 million at September 30, 2010, and $2.3 million at December 31, 2009.

	September 30,			December 31,
	2010			2009
Land and improvements	$	3,040		$	2,993
Buildings and improvements		97,391			97,238
Machinery and equipment		370,090			359,244
Tools, dies and molds		83,550			77,926
Construction-in-process		17,041			16,383
		571,112			553,784
Less accumulated depreciation		(322,423	)		(299,323	)
	$	248,689		$	254,461

Titan Europe Plc is publicly traded on the AIM market in London, England. The Company’s investment in Titan Europe represents a 22.9% ownership percentage. The Company has considered the applicable guidance in ASC 323 Investments – Equity Method and Joint Ventures and has concluded that the Company’s investment in Titan Europe Plc should be accounted for as an available-for-sale security and recorded at fair value in accordance with ASC 320 Investments – Debt and Equity Securities as the Company does not have significant influence over Titan Europe Plc. The investment in Titan Europe Plc is included as a component of other assets on the Consolidated Condensed Balance Sheets. Titan’s cost basis in Titan Europe is $5.0 million. Titan’s other comprehensive income includes a gain on the Titan Europe Plc investment of $9.3 million, which is net of tax of $5.0 million. The increased value in the Titan Europe Plc investment at September 30, 2010, was due primarily to a higher publicly quoted Titan Europe Plc market price.

The Company provides limited warranties on workmanship on 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.

The Company’s senior unsecured 8% notes (senior unsecured notes) are due January 2012. In the nine months ended September 30, 2010, the Company repurchased $53.9 million of principal value of senior unsecured notes resulting in a loss on note repurchase of $3.2 million. In the first quarter of 2009, the Company repurchased $6.2 million of principal value of senior unsecured notes for approximately $4.8 million resulting in a $1.4 million gain on the note repurchases. The Company’s senior unsecured notes outstanding balance was $139.9 million at September 30, 2010.

In May 2010, the Company commenced a tender offer to purchase its outstanding senior unsecured 8% notes due January 2012. As of the expiration of the tender offer in June 2010, there were $47.4 million of the notes tendered and accepted for payment which represented 24.4% of the principal amount of notes outstanding. In July 2010, the Company repurchased an additional $6.5 million of senior unsecured notes outstanding. In connection with the tender offer and additional note repurchase, Titan recorded expenses of $3.2 million in the nine months ended September 30, 2010. These expenses were related to: (i) early tender premium of $2.6 million, (ii) unamortized deferred financing fees of $0.4 million and (iii) other fees of $0.2 million.

The Company’s convertible senior subordinated 5.625% 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 $172.5 million at September 30, 2010.

The Company’s $100 million revolving credit facility (credit facility) with agent Bank of America, N.A. has a January 2014 termination date and is collateralized by the accounts receivable and inventory of Titan and certain of its domestic subsidiaries. During the first nine months of 2010 and at September 30, 2010, there were no borrowings under the credit facility. The credit facility contains certain financial covenants, restrictions and other customary affirmative and negative covenants. Titan is in compliance with these covenants and restrictions as of September 30, 2010.

In September 2010, Titan amended its credit facility with Bank of America, N.A. The amendment extended the credit facility termination date to January 2014 from the previous January 2012 date. The amendment also reduced the revolving commitment to $100 million from $150 million and released the lender’s lien on property, plant and equipment.

The Company has three frozen defined benefit pension plans and one defined benefit plan that previously purchased a final annuity settlement. The Company also sponsors four 401(k) retirement savings plans. The Company expects to contribute approximately $0.4 million to the pension plans during the remainder of 2010.

	Nine months ended
	September 30,
	2010			2009
Interest cost	$	3,900		$	4,092
Expected return on assets		(3,681	)		(3,703	)
Amortization of unrecognized prior service cost		102			102
Amortization of unrecognized deferred taxes		(42	)		(42	)
Amortization of net unrecognized loss		2,721			3,228
Net periodic pension cost (income)	$	3,000		$	3,677

The Company recorded income tax provision of $6.8 million for the nine months ended September 30, 2010, respectively, as compared to income tax provision of $0.3 million for the nine months ended September 30, 2009. The Company’s effective income tax rate was 39% and 13% for the nine months ended September 30, 2010 and 2009, respectively. The 2009 effective income tax rate was impacted by a reduction to the Company’s income tax provision of $0.5 million that related to one of the Company’s foreign subsidiaries.

	Nine months ended
	September 30,
	2010			2009
Revenues from external customers
Agricultural	$	497,503		$	453,098
Earthmoving/construction		139,161			113,085
Consumer		12,258			14,900
	$	648,922		$	581,083

Gross profit (loss)
Agricultural	$	78,201		$	48,400
Earthmoving/construction		10,294			8,727
Consumer		2,302			1,254
Corporate expenses		(2,861	)		(1,602	)
	$	87,936		$	56,779

Income (loss) from operations
Agricultural	$	66,222		$	35,530
Earthmoving/construction		4,080			3,711
Consumer		2,030			842
Corporate expenses		(32,252	)		(28,852	)
Income (loss) from operations		40,080			11,231
Interest expense		(19,713	)		(11,819	)
Other income (expense)		(2,888	)		2,700
Income (loss) before income taxes	$	17,479		$	2,112

	Nine months ended,
	September 30, 2010						September 30, 2009
	Net Income		Weighted average shares		Per share amount		Net Income		Weighted average shares		Per share amount
Basic EPS	$	10,662		34,819	$	.31	$	1,838		34,692	$	.05
Effect of stock options/trusts		0		545				0		559
Effect of convertible notes		4,827		16,376				0		0
Diluted EPS	$	15,489		51,740	$	.30	$	1,838		35,251	$	.05

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 affect 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.

In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-06, “Fair Value Measurements and Disclosures (Topic 820) – Improving Disclosures about Fair Value Measurements.” This guidance requires new disclosures for transfers in and out of Level 1 and Level 2 fair value measurements. This guidance requires separate presentation about purchases, sales, issuances, and settlements for activity in Level 3 fair value measurements. ASU 2010-06 also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The guidance for new disclosures and clarifications of existing disclosures was effective for reporting periods beginning after December 15, 2009. The adoption of this part of the guidance had no material effect on the Company’s financial position, results of operations or cash flows. The guidance related to presentation of Level 3 fair value measurements is effective for fiscal years beginning after December 15, 2010. The adoption of this part of the guidance is not expected to have a material effect on the Company’s financial position, results of operations or cash flows.

In July 2010, FASB issued ASU No. 2010-20, “Receivables (Topic 310) – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” This guidance amends Topic 310 to improve the disclosures that an entity provides about the credit quality of its financing receivables and the related allowance for credit losses. As a result of these amendments, an entity is required to disaggregate by portfolio segment or class certain existing disclosures and provide certain new disclosures about its financing receivables and related allowance for credit losses. The disclosures as of the end of a reporting period are effective for reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for reporting periods beginning on or after December 15, 2010. The adoption of this ASU is not expected to have a material effect on the Company’s financial position, results of operations or cash flows.

On October 1, 2010, the Company closed on an offering of $200 million senior secured 7.875% notes due 2017. Titan used a portion of the net proceeds from the offering to finance the repurchase of $138.9 million of its 8% senior unsecured notes due January 2012 and to pay all consent payments, accrued interest and costs and expenses associated therewith. The Company intends to use the remaining net proceeds from this offering of approximately $44 million for general corporate purposes, which may include potential future acquisitions.

On October 1, 2010, the Company closed on a tender transaction to purchase $138.9 million, or 99.2%, of its outstanding senior unsecured 8% notes due January 2012. In connection with this transaction, Titan will record expenses of approximately $12 million in the fourth quarter of 2010. These expenses relate primarily to a tender and consent premium of $75 per $1,000 principal amount of the notes. After this transaction, Titan’s senior unsecured 8% note due January 2012 outstanding balance was $1.1 million as of October 1, 2010, compared to a balance of $139.9 million at September 30, 2010.

The Company’s 8% senior unsecured notes and 5.625% convertible senior subordinated notes are guaranteed by each of Titan’s current and future wholly owned domestic subsidiaries other than its immaterial subsidiaries (subsidiaries with total assets less than $250,000 and total revenues less than $250,000.) The note guarantees are full and unconditional, joint and several obligations of the guarantors. Non-guarantors consist primarily of foreign subsidiaries of the Company, which are organized outside the United States of America. The following condensed consolidating financial statements are presented using the equity method of accounting.

	Consolidating Condensed Statements of Operations
(Amounts in thousands)
	For the Nine Months Ended September 30, 2010
	Titan					Non-
	Intl., Inc.			Guarantor		Guarantor
	(Parent)			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Net sales	$	0		$	648,922	$	0		$	0		$	648,922
Cost of sales		1,996			558,990		0			0			560,986
Gross profit (loss)		(1,996	)		89,932		0			0			87,936
Selling, general and administrative expenses		14,624			21,334		50			0			36,008
Research and development expenses		0			5,039		0			0			5,039
Royalty expense		0			6,809		0			0			6,809
Income (loss) from operations		(16,620	)		56,750		(50	)		0			40,080
Interest expense		(19,713	)		0		0			0			(19,713	)
Loss on note repurchase		(3,195	)		0		0			0			(3,195	)
Other income		203			104		0			0			307
Income (loss) before income taxes		(39,325	)		56,854		(50	)		0			17,479
Income tax provision (benefit)		(15,337	)		22,173		(19	)		0			6,817
Equity in earnings of subsidiaries		34,650			0		0			(34,650	)		0
Net income (loss)	$	10,662		$	34,681	$	(31	)	$	(34,650	)	$	10,662

	Consolidating Condensed Statements of Operations
(Amounts in thousands)
	For the Nine Months Ended September 30, 2009
	Titan					Non-
	Intl., Inc.			Guarantor		Guarantor
	(Parent)			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Net sales	$	0		$	581,083	$	0		$	0		$	581,083
Cost of sales		707			523,597		0			0			524,304
Gross profit (loss)		(707	)		57,486		0			0			56,779
Selling, general and administrative expenses		12,437			21,907		65			0			34,409
Research and development expenses		38			4,978		0			0			5,016
Royalty expense		0			6,123		0			0			6,123
Income (loss) from operations		(13,182	)		24,478		(65	)		0			11,231
Interest expense		(11,819	)		0		0			0			(11,819	)
Gain on note repurchase		1,398			0		0			0			1,398
Other income		1,072			230		0			0			1,302
Income (loss) before income taxes		(22,531	)		24,708		(65	)		0			2,112
Income tax provision (benefit)		(2,922	)		3,204		(8	)		0			274
Equity in earnings of subsidiaries		21,447			0		0			(21,447	)		0
Net income (loss)	$	1,838		$	21,504	$	(57	)	$	(21,447	)	$	1,838

	Consolidating Condensed Balance Sheets
(Amounts in thousands)
	September 30, 2010
	Titan					Non-
	Intl., Inc.			Guarantor		Guarantor
	(Parent)			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	159,158		$	24	$	133		$	0		$	159,315
Accounts receivable		0			114,140		0			0			114,140
Inventories		0			135,976		0			0			135,976
Prepaid and other current assets		7,004			16,887		0			0			23,891
Total current assets		166,162			267,027		133			0			433,322
Property, plant and equipment, net		3,483			245,206		0			0			248,689
Investment in subsidiaries		36,234			0		0			(36,234	)		0
Other assets		19,427			6,870		19,386			0			45,683
Total assets	$	225,306		$	519,103	$	19,519		$	(36,234	)	$	727,694

Liabilities and Stockholders’ Equity
Accounts payable	$	1,554		$	45,581	$	0		$	0		$	47,135
Other current liabilities		487			43,399		0			0			43,886
Total current liabilities		2,041			88,980		0			0			91,021
Long-term debt		312,448			0		0			0			312,448
Other long-term liabilities		6,785			31,646		0			0			38,431
Intercompany accounts		(381,762	)		393,776		(12,014	)		0			0
Stockholders’ equity		285,794			4,701		31,533			(36,234	)		285,794
Total liabilities and stockholders’ equity	$	225,306		$	519,103	$	19,519		$	(36,234	)	$	727,694

	Consolidating Condensed Balance Sheets
(Amounts in thousands)
	December 31, 2009
	Titan						Non-
	Intl., Inc.			Guarantor			Guarantor
	(Parent)			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	229,004		$	11		$	167		$	0		$	229,182
Accounts receivable		(201	)		67,714			0			0			67,513
Inventories		0			110,136			0			0			110,136
Prepaid and other current assets		19,857			18,528			0			0			38,385
Total current assets		248,660			196,389			167			0			445,216
Property, plant and equipment, net		7,602			246,859			0			0			254,461
Investment in subsidiaries		10,748			0			0			(10,748	)		0
Other assets		23,870			6,460			6,456			0			36,786
Total assets	$	290,880		$	449,708		$	6,623		$	(10,748	)	$	736,463

Liabilities and Stockholders’ Equity
Accounts payable	$	1,086		$	23,160		$	0		$	0		$	24,246
Other current liabilities		8,288			37,538			0			0			45,826
Total current liabilities		9,374			60,698			0			0			70,072
Long-term debt		366,300			0			0			0			366,300
Other long-term liabilities		5,574			32,564			0			0			38,138
Intercompany accounts		(352,321	)		377,281			(24,960	)		0			0
Stockholders’ equity		261,953			(20,835	)		31,583			(10,748	)		261,953
Total liabilities and stockholders’ equity	$	290,880		$	449,708		$	6,623		$	(10,748	)	$	736,463

	Consolidating Condensed Statements of Cash Flows
(Amounts in thousands)
	For the Nine Months Ended September 30, 2010
	Titan						Non-
	Intl., Inc.			Guarantor			Guarantor
	(Parent)			Subsidiaries			Subsidiaries			Consolidated
Net cash provided by (used for) operating activities	$	(10,887	)	$	18,569		$	(34	)	$	7,648

Cash flows from investing activities:
Capital expenditures		(1,409	)		(18,647	)		0			(20,056	)
Other, net		0			91			0			91
Net cash used for investing activities		(1,409	)		(18,556	)		0			(19,965	)

Cash flows from financing activities:
Repurchase of senior notes		(56,674	)		0			0			(56,674	)
Proceeds from exercise of stock options		240			0			0			240
Payment of financing fees		(586	)		0			0			(586	)
Other, net		(530	)		0			0			(530	)
Net cash used for financing activities		(57,550	)		0			0			(57,550	)

Net decrease in cash and cash equivalents		(69,846	)		13			(34	)		(69,867	)
Cash and cash equivalents, beginning of period		229,004			11			167			229,182
Cash and cash equivalents, end of period	$	159,158		$	24		$	133		$	159,315

	Consolidating Condensed Statements of Cash Flows
(Amounts in thousands)
	For the Nine Months Ended September 30, 2009
	Titan						Non-
	Intl., Inc.			Guarantor			Guarantor
	(Parent)			Subsidiaries			Subsidiaries			Consolidated
Net cash provided by operating activities	$	18,609		$	33,032		$	7		$	51,648

Cash flows from investing activities:
Capital expenditures		(2,389	)		(34,093	)		0			(36,482	)
Acquisition of shares of Titan Europe Plc		0			0			(2,399	)		(2,399	)
Other, net		0			1,030			0			1,030
Net cash used for investing activities		(2,389	)		(33,063	)		(2,399	)		(37,851	)

Cash flows from financing activities:
Repurchase of senior notes		(4,726	)		0			0			(4,726	)
Payment on debt		(25,000	)		0			0			(25,000	)
Proceeds from exercise of stock options		1,142			0			0			1,142
Payment of financing fees		(1,070	)		0			0			(1,070	)
Other, net		(441	)		0			0			(441	)
Net cash used for financing activities		(30,095	)		0			0			(30,095	)

Net decrease in cash and cash equivalents		(13,875	)		(31	)		(2,392	)		(16,298	)
Cash and cash equivalents, beginning of period		59,011			60			2,587			61,658
Cash and cash equivalents, end of period	$	45,136		$	29		$	195		$	45,360

On October 1, 2010, the Company closed on an offering of $200 million senior secured 7.875% notes due 2017. The Company’s 7.875% senior secured notes are guaranteed by the following subsidiaries of the Company: Titan Tire Corporation, Titan Wheel Corporation of Illinois, Titan Tire Corporation of Freeport, and Titan Tire Corporation of Bryan. The note guarantees are full and unconditional, joint and several obligations of the guarantors. The following condensed consolidating financial statements are presented using the equity method of accounting. Certain sales & marketing expenses recorded by non-guarantor subsidiaries have not been allocated to the guarantor subsidiaries.

	Consolidating Condensed Statements of Operations
(Amounts in thousands)
	For the Nine Months Ended September 30, 2010
	Titan						Non-
	Intl., Inc.			Guarantor			Guarantor
	(Parent)			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales	$	0		$	636,172		$	12,750		$	0		$	648,922
Cost of sales		1,996			542,351			16,639			0			560,986
Gross profit (loss)		(1,996	)		93,821			(3,889	)		0			87,936
Selling, general and administrative expenses		14,624			6,401			14,983			0			36,008
Research and development expenses		0			4,912			127			0			5,039
Royalty expense		0			6,809			0			0			6,809
Income (loss) from operations		(16,620	)		75,699			(18,999	)		0			40,080
Interest expense		(19,713	)		0			0			0			(19,713	)
Loss on note repurchase		(3,195	)		0			0			0			(3,195	)
Other income		203			31			73			0			307
Income (loss) before income taxes		(39,325	)		75,730			(18,926	)		0			17,479
Income tax provision (benefit)		(15,337	)		29,535			(7,381	)		0			6,817
Equity in earnings of subsidiaries		34,650			(234	)		21,378			(55,794	)		0
Net income (loss)	$	10,662		$	45,961		$	9,833		$	(55,794	)	$	10,662

	Consolidating Condensed Statements of Operations
(Amounts in thousands)
	For the Nine Months Ended September 30, 2009
	Titan						Non-
	Intl., Inc.			Guarantor			Guarantor
	(Parent)			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net sales	$	0		$	569,837		$	11,246		$	0		$	581,083
Cost of sales		707			507,982			15,615			0			524,304
Gross profit (loss)		(707	)		61,855			(4,369	)		0			56,779
Selling, general and administrative expenses		12,437			6,626			15,346			0			34,409
Research and development expenses		38			4,977			1			0			5,016
Royalty expense		0			6,123			0			0			6,123
Income (loss) from operations		(13,182	)		44,129			(19,716	)		0			11,231
Interest expense		(11,819	)		0			0			0			(11,819	)
Gain on note repurchase		1,398			0			0			0			1,398
Other income		1,072			96			134			0			1,302
Income (loss) before income taxes		(22,531	)		44,225			(19,582	)		0			2,112
Income tax provision (benefit)		(2,922	)		5,735			(2,539	)		0			274
Equity in earnings of subsidiaries		21,447			(568	)		17,200			(38,079	)		0
Net income (loss)	$	1,838		$	37,922		$	157		$	(38,079	)	$	1,838

	Consolidating Condensed Balance Sheets
(Amounts in thousands)
	September 30, 2010
	Titan					Non-
	Intl., Inc.			Guarantor		Guarantor
	(Parent)			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	159,158		$	23	$	134		$	0		$	159,315
Accounts receivable		0			110,691		3,449			0			114,140
Inventories		0			120,450		15,526			0			135,976
Prepaid and other current assets		7,004			16,204		683			0			23,891
Total current assets		166,162			247,368		19,792			0			433,322
Property, plant and equipment, net		3,483			223,119		22,087			0			248,689
Investment in subsidiaries		36,234			9,057		10			(45,301	)		0
Other assets		19,427			916		25,340			0			45,683
Total assets	$	225,306		$	480,460	$	67,229		$	(45,301	)	$	727,694

Liabilities and Stockholders’ Equity
Accounts payable	$	1,554		$	44,516	$	1,065		$	0		$	47,135
Other current liabilities		487			41,158		2,241			0			43,886
Total current liabilities		2,041			85,674		3,306			0			91,021
Long-term debt		312,448			0		0			0			312,448
Other long-term liabilities		6,785			25,736		5,910			0			38,431
Intercompany accounts		(381,762	)		142,080		239,682			0			0
Stockholders’ equity		285,794			226,970		(181,669	)		(45,301	)		285,794
Total liabilities and stockholders’ equity	$	225,306		$	480,460	$	67,229		$	(45,301	)	$	727,694

	Consolidating Condensed Balance Sheets
(Amounts in thousands)
	December 31, 2009
	Titan					Non-
	Intl., Inc.			Guarantor		Guarantor
	(Parent)			Subsidiaries		Subsidiaries			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	229,004		$	8	$	170		$	0		$	229,182
Accounts receivable		(201	)		65,533		2,181			0			67,513
Inventories		0			92,116		18,020			0			110,136
Prepaid and other current assets		19,857			17,881		647			0			38,385
Total current assets		248,660			175,538		21,018			0			445,216
Property, plant and equipment, net		7,602			222,184		24,675			0			254,461
Investment in subsidiaries		10,748			9,057		10			(19,815	)		0
Other assets		23,870			760		12,156			0			36,786
Total assets	$	290,880		$	407,539	$	57,859		$	(19,815	)	$	736,463

Liabilities and Stockholders’ Equity
Accounts payable	$	1,086		$	22,248	$	912		$	0		$	24,246
Other current liabilities		8,288			35,817		1,721			0			45,826
Total current liabilities		9,374			58,065		2,633			0			70,072
Long-term debt		366,300			0		0			0			366,300
Other long-term liabilities		5,574			26,475		6,089			0			38,138
Intercompany accounts		(352,321	)		128,302		224,019			0			0
Stockholders’ equity		261,953			194,697		(174,882	)		(19,815	)		261,953
Total liabilities and stockholders’ equity	$	290,880		$	407,539	$	57,859		$	(19,815	)	$	736,463

	Consolidating Condensed Statements of Cash Flows
(Amounts in thousands)
	For the Nine Months Ended September 30, 2010
	Titan						Non-
	Intl., Inc.			Guarantor			Guarantor
	(Parent)			Subsidiaries			Subsidiaries			Consolidated
Net cash provided by (used for) operating activities	$	(10,887	)	$	18,091		$	444		$	7,648

Cash flows from investing activities:
Capital expenditures		(1,409	)		(18,118	)		(529	)		(20,056	)
Other, net		0			42			49			91
Net cash used for investing activities		(1,409	)		(18,076	)		(480	)		(19,965	)

Cash flows from financing activities:
Repurchase of senior notes		(56,674	)		0			0			(56,674	)
Proceeds from exercise of stock options		240			0			0			240
Payment of financing fees		(586	)		0			0			(586	)
Other, net		(530	)		0			0			(530	)
Net cash used for financing activities		(57,550	)		0			0			(57,550	)

Net increase (decrease) in cash and cash equivalents		(69,846	)		15			(36	)		(69,867	)
Cash and cash equivalents, beginning of period		229,004			8			170			229,182
Cash and cash equivalents, end of period	$	159,158		$	23		$	134		$	159,315

	Consolidating Condensed Statements of Cash Flows
(Amounts in thousands)
	For the Nine Months Ended September 30, 2009
	Titan						Non-
	Intl., Inc.			Guarantor			Guarantor
	(Parent)			Subsidiaries			Subsidiaries			Consolidated
Net cash provided by operating activities	$	18,609		$	33,472		$	(433	)	$	51,648

Cash flows from investing activities:
Capital expenditures		(2,389	)		(33,538	)		(555	)		(36,482	)
Acquisition of shares of Titan Europe Plc		0			0			(2,399	)		(2,399	)
Other, net		0			25			1,005			1,030
Net cash used for investing activities		(2,389	)		(33,513	)		(1,949	)		(37,851	)

Cash flows from financing activities:
Repurchase of senior notes		(4,726	)		0			0			(4,726	)
Payment on debt		(25,000	)		0			0			(25,000	)
Proceeds from exercise of stock options		1,142			0			0			1,142
Payment of financing fees		(1,070	)		0			0			(1,070	)
Other, net		(441	)		0			0			(441	)
Net cash used for financing activities		(30,095	)		0			0			(30,095	)

Net decrease in cash and cash equivalents		(13,875	)		(41	)		(2,382	)		(16,298	)
Cash and cash equivalents, beginning of period		59,011			58			2,589			61,658
Cash and cash equivalents, end of period	$	45,136		$	17		$	207		$	45,360

	September 30,			December 31,
	2010			2009
Raw materials	$	56,557		$	44,336
Work-in-process		23,064			21,378
Finished goods		60,476			46,067
		140,097			111,781
Adjustment to LIFO basis		(4,121	)		(1,645	)
	$	135,976		$	110,136

	2010			2009
Warranty liability, January 1	$	9,169		$	7,488
Provision for warranty liabilities		12,469			12,735
Warranty payments made		(11,181	)		(11,398	)
Warranty liability, September 30	$	10,457		$	8,825

October 1 – December 31, 2010	$	0
2011		0
2012		139,948
2013		0
2014		0
Thereafter		172,500
	$	312,448

October 1 – December 31, 2010	$	303
2011		392
2012		64
2013		14
Thereafter		1
Total future minimum lease payments	$	774

	September 30,		December 31,
Total Assets	2010		2009
Agricultural segment	$	328,603	$	257,523
Earthmoving/construction segment		191,881		188,169
Consumer segment		11,761		8,305
Other assets		195,449		282,466
	$	727,694	$	736,463