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EMPLOYEE BENEFIT PLANS
 12 Months Ended
Dec. 31, 2011
Compensation and Retirement Disclosure [Abstract]  
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS

Pension plans
The Company has a frozen defined benefit pension plan covering certain employees of Titan Tire Corporation (Titan Tire) and has a frozen defined benefit pension plan covering certain employees of Titan Tire Corporation of Bryan (Bryan).  The Company also has a frozen contributory defined benefit pension plan covering certain former eligible bargaining employees of its Walcott, Iowa, facility (Walcott).  Additionally, the Company maintains a contributory defined benefit plan that covered former eligible bargaining employees of Dico, Inc (Dico).  This Dico plan purchased a final annuity settlement contract in October 2002.  As a part of the Goodyear Latin America farm tire acquisition, the Company has a pension plan in Brazil. As of December 31, 2011, the pension plan assets were not yet transferred to Titan. However, the Company is accounting for the net liabilities of these plans. The Company’s policy is to fund pension costs as required by law, which is consistent with the funding requirements of federal laws and regulations.

The Company’s defined benefit plans have been aggregated in the following table.  Included in the December 31, 2011, presentation are the Titan Tire, Bryan, Walcott and Brazil plans which have a projected benefit obligation of $112.0 million, exceeding the fair value of plan assets of $68.6 million at December 31, 2011.  Included in the December 31, 2010, presentation are the Titan Tire, Bryan and Walcott plans which have a projected benefit obligation of $98.8 million, exceeding the fair value of plan assets of $72.6 million at December 31, 2010. The Company absolved itself from the liabilities associated with the Dico plan with the purchase of a final annuity settlement contract in 2002.  Therefore, the plan no longer maintains a benefit obligation.  The fair value of the Dico plan assets was $0.5 million at December 31, 2011 and 2010.

The following table provides the change in benefit obligation, change in plan assets, funded status and amounts recognized in the consolidated balance sheet of the defined benefit pension plans as of December 31, 2011 and 2010 (amounts in thousands):
Change in benefit obligation:
2011
 
2010
Benefit obligation at beginning of year
$
98,831

 
$
93,708

Acquisition
4,869

 
—

Service cost
264

 
—

Interest cost
5,467

 
5,200

Actuarial (gain) loss
11,497

 
6,839

Benefits paid
(8,341
)
 
(6,916
)
Foreign currency translation
(632
)
 
—

Benefit obligation at end of year
$
111,955

 
$
98,831

Change in plan assets:
 

 
 

Fair value of plan assets at beginning of year
$
73,156

 
$
69,160

Actual return on plan assets
637

 
9,131

Employer contributions
3,645

 
1,781

Benefits paid
(8,341
)
 
(6,916
)
Fair value of plan assets at end of year
$
69,097

 
$
73,156

Unfunded status at end of year
$
(42,858
)
 
$
(25,675
)
Amounts recognized in consolidated balance sheet:
 

 
 

Noncurrent assets
$
542

 
$
543

Noncurrent liabilities
(43,400
)
 
(26,218
)
Net amount recognized in the consolidated balance sheet
$
(42,858
)
 
$
(25,675
)


Amounts recognized in accumulated other comprehensive loss:
 
 
 
 
2011
 
2010
Unrecognized prior service cost
$
(1,028
)
 
$
(1,164
)
Unrecognized net loss
(55,396
)
 
(43,024
)
Deferred tax effect of unrecognized items
21,387

 
16,860

Net amount recognized in accumulated other comprehensive loss
$
(35,037
)
 
$
(27,328
)

 
The weighted-average assumptions used in the actuarial computation that derived the benefit obligations at December 31 were as follows:
2011
 
2010
Discount rate
4.6
%
 
5.3
%
Expected long-term return on plan assets
7.5
%
 
7.5
%

 
The discount rates were determined using the Above Average Median Citigroup Pension Discount Curve with durational yields applied to the expected Titan cash benefit payments to participants.


The following table provides the components of net periodic pension cost for the plans, settlement cost and the assumptions used in the measurement of the Company’s benefit obligation for the years ended December 31, 2011, 2010 and 2009 (amounts in thousands):
Components of net periodic benefit cost and other
amounts recognized in other comprehensive income
 
 
 
 
 
Net periodic benefit cost:
2011
 
2010
 
2009
Service cost
$
264

 
$
—

 
$
—

Interest cost
5,467

 
5,200

 
5,456

Assumed return on assets
(5,258
)
 
(4,911
)
 
(4,939
)
Amortization of unrecognized prior service cost
137

 
137

 
137

Amortization of unrecognized deferred taxes
(56
)
 
(56
)
 
(56
)
Amortization of net unrecognized loss
3,745

 
3,628

 
4,303

Net periodic pension cost
$
4,299

 
$
3,998

 
$
4,901



The estimated net loss and prior service cost that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $5.2 million and $0.1 million, respectively.

The weighted-average assumptions used in the actuarial computation that derived net periodic pension cost for the years ended December 31, 2011, 2010 and 2009 were as follows:
 
2011
 
2010
 
2009
Discount rate
5.3
%
 
5.75
%
 
6.25
%
Expected long-term return on plan assets
7.5
%
 
7.5
%
 
8.5
%


The allocation of the fair value of plan assets was as follows:
 
Percentage of Plan Assets
at December 31,
 
Target
Allocation
Asset Category
2011
 
2010
 
2012
U.S. equities (a)
60
%
 
59
%
 
40% - 80%
Fixed income
24
%
 
24
%
 
20% - 50%
Cash and cash equivalents
7
%
 
7
%
 
0% - 20%
International equities (a)
9
%
 
10
%
 
0% - 16%
 
100
%
 
100
%
 
 
 
(a)
Total equities may not exceed 80% of total plan assets.
 
 
ASC 820 establishes 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.
 
The fair value of the plan assets by asset categories at December 31, 2011 was as follows (amounts in thousands):
 
Fair Value Measurements as of December 31, 2011
 
Total
 
Level 1
 
Level 2
 
Level 3
Money market funds
$
4,659

 
$
4,659

 
$
—

 
$
—

Domestic common stock
28,123

 
28,123

 
—

 
—

Foreign common stock
3,847

 
3,847

 
—

 
—

Corporate bonds
2,439

 
2,439

 
—

 
—

Foreign bonds
510

 
510

 
—

 
—

U.S. government securities
299

 
299

 
—

 
—

Mutual funds
949

 
949

 
—

 
—

Common / collective trusts
28,271

 
—

 
28,271

 
—

Totals
$
69,097

 
$
40,826

 
$
28,271

 
$
—


 
 
The fair value of the plan assets by asset categories at December 31, 2010 was as follows (amounts in thousands):
 
Fair Value Measurements as of December 31, 2010
 
Total
 
Level 1
 
Level 2
 
Level 3
Money market funds
$
4,674

 
$
4,674

 
$
—

 
$
—

Domestic common stock
29,429

 
29,429

 
—

 
—

Foreign common stock
3,976

 
3,976

 
—

 
—

Corporate bonds
4,050

 
4,050

 
—

 
—

Foreign bonds
536

 
536

 
—

 
—

U.S. government securities
577

 
577

 
—

 
—

Mortgage-backed securities
8

 
—

 
8

 
—

Mutual funds
1,239

 
1,239

 
—

 
—

Common / collective trusts
28,667

 
—

 
28,667

 
—

Totals
$
73,156

 
$
44,481

 
$
28,675

 
$
—



The Company invests in a diversified portfolio consisting of an array of asset classes in an attempt to maximize returns while minimizing risk.  These asset classes include U.S. equities, fixed income, cash and cash equivalents, and international equities.  The investment objectives are to provide for the growth and preservation of plan assets on a long-term basis through investments in: (i) investment grade securities that provide investment returns that meet or exceed the Standard & Poor’s 500 Index and (ii) investment grade fixed income securities that provide investment returns that meet or exceed the Barclays Capital Aggregate Bond Index.  The U.S. equities asset category included the Company’s common stock in the amount of $3.3 million (approximately five percent of total plan assets) at December 31, 2011, and $3.5 million (approximately five percent of total plan assets) at December 31, 2010.

The fair value of money market funds, stock, bonds, U.S. government securities and mutual funds are determined based on valuation for identical instruments in active markets. The fair value of common and collective trusts is determined based on the fair value of the underlying instruments.
The long-term rate of return for plan assets is determined using a weighted-average of long-term historical approximate returns on cash and cash equivalents, fixed income securities, and equity securities considering the anticipated investment allocation within the plans.  The expected return on plan assets is anticipated to be 7.5% over the long-term.  This rate assumes long-term historical returns of approximately 9% for equities and approximately 6% for fixed income securities using the plans’ target allocation percentages.  Professional investment firms, none of which are Titan employees, manage the plan assets.

Although the 2012 minimum pension funding calculations are not finalized, the Company estimates those funding requirements will be approximately $7 million.

Projected benefit payments from the plans as of December 31, 2011, are estimated as follows (amounts in thousands):
2012
$
6,916

2013
6,997

2014
7,170

2015
7,296

2016
7,533

2017-2021
36,380



401(k)
The Company sponsors four 401(k) retirement savings plans.  One plan is for the benefit of substantially all employees who are not covered by a collective bargaining arrangement.  Titan provides a 25% matching contribution in the form of the Company’s common stock on the first 6% of the employee’s contribution in this plan.  The Company issued 26,346 shares, 49,536 shares and 59,257 shares of treasury stock in connection with this 401(k) plan during 2011, 2010 and 2009, respectively.  Expenses to the Company related to this common stock matching contribution were $0.5 million, $0.5 million and $0.4 million for 2011, 2010 and 2009.

The other three 401(k) plans are for employees covered by collective bargaining arrangements at (i) Titan Tire Corporation; (ii) Titan Tire Corporation of Freeport; and (iii) Titan Tire Corporation of Bryan.  These three plans do not include a Company matching contribution.  Employees are fully vested with respect to their contributions.