Titan International - 10-K annual report

Washington, D.C.  20549

or

(Exact name of registrant as specified in its charter)

(Address of principal executive offices)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(g) of the Act:   None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.  Yes o  No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o  No x

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 x  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

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

The aggregate market value of the shares of common stock of the registrant held by non-affiliates was approximately $636  million based upon the closing price of the common stock on the New York Stock Exchange on June 30, 2008.

As of February 23, 2009, a total of 35,171,524 shares of common stock of the registrant were outstanding.

Part III incorporates information by reference from the registrant's definitive proxy statement for its annual meeting of stockholders to be held May 14, 2009.

Index to Annual Report on Form 10-K

None.

The Company’s properties are detailed by the location, size and focus of each facility as provided in the table below:

(All amounts in thousands, except per share data)

This Form 10-K contains forward-looking statements, including statements regarding, among other items:

Actual results could differ materially from these forward-looking statements as a result of certain factors, including:

On January 30, 2009, Titan International, Inc. amended and restated its revolving credit facility (credit facility) with Bank of America, N.A.  The amendment included a multi-year extension that extended the credit facility termination date to January 2012 from the previous October 2009 date.  The amendment created an accordion feature within the credit facility that set the initial loan availability at $150 million with the ability to request increases up to a maximum availability of $250 million.  The amendment adjusted the borrowing rates within a pricing grid that includes a minimum 1½% LIBOR rate.

The following table sets forth the Company’s statement of operations expressed as a percentage of net sales for the periods indicated.  This table and subsequent discussions should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto.

In addition, the following table sets forth components of the Company’s net sales classified by segment for the years ended December 31, (in thousands):

In June 2008, Titan’s Board of Directors approved a five-for-four stock split with a record date of July 31, 2008, and a payable date of August 15, 2008.  The Company gave five shares for every four shares held as of the record date.  Stockholders received one additional share for every four shares owned as of the record date and received cash in lieu of fractional shares.  All share and per share data, except shares authorized, have been adjusted to reflect the effect of the stock split for all periods presented.

In May 2007, Titan’s Board of Directors approved funding for the Company to increase giant OTR mining tire production capacity to include 57-inch and 63-inch giant radial tires (the “Giant OTR Project”).  The Company began start-up production of these giant mining tires in July 2008.

On July 31, 2006, Titan Tire Corporation of Bryan, a subsidiary of the Company, acquired the off-the-road (OTR) tire assets of Continental Tire North America, Inc. (Continental) in Bryan, Ohio.  Titan Tire Corporation of Bryan purchased the assets of Continental’s tire facility for approximately $53 million in cash proceeds.  The assets purchased included plant, property and equipment located in Bryan, Ohio, inventory and other current assets.  The acquisition included an agreement to use the General trademark on OTR tires.  In addition, the Company recorded intangibles related to the acquisition as noncurrent assets and assumed warranty liabilities.  This acquisition expanded Titan’s product offering into larger earthmoving, construction and mining tires and added the manufacturing capacity of the Bryan, Ohio, facility.

In January 2007, the Company filed a registration statement relating to an offer to the holders of its 5.25% senior unsecured convertible notes due 2009 to convert their notes into Titan’s common stock at an increased conversion rate (the “Offer”).  Per the Offer, each $1,000 principal amount of notes was convertible into 81.0000 shares of common stock, which is equivalent to a conversion price of approximately $12.35 per share. Prior to the Offer, each $1,000 principal amount of notes was convertible into 74.0741 shares of common stock, which was equivalent to a conversion price of approximately $13.50 per share.

The registration statement relating to the shares of common stock to be offered was declared effective February 2007.  In March 2007, the Company announced 100% acceptance of the conversion offer and the $81,200,000 of accepted notes were converted into 6,577,200 shares of Titan common stock.  Titan recognized a noncash charge of $13.4 million in connection with this exchange in accordance with SFAS No. 84, “Induced Conversions of Convertible Debt.”

Preparation of the financial statements and related disclosures in compliance with accounting principles generally accepted in the United States of America requires the application of appropriate technical accounting rules and guidance, as well as the use of estimates.  The Company’s application of these policies involves assumptions that require difficult subjective judgments regarding many factors, which, in and of themselves, could materially impact the financial statements and disclosures.  A future change in the estimates, assumptions or judgments applied in determining the following matters, among others, could have a material impact on future financial statements and disclosures.

Inventories are valued at the lower of cost or market.  Cost is determined using the first-in, first-out (FIFO) method in 2008 for approximately 78% of inventories and the last-in, first-out (LIFO) method for approximately 22% of inventories.  The major rubber material inventory and related work-in-process and their finished goods are accounted for under the FIFO method.  The major steel material inventory and related work-in-process and their finished goods are accounted for under the LIFO method.  Market value is estimated based on current selling prices.  Estimated provisions are established for excess and obsolete inventory, as well as inventory carried above market price based on historical experience.  Should experience change, adjustments to the estimated provisions would be necessary.

The Company reviews goodwill to assess recoverability from future operations during the fourth quarter of each annual reporting period, and whenever events and circumstances indicate that the carrying values may not be recoverable.  The Company’s goodwill was $11.7 million at December 31, 2008 and 2007.  Based on a discounted cash flow method, the Company’s computation showed no impairment at December 31, 2008.  See Note 8 for additional information.  Significant assumptions relating to future operations must be made when estimating future cash flows in analyzing goodwill for impairment.  Should unforeseen events occur or operating trends change significantly, impairment losses could occur.

The allocation of purchase price for asset and business acquisitions requires management estimates and judgment as to expectations for future cash flows of the acquired assets and business and the allocation of those cash flows to identifiable intangible assets in determining the estimated fair value for purchase price allocations.  If the actual results differ from the estimates and judgments used in determining the purchase price allocations, impairment losses could occur relating to any intangibles recorded in the acquisition.  To aid in establishing the value of any intangible assets at the time of acquisition, the Company typically engages a professional appraisal firm.

The effect of hypothetical changes to selected assumptions on the Company’s frozen pension benefit obligations would be as follows (in thousands):

Net sales for the year ended December 31, 2008, were $1,036.7 million compared to $837.0 million for the year ended December 31, 2007.  The large sales improvement of $199.7 million, or 24%, for the year ended December 31, 2008, was attributed to strong demand in the Company’s agricultural market, which reported higher sales of approximately 42% for 2008 as compared to the previous year.  Titan believes it has benefited in 2008 from a preliminary ruling from the U.S. Department of Commerce, affirming that exporters of Chinese-manufactured tires have been selling certain off-the-road tires in the U.S.A. at less than normal value and received subsidies, resulting in duties being imposed on certain imported tires.

Cost of sales was $897.0 million for the year ended December 31, 2008, as compared to $752.9 million in 2007.  The higher cost of sales resulted from the record sales levels achieved in 2008.  Additional costs recorded during the year related to expenses associated with hiring and training workers to be utilized in giant OTR production, which were estimated to be approximately $6 million for 2008.

Gross profit for the year 2008 was $139.7 million, or 13.5% of net sales, compared to $84.1 million, or 10.1% of net sales, for 2007.  The gross profit margin for 2008 showed a significant improvement of over three percentage points compared to the previous year, as the Company continues its efforts to improve efficiencies and align sale prices with production cost.

Selling, general and administrative (SG&A) expenses were $57.2 million, or 5.5% of net sales, for the year ended December 31, 2008, as compared to $53.1 million, or 6.3% of net sales, for 2007.  Research and development (R&D) expenses, which are included in SG&A expenses, were $3.5 million and $1.7 million for the years ended December 31, 2008 and 2007, respectively.  SG&A expense rose primarily as the result of higher selling costs of approximately $3 million year over year.  SG&A percentage of net sales improved nearly one percentage point due to the Company’s SG&A expenses remaining relatively unchanged while sales achieved record levels.

The Goodyear North American farm tire asset acquisition included a license agreement with The Goodyear Tire & Rubber Company to manufacture and sell certain off-highway tires in North America under the Goodyear name.  Royalty expenses were $9.2 million for the year ended December 31, 2008, as compared to $6.2 million in 2007.  The higher royalty expense was the result of the strong sales in the agricultural segment.

Net sales in the agricultural market were $729.9 million for the year ended December 31, 2008, as compared to $515.6 million in 2007.  The robust agricultural segment sales were the result of significantly higher demand from the Company’s customers, an effect of record farm income and crop prices.

Gross profit in the agricultural market was $89.8 million for the year 2008, as compared to $35.7 million in 2007.  Income from operations in the agricultural market was $74.2 million for the year 2008, as compared to $25.3 million in 2007.  The significant improvement in gross profit and income from operations in the agricultural market was attributed to robust farm equipment sales and the Company continuing to align sales prices with production costs.

The Company’s earthmoving/construction market net sales were $281.0 million for the year ended December 31, 2008, as compared to $277.2 million in 2007.  The increase of $3.8 million primarily resulted from the continued strong earthmoving and mining sales.

Gross profit in the earthmoving/construction market was $46.0 million for the year 2008, as compared to $47.8 million in 2007.  The Company’s earthmoving/construction market income from operations was $38.4 million for the year 2008, as compared to $40.8 million in 2007.  The Company’s gross profit was negatively impacted by costs associated with hiring and training workers to be utilized in giant OTR production, estimated to be approximately $6 million for 2008.

Consumer market net sales were $25.8 million for the year ended December 31, 2008, as compared to $44.2 million in 2007.  The Goodyear farm tire acquisition agreement included an off-take/mixing agreement for certain product sales to Goodyear.  The reduction in consumer market sales was primarily related to lower sales to The Goodyear Tire and Rubber Company of approximately $15 million for the twelve months ended December 31, 2008, as compared to the previous year.

Gross profit from the consumer market was $3.9 million in 2008 as compared to $3.4 million in 2007.  Consumer market income from operations was $3.3 million for the year 2008 as compared to $2.5 million in 2007.  The improvement in gross profit and income from operations in the consumer segment was the result of a shift to higher margin products.

(Amounts in thousands)

Corporate expenses for the year ended December 31, 2008, were composed of selling and marketing expenses of approximately $20 million and administrative expenses of approximately $23 million.

Corporate expenses for the year ended December 31, 2007, were composed of selling and marketing expenses of approximately $17 million and administrative expenses of approximately $27 million.

The higher selling and marketing expenses for 2008 as compared to the previous year resulted from the record sales levels and the associated selling costs.  The lower administrative costs resulted primarily from a reduction in management incentives.

Net sales for the year ended December 31, 2007, were $837.0 million compared to $679.5 million for the year ended December 31, 2006.  The large sales improvement of $157.6 million, or 23%, for the year ended December 31, 2007, was attributed to the expanded agricultural product offering of Goodyear branded farm tires and the expanded earthmoving, construction and mining product offering of General branded OTR tires, along with added manufacturing capacity from the Bryan, Ohio, facility, which was acquired on July 31, 2006.  In addition, the Company has experienced strong demand in the agricultural segment.

These OTR realignment costs lowered the Company’s gross profit for 2007 and for the fourth quarter of 2006, as labor costs that are normally dedicated to making products were instead used for retooling, retraining and movement of equipment.  The Company estimates realignment costs to be approximately $22 million to $24 million for 2007 and approximately $9 million to $11 million in 2006.

SG&A expenses were $53.1 million, or 6.3% of net sales, for the year ended December 31, 2007, as compared to $45.8 million, or 6.7% of net sales, for 2006.  R&D expenses, which are included in SG&A expenses, were $1.7 million and $1.3 million for the years ended December 31, 2007 and 2006, respectively.  The higher SG&A expenses for 2007 are primarily the result of the higher selling and marketing expenses related to higher sales and the CEO and executive incentives.  Selling and marketing expenses were approximately $5 million higher in 2007, when compared to 2006.  Expenses recorded for CEO and executive incentives were approximately $4 million higher in 2007, when compared to 2006.

The Goodyear North American farm tire asset acquisition included a license agreement with The Goodyear Tire & Rubber Company to manufacture and sell certain off-highway tires in North America under the Goodyear name.  Royalty expenses were $6.2 million for the year ended December 31, 2007, as compared to $5.0 million in 2006.  The increase in royalty expenses is directly attributable to higher sales levels.

The Company recorded an income tax expense of $3.4 million in 2007 and 2006.   The Company’s effective tax rate was (87%) in 2007 and 40% in 2006.  The Company’s 2007 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 the $13.4 million noncash charge taken in connection with the Company’s convertible debt.  This noncash charge is not deductible for income tax purposes.

Net loss for the year ended December 31, 2007, was $(7.2) million, compared to net income of $5.1 million in 2006.  Basic and diluted loss per share was $(.23) for the year ended December 31, 2007, as compared to basic and diluted income per share of $.21 in 2006.  The Company’s net income and earnings per share decreased due to the items detailed above and as a result of the $13.4 million noncash convertible debt conversion charge.

Net sales in the agricultural market were $515.6 million for the year ended December 31, 2007, as compared to $421.1 million in 2006.  The increase in agricultural segment sales was the result of increased demand from the Company’s customers, which resulted from record farm income in 2007.

Gross profit in the agricultural market was $35.7 million for the year 2007, as compared to $42.5 million in 2006.  Income from operations in the agricultural market was $25.3 million for the year 2007, as compared to $27.4 million in 2006.  The decrease in gross profit and income from operations in the agricultural market was primarily attributed to the related disruption to production in Titan’s agricultural products resulting from the OTR realignment initiative.

The Company’s earthmoving/construction market net sales were $277.2 million for the year ended December 31, 2007, as compared to $183.4 million in 2006.  The expanded product offering of the General brand for OTR tires, along with added manufacturing capacity from the Bryan, Ohio, facility and the OTR realignment initiative accounted for the higher sales levels in the earthmoving/construction market in 2007.

Consumer market net sales were $44.2 million for the year ended December 31, 2007, as compared to $75.0 million in 2006.  The Goodyear farm tire acquisition agreement included an off-take/mixing agreement for certain product sales to Goodyear.  The decrease in consumer market sales was primarily related to a reduction in sales to The Goodyear Tire and Rubber Company of approximately $24 million for the twelve months ended December 31, 2007, as compared to 2006.

Gross profit from the consumer market was $3.4 million as compared to $2.8 million in 2006.  Consumer market income from operations was $2.5 million for the year 2007 as compared to $1.7 million in 2006.  The increase in gross profit and income from operations in the consumer segment was the result of a shift to higher margin products.

(Amounts in thousands)

Income from operations on a segment basis does not include corporate expenses or depreciation and amortization expense related to property, plant and equipment carried at the corporate level totaling $43.9 million for the year ended December 31, 2007, as compared to $28.8 million in 2006.

Corporate expenses for the year ended December 31, 2007, were composed of the following:  (i) selling and marketing expenses of approximately $17 million; (ii) CEO and executive incentives of approximately $7 million; and (iii) administrative expenses of approximately $20 million.

Corporate expenses for the year ended December 31, 2006, were composed of the following:  (i) selling and marketing expenses of approximately $12 million; (ii) CEO and executive incentives of approximately $3 million; and (iii) administrative expenses of approximately $14 million.

The increase of approximately $5 million in selling and marketing expenses in 2007 as compared to 2006 resulted primarily from the higher sales levels.  The increase of approximately $4 million in the CEO and executive incentives is primarily related to the substantial appreciation in Titan’s stock price during 2007.  The increase of approximately $6 million in administrative costs in 2007 was primarily related to higher professional fees.

As of December 31, 2008, the Company had $61.7 million of cash balances within various bank accounts.  This cash balance increased by $3.3 million from December 31, 2007, due to the following cash flow discussion items.

For the year ended December 31, 2006, cash of $5.3 million was used for operating activities.  This usage was primarily the result of increases in accounts receivable and inventories of $26.8 million and $19.5 million, respectively, offset by an increase in other current liabilities of $13.4 million and net income of $5.1 million.  Included as a reduction to net income were noncash charges for depreciation and amortization of $26.9 million.

Operating cash flows increased $81.3 million from the year ended December 31, 2006, to December 31, 2007.  This increase was largely the result of cash flows from inventories increasing $46.1 million and cash flows from accounts payable increasing by $16.7 million.  In 2007, the Company was successful in lowering the finished goods inventory at the recently acquired facilities in Freeport, Illinois, and Bryan, Ohio.  Accounts payable increased in 2007 as a result of higher purchases resulting from higher sales levels.

Net cash used for investing activities was $79.8 million in 2008, as compared to $46.4 million in 2007 and $52.7 million in 2006.  The Company invested a total of $80.0 million in capital expenditures in 2008, compared to $38.0 million in 2007 and $8.3 million in 2006.  The 2008 capital expenditures include approximately $60 million for the giant OTR project and the 2007 capital expenditures include approximately $22 million for the Giant OTR project.  The remaining capital expenditures in 2008 and 2007 were used primarily for updating manufacturing equipment, expanding manufacturing capacity and for further automation at the Company’s facilities.  Titan invested $44.6 million for the Continental OTR tire acquisition in 2006.

The Company estimates that costs related to the Giant OTR Project at this time are approximately $100 million, of which approximately $82 million was disbursed from inception of the Giant OTR Project through December 31, 2008.  Capital expenditures for 2009 are forecasted to be approximately $25 million to $35 million.  Approximately $15 million to $20 million of this amount may be spent on the giant OTR project and the remainder is anticipated to be used to enhance the Company’s existing facilities and manufacturing capabilities.

Investing cash flows decreased $33.4 million from the year ended December 31, 2007, to December 31, 2008.  This decrease was primarily the result of additional cash being used for capital expenditures related to the Giant OTR project.

Summary of cash flows from financing activities:

Net cash provided by financing activities was $32.0 million in 2008.  This cash was provided primarily by revolving credit facility proceeds of $25.0 million.  Also, the exercise of stock options provided $3.5 million and excess tax benefit from stock options exercised provided $4.1 million.  Net cash used by financing activities was $4.7 million in 2007.  This cash use was primarily used for payment of debt of $10.2 million offset by proceeds of $6.6 million from the exercise of stock options.  Net cash provided by financing activities in 2006 was $90.8 million.  This cash was primarily provided by $88.9 million of net debt proceeds.  In addition, the exercise of stock options provided $5.4 million in cash and the payment of financing fees used $3.7 million of cash.

Financing cash flows increased $36.7 million from the year ended December 31, 2007, to the year ended December 31, 2008.  Also, financing cash flows decreased $95.5 million from the year ended December 31, 2006, to December 31, 2007.  The large changes from year to year are primarily the result of changes in total debt borrowings.

The Company’s revolving credit facility contains various covenants and restrictions.  The financial covenants in this agreement require that:

Restrictions include:

These covenants and restrictions could limit the Company’s ability to respond to market conditions, to provide for unanticipated capital investments, to raise additional debt or equity capital, to pay dividends or to take advantage of business opportunities, including future acquisitions.  The failure by Titan to meet these covenants could result in the Company ultimately being in default on these loan agreements.

The Company is in compliance with these covenants and restrictions as of December 31, 2008.  The collateral coverage was calculated to be approximately 15 times the outstanding revolver balance at December 31, 2008.

The fixed charge coverage ratio did not apply for the quarter ended December 31, 2008.  The credit facility usage was $30.0 million at December 31, 2008, consisting of cash borrowings of $25.0 million and outstanding letters of credit of $5.0 million.

The Company’s business is subject to seasonal variations in sales that affect inventory levels and accounts receivable balances.  Historically, Titan tends to experience higher sales demand in the first and second quarters.

At December 31, 2008, the Company had $61.7 million of cash and cash equivalents and $220.0 million of unused availability under the terms of its revolving credit facility (credit facility).  The availability under the Company’s $250 million credit facility was reduced by $25.0 million for cash borrowings and $5.0 million for outstanding letters of credit.  The Company expects to contribute approximately $1 million to its frozen defined benefit pension plans during 2009.

In May 2007, Titan’s Board of Directors approved funding for the Company to increase giant OTR mining tire production capacity to include 57-inch and 63-inch giant radial tires (the “Giant OTR Project”).  The Company estimates that current commitments related to the Giant OTR Project at this time are approximately $100 million, of which approximately $82 million was disbursed from inception of the Giant OTR Project through December 31, 2008.  Additional capital expenditure commitments will be incurred through 2009 as the Giant OTR Project moves to completion.  The final cost of these additional OTR capital items have not been finalized at this time.

The Company currently anticipates that cash on hand and anticipated internal cash flows from operations will allow the Company sufficient funds for completion of the Giant OTR Project.  Capital expenditures for 2009 are forecasted to be approximately $25 million to $35 million.  Approximately $15 million to $20 million of this amount may be spent on the giant OTR project and the remainder is anticipated to be used to enhance the Company’s existing facilities and manufacturing capabilities.

Cash on hand, anticipated internal cash flows from operations and utilization of remaining available borrowings are expected to provide sufficient liquidity for working capital needs and capital expenditures.  If the Company were to exhaust all currently available working capital sources or not meet the financial covenants and conditions of its loan agreements, the Company’s ability to secure additional funding may be negatively impacted.

The Company is subject to the effect of price fluctuations.  During 2008, 2007 and 2006, the Company realized price increases for purchases of steel and rubber used in the manufacture of its products.  While the cost outlook for commodities used in the Company’s production is not certain, management believes it can manage these inflationary pressures by introducing appropriate sales price adjustments.  However, these price adjustments usually lag the inflationary pressures.

The Company has no material off-balance sheet arrangements.

The Company is exposed to fluctuations in the British pound and Euro world currencies.  Titan does not hedge foreign currency transaction or translation exposures.  The Company’s net investment in foreign entities translated into U.S. dollars was $2.6 million at December 31, 2008, and $34.5 million at December 31, 2007.  The hypothetical potential loss in value of the Company’s net investment in foreign entities resulting from a 10% adverse change in foreign currency exchange rates at December 31, 2008, would amount to approximately $0.3 million.

The Company does not generally enter into long-term commodity contracts and does not use derivative commodity instruments to hedge its exposures to commodity market price fluctuations.  Therefore, the Company is exposed to price fluctuations of its key commodities, which consist primarily of steel and rubber.  The Company attempts to pass on certain material price increases and decreases to its customers, depending on market conditions.

The Company has a $250 million credit facility that has a variable interest rate.  If the credit facility were fully drawn, a change in the interest rate of 100 basis points, or 1%, would change the Company’s interest expense by approximately $2.5 million.  At December 31, 2008, the Company had $25.0 million of cash borrowings on the credit facility.

At December 31, 2008, the fair value of the 8% senior unsecured notes, based on market prices obtained through independent pricing sources, was approximately $147 million, compared to a carrying value of $200 million.

Titan experienced strong demand for its agricultural and earthmoving/construction products throughout 2008.  The continued strength of the agricultural market, resulting from high commodity prices and a gradual increase in the use of biofuels, contributed to the increase in sales.  Tire shortages and strong demand in mining products such as oil, iron ore and aggregates contributed to the rise in earthmoving/construction product demand.  These trends are expected to continue through the first part of 2009.  However, the housing market decline, recession, and banking and credit crisis are affecting Titan’s customers.  The degree to which these items will affect Titan’s customers in 2009 and the future is difficult to estimate because of the uncertainty in the resolution of these financial conditions.

In May 2007, Titan’s Board of Directors approved funding for the Company to increase giant OTR mining tire production capacity to include 57-inch and 63-inch giant radial tires.  The Company began start-up production of these giant mining tires in July 2008.  Titan continues to add giant OTR tire capacity at the Bryan, Ohio, facility as the Company brings new equipment online.

Energy, raw material and petroleum-based product costs have been volatile and increases in these costs may negatively impact the Company’s margins.  Many of Titan’s overhead expenses are fixed; therefore, lower seasonal trends may cause negative fluctuations in quarterly profit margins and affect the financial condition of the Company.

Agricultural market sales are forecasted to remain strong for 2009.  Commodity prices have declined from recent highs, but remain at healthy levels.  If oil prices remain lower, farmers will benefit from lower input costs for fuel and fertilizer.  The available stock of many farm crops is at low levels, which should sustain future production.  The gradual increase in the use of biofuels should also sustain future production.  In April 2008, Titan signed a three-year agreement to supply farm tires to various John Deere affiliates.  Many variables, including weather, grain prices, export markets and future government policies and payments can greatly influence the overall health of the agricultural economy.

Sales for the earthmoving/construction market are expected to remain stable in 2009.  Metals, oil and gas prices have retreated from recent highs as a result of the worldwide economic downturn.  However, in the long-term, these prices are expected to remain at levels that are attractive for continued investment, which will maintain support for earthmoving and mining sales.  The significant decline in the United States housing market continues to cause a decline in equipment used for housing construction.  The giant OTR project will add significant capacity for giant mining tires in 2009.  The additional sales of these giant OTR tires are expected to more than offset any softness in other areas of the earthmoving/construction market.  The earthmoving/construction market is affected by many variables, including commodity prices, road construction, infrastructure, government appropriations, housing starts and the current banking and credit crisis.

The current overall uncertainty in consumer spending resulting from the current banking and credit crisis, housing market decline, and high energy and food costs has affected the Company’s consumer market sales.  Titan’s sales in the consumer market include sales to Goodyear, which includes an off-take/mixing agreement.  This agreement includes mixed stock, which is a prepared rubber compound used in tire production.  The Company’s consumer market sales will fluctuate significantly related to sales volumes under the off-take/mixing agreement with Goodyear.  The Company expects challenging conditions for the consumer market for 2009.  Many factors affect the consumer market including weather, competitive pricing, energy prices and consumer attitude.

The Company has three frozen defined benefit pension plans and one defined benefit plan that purchased a final annuity settlement in 2002.  These plans are described in Note 21 of the Company’s Notes to Consolidated Financial Statements.

The Company’s recorded liability for pensions is based on a number of assumptions, including discount rates, rates of return on investments, mortality rates and other factors.  Certain of these assumptions are determined by the Company with the assistance of outside actuaries.  Assumptions are based on past experience and anticipated future trends.  These assumptions are reviewed on a regular basis and revised when appropriate.  Revisions in assumptions and actual results that differ from the assumptions affect future expenses, cash funding requirements and the carrying value of the related obligations.  During the twelve months ended December 31, 2008, the Company contributed cash funds of $0.2 million to the frozen defined benefit pension plans.  Titan expects to contribute approximately $1 million to these frozen defined benefit pension plans during 2009.

In October 2007, the Titan Tire Bryan pension plan, adopted at the date of the Continental OTR asset acquisition and frozen from its inception, received cash transfers of approximately $25 million from Continental Tire North America’s frozen pension plan for the Bryan, Ohio, location.  The amount transferred into the frozen plan was actuarially approved to be a fully funded plan.

Titan’s projected benefit obligation at December 31, 2008, was $90.5 million as compared to $95.4 million at December 31, 2007.  The Company’s defined benefit pension plans were underfunded by $28.7 million at December 31, 2008.  During 2008, the Company recorded net periodic pension income of $0.9 million.  Accumulated other comprehensive loss recorded for defined benefit pension plans, net of tax, was $33.6 million and $15.6 million at December 31, 2008 and 2007, respectively.  Other comprehensive income is recorded as a direct charge to stockholders’ equity and does not affect net income.  Titan will be required to record net periodic pension cost in the future; these costs may fluctuate based upon revised assumptions and could negatively affect the Company’s financial position, cash flows and results of operations.

In December 2007, SFAS No. 141 (revised 2007), “Business Combinations,” was issued.  This statement requires an acquirer to recognize assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired.  This statement is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  The Company does not expect the adoption of this statement to have a material impact on its consolidated financial position, results of operations and cash flows.

In December 2007, SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” was issued.  This statement establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008.  The Company does not expect the adoption of this statement to have a material impact on its consolidated financial position, results of operations and cash flows.

Reference is made to Item 7, Part II of this report.

Reference is made to Item 15, Part IV of this report, “Exhibits, Financial Statement Schedules.”

None.

The Company’s principal executive officer and principal financial officer have concluded the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) are effective as of the end of the period covered by this Form 10-K based on an evaluation of the effectiveness of disclosure controls and procedures.

There were no material changes in internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the fourth quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluations of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

None.

The information required by this item regarding the Company’s directors is incorporated by reference to the Company’s 2009 Proxy Statement under the captions “Election of Mr. Billig and Mr. Soave as Directors,” “Directors Continuing in Office,” “Committees and Meetings of the Board of Directors” and “Corporate Governance.”

The names, ages and positions of all executive officers of the Company are listed below, followed by a brief account of their business experience during the past five years.  Officers are normally appointed annually by the Board of Directors at a meeting immediately following the Annual Meeting of Stockholders.  The Chief Executive Officer and Secretary are brother and sister.  There is no arrangement or understanding between any officer and any other person pursuant to which an officer was selected.

Maurice M. Taylor Jr., 64, has been Chief Executive Officer and a Director of the Company since 1990, when Titan was acquired in a management-led buyout by investors, including Mr. Taylor.  Mr. Taylor served as President of the Company from 1990 to 2005 and was appointed Chairman in 2005.

Kent W. Hackamack, 50, served as Corporate Controller of the Company from 1994 to 1996.  Mr. Hackamack was appointed Vice President of Finance and Treasurer in 1996.

Cheri T. Holley, 61, joined the Company in 1994 as General Counsel and Secretary.  Ms. Holley was appointed Vice President in 1996.

The information required by this item regarding beneficial ownership reporting compliance is incorporated by reference to the Company’s 2009 Proxy Statement under the caption “Section 16(a) Beneficial Ownership Reporting Compliance.”

The Company adopted a business conduct policy, which is applicable to directors, officers and employees.  The Company has also adopted corporate governance guidelines.  The business conduct policy and corporate governance guidelines are available under the investor information category of the Company’s website, www.titan-intl.com.  The Company intends to satisfy disclosure requirements regarding amendments to or waivers from its business conduct policy by posting such information on its website.  A printed copy of the business conduct policy and corporate governance guidelines are available, without charge, by writing to:  Titan International, Inc., c/o Corporate Secretary, 2701 Spruce Street, Quincy, IL 62301.

The information required by this item is incorporated by reference to the Company’s 2009 Proxy Statement under the caption “Compensation of Executive Officers.”

Except for the information concerning equity compensation plans, the information required by this item is incorporated by reference to the Company’s 2009 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management.”

The following table provides information about shares of Titan common stock that may be issued under Titan’s equity compensation plans, as of December 31, 2008:

For additional information regarding the Company’s stock option plans, please see Note 22 of the Company’s Notes to Consolidated Financial Statements.

The information required by this item is incorporated by reference to the Company’s 2009 Proxy Statement under the caption “Related Party Transactions” and “Corporate Governance” and also appears in Note 26 of the Company’s Notes to Consolidated Financial Statements.

The information required by this item is incorporated by reference to the Company’s 2009 Proxy Statement under the caption “Audit and Other Fees.”

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 26, 2009.

*Filed herewith

Management is responsible for the preparation of the Company’s consolidated financial statements included in this annual report on Form 10-K.  Management believes that the consolidated financial statements fairly reflect the transactions and the financial statements reasonably present the Company’s financial position and results of operations in conformity with accounting principles generally accepted in the United States of America.

The Board of Directors of the Company has an Audit Committee comprised entirely of outside directors who are independent of management.  The Committee meets periodically with management, the internal auditors and the independent registered public accounting firm to review accounting control, auditing and financial reporting matters.  The Audit Committee is responsible for the appointment of the independent registered public accounting firm and approval of their fees.

The independent registered public accounting firm audits the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States).  The consolidated financial statements as of December 31, 2008, have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

Management is responsible for establishing and maintaining adequate internal control over financial reporting.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has performed an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008, based on criteria for effective internal control over financial reporting described in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on this evaluation, management concluded the Company maintained effective internal control over financial reporting as of December 31, 2008.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2008, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is presented in this Annual Report on Form 10-K.

To the Board of Directors

and Stockholders of

Titan International, Inc.:

In our opinion, the consolidated financial statements listed in the accompanying index under item 15(a)(1) present fairly, in all material respects, the financial position of Titan International Inc. and its subsidiaries at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.  In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.  Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting appearing on page F-1.  Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.  Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

St. Louis, MO

February 26, 2009