UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C.  20549











FORM
                10-K




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





For
                the fiscal year ended December 31, 2007


or


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





Commission
                file number 1-12936





TITAN
      INTERNATIONAL, INC.


(Exact
      name of registrant as specified in its charter)





Illinois
            
            36-3228472(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                No.)





2701
      Spruce Street, Quincy, IL 62301


(Address
      of principal executive offices)





(217)
      228-6011


(Registrant’s
      telephone number, including area code)





Securities
      registered pursuant to Section 12(b) of the Act:





Title
                of each class
            Name
                of each exchange on which
                registeredCommon
                stock, no par value
            New
                York Stock Exchange
                (Symbol:  TWI)





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.
 Large
                  accelerated filer o
              Accelerated
                  filer xNon-accelerated
                  filer o
                  (Do
                  not check if a smaller reporting company)
              Smaller
                  reporting company o




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


Large
      accelerated filer o                                                                                                 Accelerated
      filer
x


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





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





The
      aggregate market value of the shares of common stock of the registrant held
      by
      non-affiliates was approximately $688 million based upon the closing price
      of
      the common stock on the New York Stock Exchange on June 30, 2007.





As
      of
      February 25, 2008, a total of 27,432,856 shares of common stock of the
      registrant were outstanding.





DOCUMENTS
      INCORPORATED BY REFERENCE





Part
      III
      incorporates information by reference from the registrant's definitive proxy
      statement for its annual meeting of stockholders to be held May 15,
      2008.











TITAN
      INTERNATIONAL, INC.


Index
      to
      Annual Report on Form 10-K





Part
                I.
            
            PageItem
                1.
            Business
            3-9Item
                1A.
            Risk
                Factors
            10Item
                1B.
            Unresolved
                Staff Comments
            10Item
                2.
            Properties
            11Item
                3.
            Legal
                Proceedings
            11Item
                4.
            Submission
                of Matters to a Vote of Security Holders.
            11Part
                II.Item
                5.
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            12Item
                6.
            Selected
                Financial Data
            13Item
                7.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            14-34Item
                7A.
            Quantitative
                and Qualitative Disclosures about Market Risk
            35Item
                8.
            Financial
                Statements and Supplementary Data
            35Item
                9.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            35Item
                9A.
            Controls
                and Procedures
            35Item
                9B.
            Other
                Information
            35Part
                III.Item
                10.
            Directors,
                Executive Officers and Corporate Governance
            36Item
                11.
            Executive
                Compensation
            36Item
                12.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            37Item
                13.
            Certain
                Relationships and Related Transactions, and Director
                Independence
            37Item
                14.
            Principal
                Accounting Fees and Services
            37Part
                IV.Item
                15.
            Exhibits,
                Financial Statement Schedules
            38Signatures
            39Exhibit
                Index
            40





2





PART
      I


ITEM
      1 – BUSINESS





INTRODUCTION


Titan
      International, Inc. and its subsidiaries (Titan or the Company) are leading
      manufacturers of wheels, tires and assemblies for off-highway vehicles used
      in
      the agricultural, earthmoving/construction and consumer
      markets.  Titan’s earthmoving/construction market also includes
      products supplied to the U.S. government, while the consumer market includes
      products for all-terrain vehicles (ATVs) and recreational/utility trailer
      applications.  Titan manufactures both wheels and tires for the
      majority of these market applications, allowing the Company to provide the
      value-added service of delivering complete wheel and tire
      assemblies.  The Company offers a broad range of products that are
      manufactured in relatively short production runs to meet the specifications
      of
      original equipment manufacturers (OEMs) and/or the requirements of aftermarket
      customers.





As
      one of
      the few companies dedicated to the off-highway wheel and tire market, Titan’s
      engineering and manufacturing resources are focused on addressing the real-life
      concerns of the end-users of our products.  Titan’s team of
      experienced designers and engineers is working on new and improved engineered
      products.





In
      2008,
      Titan plans to enter the giant off-the-road (OTR) tire market, which will
      include 57-inch and 63-inch giant radial tires, the largest tires in the
      world.  To enter the giant OTR tire market, the Company is investing
      in a large capital expansion project at its Bryan, Ohio,
      location.  The Company has also worked on adding OTR tire capacity
      through a production realignment of aligning synergies through retooling,
      retraining personnel and redistribution of equipment.





In
      2007,
      Titan’s agricultural market sales represented 62% of net sales, the
      earthmoving/construction market represented 33% and the consumer market
      represented 5% of net sales.  For information concerning the revenues,
      certain expenses, income from operations and assets attributable to each of
      the
      segments in which the Company operates, see Note 27 to the consolidated
      financial statements of Titan, included in Item 8 herein.





COMPETITIVE
      STRENGTHS


Titan’s
      competitive strengths include the Company’s strong market position in the
      off-highway wheel and tire market and the Company’s long-term core customer
      relationships.  These competitive strengths along with Titan’s
      dedication to the off-highway tire and wheel market continue to drive the
      Company forward.





Strong
      Market
      Position:  The Company has achieved a strong position in the
      domestic market for off-highway wheels, tires and assembly
      products.  Titan’s ability to offer a broad range of different
      products has increased the Company’s visibility and has enhanced its ability to
      cross-sell products and consolidate market positions.  Innovative
      marketing programs have strengthened Titan’s image in the marketplace, and the
      Company is reaching an increasing number of customers in the
      aftermarket.  Years of product design and engineering experience have
      enabled Titan to improve existing products and develop new ones that have been
      well received in the marketplace.  In addition, Titan believes it has
      benefited from significant barriers to entry, such as the substantial investment
      necessary to replicate the Company’s manufacturing equipment and numerous tools,
      dies and molds.





Long-Term
      Core Customer
      Relationships:The Company’s top
      customers, including global leaders in agricultural and construction equipment
      manufacturing, have been purchasing wheels from Titan or its predecessors for
      many decades on average.  Customers including AGCO Corporation,
      Caterpillar Inc., CNH Global N.V., Deere & Company, Kubota Corporation and
      the U.S. Government have helped sustain Titan’s leadership in wheel, tire and
      assembly innovation.





3





BUSINESS
      STRATEGY


Titan’s
      business strategy is to enter the giant OTR market, to increase its penetration
      of the aftermarket for tires, to continue to improve operating efficiencies,
      to
      maintain emphasis on new product development and to explore possible additional
      strategic acquisitions.





Enter
      the Giant OTR Tire
      Market:  In May 2007, Titan’s Board of Directors approved
      funding to increase giant OTR mining tire production capacity to include 57-inch
      and 63-inch giant radial tires.  This funding should allow Titan to
      produce up to an estimated 6,000 giant radial tires a year.  These
      giant tires are in short supply in the mining industry and offer an opportunity
      for improved margins and greater demand.  Titan estimates this may
      increase sales as much as $240 million on an annual basis.  The
      Company currently plans to be in start-up production of these giant mining
      tires
      by the end of the second quarter of 2008.





Increase
      Aftermarket Tire Business /
      OTR Realignment:The Company
      has
      concentrated on increasing its penetration of the tire
      aftermarket.  The aftermarket in many cases offers increased profit
      margins and is larger and somewhat less cyclical than the OEM
      market.  The Company’s OTR production realignment was instituted to
      increase OTR tire production and align synergies at the Company’s tire
      facilities.





Improve
      Operating
      Efficiencies:  The Company continually works to improve the
      operating efficiency of its assets and manufacturing
      facilities.  Titan integrates each facility’s strength, which may
      include transferring equipment and business to the facilities that are best
      equipped to handle the work.  This provides capacity to increase
      utilization and spread operating costs over a greater volume of
      products.  Titan is also continuing a comprehensive program to
      refurbish, modernize and enhance the computer technology of its manufacturing
      equipment.  The Company has centralized and streamlined inventory
      controls.  These efforts have led to improved management of order
      backlogs and have substantially improved Titan’s ability to respond to customer
      orders on a timely basis.





Improve
      Design Capacity and Increase
      New Product Development:Equipment manufacturers constantly
      face changing industry dynamics.  Titan directs its business and
      marketing strategy to understand and address the needs of its customers and
      demonstrate the advantages of its products.  In particular, the
      Company often collaborates with customers in the design of new and upgraded
      products.  Titan will occasionally recommend modified products to its
      customers based on its own market information.  These value-added
      services enhance Titan’s relationships with its customers.  The
      Company tests new designs and technologies and develops methods of manufacturing
      to improve product quality and performance.  Titan’s engineers are
      currently working on 57-inch and 63-inch giant OTR tires to be introduced in
      2008.  Titan’s engineers are also working on a new 15-degree tire and
      wheel design for OTR and farm radial assemblies, which improve tire and wheel
      life.





Explore
      Additional Strategic
      Acquisitions:The Company’s expertise
      in the manufacture of off-highway steel wheels and tires has permitted it to
      take advantage of opportunities to acquire businesses in the United States
      that
      complement this product line, including companies engaged in the tire market
      and
      companies that have wheel and tire assembly capabilities.  In the
      future, Titan may make additional strategic acquisitions of businesses that
      have
      an off-highway focus.





ACQUISITION
      OF CONTINENTAL’S OTR ASSETS


On
      July
      31, 2006, Titan Tire Corporation of Bryan, a subsidiary of Titan International,
      Inc., 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 OTR tire facility for approximately
      $53 million in cash proceeds.  The assets purchased included
      Continental’s OTR plant, property and equipment located in Bryan, Ohio, and
      inventory and other current assets.  The acquisition included an
      agreement with Continental to use the General trademark on OTR
      tires.





ACQUISITION
      OF GOODYEAR’S NORTH AMERICAN FARM TIRE ASSETS


On
      December 28, 2005, Titan Tire Corporation, a subsidiary of Titan International,
      Inc., acquired The Goodyear Tire & Rubber Company’s North American farm tire
      assets.  Titan Tire purchased the assets of Goodyear’s North American
      farm tire business for approximately $100 million in cash
      proceeds.  The assets purchased include Goodyear’s North American
      plant, property and equipment located in Freeport, Illinois, and Goodyear’s
      North American farm tire inventory.  The acquisition included a
      long-term license agreement with The Goodyear Tire & Rubber Company to
      manufacture and sell certain off-highway tires in North America, which includes
      the right to use the Goodyear trademark.





4


AGRICULTURAL
      MARKET


Titan’s
      agricultural rims, wheels and tires are manufactured for use on various
      agricultural and forestry equipment, including tractors, combines, skidders,
      plows, planters and irrigation equipment, and are sold directly to OEMs and
      to
      the aftermarket through independent distributors, equipment dealers and Titan’s
      own distribution centers.  The wheels and rims range in diameter from
      9 to 54 inches with the 54-inch diameter being the largest agricultural wheel
      manufactured in North America.  Basic configurations are combined with
      distinct variations (such as different centers and a wide range of material
      thickness) allowing the Company to offer a broad line of product models to
      meet
      customer specifications.  Titan’s agricultural tires range from 8 to
      85 inches in outside diameter and from 4.8 to 44 inches in width.  The
      Company offers the added value of delivering a complete wheel and tire assembly
      to customers.





EARTHMOVING/CONSTRUCTION
      MARKET


The
      Company manufactures rims, wheels and tires for various types of off-the-road
      (OTR) earthmoving, mining, military and construction equipment, including skid
      steers, aerial lifts, cranes, graders and levelers, scrapers, self-propelled
      shovel loaders, articulated dump trucks, load transporters, haul trucks and
      backhoe loaders.  The earthmoving/construction market is often
      referred to as OTR, an acronym for off-the-road.  The Company provides
      customers with a broad range of earthmoving/construction wheels ranging in
      diameter from 20 to 63 inches and in weight from 125 pounds to 7,000
      pounds.  The 63-inch diameter wheel is the largest manufactured in
      North America for the earthmoving/construction market.  The
      earthmoving/construction wheels and tires produced by Titan are sold to OEMs
      and
      the aftermarket.  Titan’s earthmoving/construction tires range from 30
      to 109 inches in outside diameter and in weight from 50 pounds to 6,200
      pounds.  The Company offers the added value of wheel and tire assembly
      for certain applications in the earthmoving/construction market.





CONSUMER
      MARKET


Titan
      builds a variety of products for all-terrain vehicles (ATV), turf, golf and
      trailer applications.  Consumer wheels and rims range from 8 to 16
      inches in diameter.  Likewise, Titan produces a variety of tires for
      the consumer market.  ATV tires using the new stripwinding
      manufacturing process have been introduced to the marketplace, which improves
      tread durability.  Titan’s sales in the consumer market include sales
      to Goodyear, which include an off-take/mixing agreement.  This
      agreement includes mixed stock, which is a prepared rubber compound used in
      tire
      production.  For the domestic boat, recreational and utility trailer
      markets, the Company provides wheels and tires and assembles brakes, actuators
      and components.  The Company also offers the value-added service of a
      wheel and tire assembly for the consumer market.





MARKET
      CONDITIONS OUTLOOK


In
      2007,
      Titan experienced strong demand for the Company’s agricultural and
      earthmoving/construction products.  This strong demand is expected to
      continue into 2008.  The strength in the agricultural market is the
      result of high commodity prices, which have resulted from the continuing
      increase in the use of biofuels.  High prices for metals, oil and gas
      have created a large demand for the Company’s earthmoving and mining products.
      The current overall uncertainty in consumer spending resulting from the housing
      market decline makes consumer market projections especially
      difficult.





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
      OTR radial tires.  These tires have an outside diameter of
      approximately 140 inches and 160 inches, respectively.  This funding
      should allow Titan to produce up to an estimated 6,000 giant radial tires a
      year.  Titan estimates this may increase sales as much as $240 million
      on an annual basis.  The Company currently plans to be in start-up
      production of these giant mining tires by the end of the second quarter of
      2008.





5





OPERATIONS


Titan’s
      operations include manufacturing wheels, manufacturing tires, and combining
      these wheels and tires into assemblies for use in the agricultural,
      earthmoving/construction and consumer markets.  These operations
      entail many manufacturing processes in order to complete the finished
      products.





Wheel
      Manufacturing
      Process:  Most agricultural wheels are produced using a rim and
      a center disc.  A rim is produced by first cutting large steel sheets
      to required width and length specifications.  These steel sections are
      rolled and welded to form a circular rim, which is flared and formed in the
      rollform operation.  The majority of discs are manufactured using
      presses that both blank and form the center to specifications in multiple stage
      operations.  The Company e-coats wheels using a multi-step process
      prior to the final paint top coating.





Large
      earthmoving/construction steel wheels are manufactured from hot and cold-rolled
      steel sections.  Hot-rolled sections are generally used to increase
      cross section thickness in high stress areas of large diameter
      wheels.  A special cold forming process for certain wheels is used to
      increase cross section thickness while reducing the number of wheel
      components.  Rims are built from a series of hoops that are welded
      together to form a rim base.  The complete rim base is made from
      either three or five separate parts that lock together after the rubber tire
      has
      been fitted to the wheel and inflated.





For
      most
      consumer market wheels, the Company manufactures rims and center discs from
      steel sheets.  Rims are rolled and welded, and discs are stamped and
      formed from the sheets.  The manufacturing process then entails
      welding the rims to the centers and painting the assembled product.





Tire
      Manufacturing
      Process:The
      first stage in tire production is the mixing of rubber, carbon black and
      chemicals to form various rubber compounds.  These rubber compounds
      are then extruded and processed with textile or steel materials to make specific
      components.  These components – beads (wire bundles that anchor the
      tire with the wheel), plies (layers of fabric that give the tire strength),
      belts (fabric or steel fabric wrapped under the tread in some tires), tread
      and
      sidewall – are then assembled into an uncured tire carcass.  The
      uncured carcass is placed into a press that molds and vulcanizes the carcass
      under set time, temperature and pressure into a finished tire.





Wheel
      and Tire
      Assemblies:The Company’s position
      as a manufacturer of both wheels and tires allows Titan to mount and deliver
      one
      of the largest selections of off-highway assemblies in North
      America.  Titan offers this value-added service of one-stop shopping
      for wheel and tire assemblies for the agricultural, earthmoving/construction
      and
      consumer markets.  Customer orders are entered into the Company’s
      system either through electronic data interchange or manually.  The
      appropriate wheel-tire assembly delivery schedule is formulated based on each
      customer’s requirements and products are received by the customer on a
      just-in-time basis.





Quality
      Control:The Company
      is ISO
      certified at all five main manufacturing facilities located in Bryan, Ohio; Des
      Moines, Iowa; Freeport, Illinois; Quincy, Illinois; and Saltville,
      Virginia.  The ISO series is a set of related and internationally
      recognized standards of management and quality assurance.  The
      standards specify guidelines for establishing, documenting and maintaining
      a
      system to ensure quality.  The ISO certifications are a testament to
      Titan’s dedication to providing quality products for its customers.





RAW
      MATERIALS


Steel
      and
      rubber are the primary raw materials used by the Company in all
      segments.  To ensure a consistent steel supply, Titan purchases raw
      steel from key steel mills and maintains relationships with steel processors
      for
      steel preparation.  The Company is not dependent on any single
      producer for its steel supply.  Rubber and other raw materials for
      tire manufacture represent some of the Company’s largest commodity
      expenses.  Titan buys rubber in markets where there are several
      sources of supply.  In addition to the development of key domestic
      suppliers, the Company’s strategic procurement plan includes international steel
      and rubber suppliers to assure competitive price and quality in the global
      marketplace.  As is customary in the industry, the Company does not
      have long-term contracts for the purchase of steel or rubber and, therefore,
      purchases are subject to price fluctuations.





6





CAPITAL
      EXPENDITURES


Capital
      expenditures for 2007, 2006 and 2005 were $38.0 million, $8.3 million and $6.8
      million, respectively. The
      2007
      capital expenditures include $22.1 million for the giant OTR
      project.  The remaining capital expenditures in 2007 were used
      primarily for updating manufacturing equipment, expanding manufacturing capacity
      and for further automation at the Company’s facilities.  Capital
      expenditures for 2008 are forecasted to be approximately $55 million to $65
      million.  Approximately $35 million to $45 million of this amount will
      be spent on the giant OTR project and the remainder will be used to enhance
      the
      Company’s existing facilities and manufacturing capabilities.





PATENTS
      AND TRADEMARKS


The
      Company owns various patents and trademarks and continues to apply for patent
      protection for new products.  While patents are considered significant
      to the operations of the business, at this time Titan does not consider any
      one
      of them to be of such importance that the patent’s expiration or invalidity
      could materially affect the Company’s business.  However, due to the
      difficult nature of predicting the interpretation of patent laws, the Company
      cannot anticipate or predict the material adverse effect on its operations,
      cash
      flows or financial condition as a result of associated liabilities created
      under
      such patent interpretations.





MARKETING
      AND DISTRIBUTION


The
      Company employs an internal sales force and utilizes several manufacturing
      representative firms for sales in North America.  Sales
      representatives are primarily organized within geographic regions.





Titan
      distributes wheels and tires directly to OEMs. The distribution of aftermarket
      tires occurs primarily through a network of independent and OEM-affiliated
      dealers.  The Company distributes wheel and tire assemblies directly
      to OEMs and aftermarket customers through its distribution network consisting
      of
      nine facilities in the United States.





SEASONALITY


Agricultural
      equipment sales are seasonal by nature.  Farmers generally order
      equipment to be delivered before the growing season.  Shipments to
      OEMs usually peak during the Company’s first and second quarters for the spring
      planting period.  Earthmoving/construction and consumer markets also
      historically tend to experience higher demand in the first and second
      quarters.  These markets are affected by mining, building and economic
      conditions.





RESEARCH,
      DEVELOPMENT AND ENGINEERING


The
      Company’s research, development and engineering staff tests original designs and
      technologies and develops new manufacturing methods to improve product
      performance.  These services enhance the Company’s relationships with
      customers.  Titan’s engineers are currently working on 57-inch and
      63-inch giant OTR tires to be introduced in
      2008.  Titan’s engineers are also working on a new 15-degree tire and
      wheel design for OTR and farm radial assemblies.  This revolutionary
      technology will simplify maintenance to minimize downtime, provide better air
      retention, simplify mounting and increase service life.  The Company
      continues to work on sidewall improvements including the LSW (low sidewall)
      tire
      design.





CUSTOMERS


Titan’s
      10 largest customers accounted for approximately 47% of net sales for the year
      ended December 31, 2007, compared to approximately 53% for the year ended
      December 31, 2006.  Net sales to Deere & Company in Titan’s
      agricultural, earthmoving/construction and consumer markets combined represented
      approximately 17% of the Company’s consolidated revenues for each of the years
      ended December 31, 2007 and 2006.  Net sales to CNH Global N.V. in
      Titan’s three markets represented approximately 11% of the Company’s
      consolidated revenues for each of the years ended December 31, 2007 and
      2006.  No other customer accounted for more than 10% of the Company’s
      net sales in 2007 or 2006.  Management believes the Company is not
      totally dependent on any single customer, however, certain products are
      dependent on a few customers.  While the loss of any substantial
      customer could impact Titan’s business, the Company believes that its diverse
      product mix and customer base minimizes a longer-term impact caused by any
      such
      loss.





7





ORDER
      BACKLOG


As
      of
      January 31, 2008, Titan estimates $208 million in firm orders compared to $171
      million at January 31, 2007, for the Company’s operations.  Orders are
      considered firm if the customer would be obligated to accept the product if
      manufactured and delivered pursuant to the terms of such orders.  The
      Company believes that the majority of the current order backlog will be filled
      during the present year.





INTERNATIONAL
      OPERATIONS


In
      accordance with Statement of Financial Accounting Standards (SFAS) No. 115,
      the
      Company records the Titan Europe Plc investment as an available-for-sale
      security and reports the investment at fair value, with unrealized gains and
      losses excluded from earnings and reported as a separate component of
      comprehensive income in stockholders’ equity.  The Company’s stock
      ownership interest in Titan Europe Plc was 17.3% at December 31, 2007 and
      2006.  The fair value of the Company’s investment in Titan Europe Plc
      was $34.5 million and $65.9 million at December 31, 2007 and
      2006.  Titan Europe Plc is publicly traded on the AIM market in
      London, England.





EMPLOYEES


At
      December 31, 2007, the Company employed approximately 2,700 people in the United
      States.  Approximately 48% of the Company’s employees in the United
      States were covered by collective bargaining agreements.  In December
      2005, the workers at the Des Moines, Iowa, and Freeport, Illinois, facilities
      ratified new labor agreements through November 2010.  The workers at
      the Bryan, Ohio, facility ratified a new labor agreement in July 2006 with
      the
      same November 2010 expiration date.  The Company believes employee
      relations are generally good.





EXPORT
      SALES


The
      Company had total aggregate export sales of approximately $77.0 million, $57.4
      million and $39.0 million, for the years ended December 31, 2007, 2006 and
      2005,
      respectively.





Exports
      to foreign markets are subject to a number of special risks, including but
      not
      limited to risks with respect to currency exchange rates, economic and political
      destabilization, other disruption of markets and restrictive actions by foreign
      governments (such as restrictions on transfer of funds, export duties and quotas
      and foreign customs).  Other risks include changes in foreign laws
      regarding trade and investment, difficulties in obtaining distribution and
      support, nationalization, reforms of laws and policies of the United States
      affecting trade, foreign investment and loans and foreign tax
      laws.  There can be no assurance that one, or a combination, of these
      factors will not have a material adverse effect on the Company’s ability to
      increase or maintain its export sales.





The
      Company purchases a portion of its raw materials from foreign
      suppliers.  The production costs, profit margins and competitive
      position of the Company are affected by the strength of the currencies in
      countries where Titan purchases goods, relative to the strength of the
      currencies in countries where the products are sold.  The Company’s
      results of operations, cash flows and financial position may be affected by
      fluctuations in foreign currencies.





ENVIRONMENTAL
      LAWS AND REGULATIONS


In
      the
      ordinary course of business, like other industrial companies, Titan is subject
      to extensive and evolving federal, state and local environmental laws and
      regulations, and has made provisions for the estimated financial impact of
      environmental cleanup.  The Company’s policy is to accrue
      environmental cleanup-related costs of a non-capital nature when those costs
      are
      believed to be probable and can be reasonably estimated.  Expenditures
      that extend the life of the related property, or mitigate or prevent future
      environmental contamination, are capitalized. The Company does not currently
      anticipate any material capital expenditures for environmental control
      facilities.  The quantification of environmental exposures requires an
      assessment of many factors, including changing laws and regulations, advances
      in
      environmental technologies, the quality of information available related to
      specific sites, the assessment stage of the site investigation, preliminary
      findings and the length of time involved in remediation or
      settlement.  Due to the difficult nature of predicting future
      environmental costs, the Company cannot anticipate or predict the material
      adverse effect on its operations, cash flows or financial condition as a result
      of efforts to comply with, or its liabilities under, environmental
      laws.





8





COMPETITION


The
      Company competes with several domestic and international companies, some of
      which are larger and have greater financial and marketing resources than
      Titan.  The Company believes it is a primary source of steel wheels
      and rims to the majority of its North American customers.  Major
      competitors in the off-highway wheel market include Carlisle Companies
      Incorporated, GKN Wheels, Ltd., Topy Industries, Ltd. and certain other foreign
      competitors.  Significant competitors in the off-highway tire market
      include Bridgestone/Firestone, Carlisle Companies Incorporated, Michelin and
      certain other foreign competitors.





The
      Company competes primarily on the basis of price, quality, customer service,
      design capability and delivery time.  The Company’s ability to compete
      with international competitors may be adversely affected by currency
      fluctuations.  In addition, certain of the Company’s OEM customers
      could, under individual circumstances, elect to manufacture the Company’s
      products to meet their requirements or to otherwise compete with the
      Company.  There can be no assurance that the Company will not be
      adversely affected by increased competition in the markets in which it operates,
      or that competitors will not develop products that are more effective, less
      expensive or otherwise render certain of Titan’s products less
      competitive.  From time to time, certain of the Company’s competitors
      have reduced their prices in particular product categories, which has prompted
      Titan to reduce prices as well.  There can be no assurance that
      competitors of the Company will not further reduce prices in the future or
      that
      any such reductions would not have a material adverse effect on the
      Company.





NEW
      YORK STOCK EXCHANGE CERTIFICATION


The
      Company submitted to the New York Stock Exchange during fiscal 2007 the Annual
      CEO Certification required by Section 303A.12(a) of the New York Stock Exchange
      Listed Company Manual.





AVAILABLE
      INFORMATION


The
      Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current
      reports on Form 8-K, and any amendments to those reports are made available,
      without charge, through the Company’s website located at www.titan-intl.com as
      soon as reasonably practicable after they are filed with the Securities and
      Exchange Commission (SEC).  The SEC maintains an Internet site that
      contains reports, proxy and information statements, and other information
      regarding issuers that file electronically with the SEC at www.sec.gov
      website.  The following documents are also posted on the Company’s
      website:





Corporate
      Governance
      Policy


Business
      Conduct Policy


Audit
      Committee Charter


Compensation
      Committee
      Charter


Nominating/Corporate
      Governance
      Committee Charter





Printed
      copies of these documents are available, without charge, by writing
      to:  Corporate Secretary, Titan International, Inc., 2701 Spruce
      Street, Quincy, IL 62301.





9





ITEM
      1A – RISK FACTORS





The
      Company is subject to various risks and uncertainties relating to or arising
      out
      of the nature of its business and general business, economic, financing, legal
      and other factors or conditions that may affect the Company. Realization of
      any
      of the following risks could have a material adverse effect on Titan’s business,
      financial condition, cash flows and results of operations.




·
            The
                Company operates in cyclical industries and, accordingly, its business
                is
                subject to the numerous and continuing changes in the
                economy.




·
            The
                Company’s debt and related interest expense may limit Titan’s financial
                and operating flexibility.




·
            The
                Company has incurred, and may incur in the future, net
                losses.




·
            The
                Company is exposed to price fluctuations of key commodities, which
                are
                primarily steel and rubber.




·
            The
                Company relies on a limited number of suppliers for key commodities,
                which
                consist primarily of steel and
                rubber.




·
            Fluctuations
                in energy and transportation costs may affect Titan’s operating costs and
                the demand for the Company’s
                products.




·
            The
                Company’s revenues are seasonal due to Titan’s dependence on agricultural,
                construction and recreational industries, which are seasonal and
                typically
                have lower sales in the second half of the
                year.




·
            The
                Company may be adversely affected by changes in government regulations
                and
                policies, especially those related to farm and ethanol subsidies
                and those
                related to infrastructure
                construction.




·
            The
                Company is subject to corporate governance requirements, and costs
                related
                to compliance with, or failure to comply with, existing and future
                requirements could adversely affect Titan’s
                business.




·
            The
                Company’s customer base is relatively concentrated with Titan’s ten
                largest customers historically accounting for approximately 50% of
                sales.




·
            The
                Company’s giant OTR project and OTR realignment may experience unforeseen
                obstacles, which may delay the project, increase costs and adversely
                affect Titan’s financial results.




·
            The
                Company faces substantial competition from domestic and international
                companies, some of which operate in low wage
                markets.




·
            The
                Company’s business could be negatively impacted if Titan fails to maintain
                satisfactory labor relations.




·
            Unfavorable
                outcomes of legal proceedings could adversely affect the Company’s
                financial condition and results of
                operations.




·
            Acquisitions
                may require significant resources and/or result in significant
                unanticipated losses, costs or liabilities for the
                Company.




·
            The
                Company may be subject to product liability
                claims.




·
            The
                Company is subject to risks associated with environmental laws and
                regulations.




·
            The
                Company has an investment in Titan Europe Plc which is recorded at
                fair
                value.  Titan Europe Plc’s fair value has fluctuated
                significantly due to large changes in their stock price which is
                traded on
                the AIM market in London, England.








ITEM
      1B – UNRESOLVED STAFF COMMENTS





None.





10





ITEM
      2 – PROPERTIES





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





Approximate
                square footageLocation
            
            Owned
            
            
            Leased
            
            Use
            SegmentDes
                Moines, Iowa
            
            
            2,047,000
            
            
            
            
            Manufacturing,
                distribution
            All
                segmentsFreeport,
                Illinois
            
            
            1,202,000
            
            
            
            211,000
            
            Manufacturing,
                distribution
            All
                segmentsQuincy,
                Illinois
            
            
            1,134,000
            
            
            
            
            
            Manufacturing,
                distribution
            All
                segmentsBrownsville,
                Texas
            
            
            993,000
            
            
            
            
            
            Storage
            See
                note(a)Bryan,
                Ohio
            
            
            740,000
            
            
            
            
            
            Manufacturing,
                distribution
            Earthmoving/ConstructionWalcott,
                Iowa
            
            
            378,000
            
            
            
            
            
            Storage
            See
                note(a)Greenwood,
                S. Carolina
            
            
            110,000
            
            
            
            
            
            Storage
            See
                note(a)Dublin,
                Georgia
            
            
            20,000
            
            
            
            
            
            Distribution
            All
                segmentsSaltville,
                Virginia
            
            
            14,000
            
            
            
            245,000
            
            Manufacturing,
                distribution
            Earthmoving/ConstructionNatchez,
                Mississippi
            
            
            
            
            
            
            1,203,000
            
            Storage
            See
                note(a)Cartersville,
                Georgia
            
            
            
            
            
            
            169,000
            
            Distribution
            All
                segmentsPendergrass,
                Georgia
            
            
            
            
            
            
            120,000
            
            Distribution
            All
                segmentsElko,
                Nevada
            
            
            
            
            
            
            4,000
            
            Distribution
            Earthmoving/Construction





(a)
            The
                Brownsville, Greenwood and Natchez facilities are currently being
                used for
                storage.  The Company’s facilities in Brownsville, Texas;
                Greenwood, South Carolina; Natchez, Mississippi, and Walcott, Iowa,
                are
                not in operation.  The Company has a contract for sale on the
                Walcott building.





The
      Company considers each of its facilities to be in good condition and adequate
      for present use.  Management believes that the Company has sufficient
      capacity to meet current market demand with the active
      facilities.  The Company has no current plans to restart manufacturing
      at the storage facilities described in note (a) above.








ITEM
      3 – LEGAL PROCEEDINGS





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








ITEM
      4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





No
      matters were submitted to the vote of security holders during the fourth quarter
      of 2007.





11





PART
      II





ITEM
                5 – MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
                AND ISSUER PURCHASES OF EQUITY SECURITIES





The
      Company’s common stock is traded on the New York Stock Exchange (NYSE) under the
      symbol TWI.  On February 25, 2008, there were approximately 600
      holders of record of Titan common stock and an estimated 5,000 beneficial
      stockholders.  The following table sets forth the high and low sales
      prices per share of common stock as reported on the NYSE, as well as information
      concerning per share dividends declared for the periods indicated.





2007
            
            High
            
            
            Low
            
            
            Dividends
              DeclaredFirst
                quarter
            
            $
            26.20
            
            
            $
            19.90
            
            
            $
            0.005Second
                quarter
            
            
            32.48
            
            
            
            25.33
            
            
            
            0.005Third
                quarter
            
            
            33.25
            
            
            
            23.70
            
            
            
            0.005Fourth
                quarter
            
            
            35.29
            
            
            
            24.13
            
            
            
            0.0052006First
                quarter
            
            $
            17.64
            
            
            $
            16.55
            
            
            $
            0.005Second
                quarter
            
            
            19.76
            
            
            
            16.20
            
            
            
            0.005Third
                quarter
            
            
            19.40
            
            
            
            16.65
            
            
            
            0.005Fourth
                quarter
            
            
            20.85
            
            
            
            17.52
            
            
            
            0.005





PERFORMANCE
      COMPARISON GRAPH




The
      following performance graph compares cumulative total return for the Company’s
      common stockholders over the past five years against the cumulative total return
      of the Standard & Poor’s 500 Stock Index, and against the Standard &
Poor’s 600 Construction and Farm Machinery and Heavy Trucks
      Index.  The graph depicts the value on December 31, 2007, of a $100
      investment made on December 31, 2002, in Company common stock and each of the
      other two indices, with all dividends reinvested.  The Company’s
      common stock is currently traded on the NYSE under the symbol TWI.










Fiscal
                  Year Ended December 31,2002
              
              
              2003
              
              
              2004
              
              
              2005
              
              
              2006
              
              
              2007Titan
                  International, Inc.
              
              $
              100.00
              
              
              $
              231.54
              
              
              $
              1,145.15
              
              
              $
              1,309.98
              
              
              $
              1,531.87
              
              
              $
              2,378.08S&P
                  600 Const. & Farm Machinery Index
              
              
              100.00
              
              
              
              168.58
              
              
              
              225.95
              
              
              
              287.22
              
              
              
              387.32
              
              
              
              488.11S&P
                  500 Index
              
              
              100.00
              
              
              
              128.68
              
              
              
              142.69
              
              
              
              149.70
              
              
              
              173.34
              
              
              
              182.86


12





ITEM
      6 – SELECTED FINANCIAL DATA





The
      selected financial data presented below, as of and for the years ended December
      31, 2007, 2006, 2005, 2004, and 2003, are derived from the Company’s
      consolidated financial statements, as audited by PricewaterhouseCoopers LLP,
      an
      independent registered public accounting firm, and should be read in conjunction
      with the Company’s audited consolidated financial statements and notes
      thereto.





(All
      amounts in thousands, except per share data)


Year
                Ended December 31,2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003Net
                sales
            
            $
            837,021
            
            
            $
            679,454
            
            
            $
            470,133
            
            
            $
            510,571
            
            
            $
            491,672Gross
                profit
            
            
            84,131
            
            
            
            72,778
            
            
            
            64,210
            
            
            
            79,500
            
            
            
            29,703Income
                (loss) from operations
            
            
            24,838
            
            
            
            22,011
            
            
            
            11,999
            
            
            
            33,322
            
            
            
            (16,220
            )Noncash
                debt conversion charge
            
            
            (13,376
            )
            
            
            0
            
            
            
            (7,225
            )
            
            
            0
            
            
            
            0(Loss)
                income before income taxes
            
            
            (3,884
            )
            
            
            8,574
            
            
            
            (2,885
            )
            
            
            15,215
            
            
            
            (33,668
            )Net
                (loss) income
            
            
            (7,247
            )
            
            
            5,144
            
            
            
            11,042
            
            
            
            11,107
            
            
            
            (36,657
            )Net
                (loss) income per share – basic
            
            
            (.28
            )
            
            
            .26
            
            
            
            .61
            
            
            
            .62
            
            
            
            (1.75
            )Net
                (loss) income per share – diluted
            
            
            (.28
            )
            
            
            .26
            
            
            
            .60
            
            
            
            .61
            
            
            
            (1.75
            )Dividends
                declared per common share
            
            
            .02
            
            
            
            .02
            
            
            
            .02
            
            
            
            .02
            
            
            
            .02





(All
                amounts in thousands)
            
            As
                of December 31,2007
            
            
            2006
            
            
            2005
            
            
            2004
            
            
            2003Working
                capital
            
            $
            239,985
            
            
            $
            247,009
            
            
            $
            157,984
            
            
            $
            114,898
            
            
            $
            183,971Current
                assets
            
            
            327,765
            
            
            
            309,933
            
            
            
            206,167
            
            
            
            154,668
            
            
            
            286,946Total
                assets
            
            
            590,495
            
            
            
            585,126
            
            
            
            440,756
            
            
            
            354,166
            
            
            
            523,084Long-term
                debt (a)
            
            
            200,000
            
            
            
            291,266
            
            
            
            190,464
            
            
            
            169,688
            
            
            
            248,397Stockholders’
                equity
            
            
            272,522
            
            
            
            187,177
            
            
            
            167,813
            
            
            
            106,881
            
            
            
            111,956(a)Excludes
                amounts due within one year and classified as a current
                liability.





13





ITEM
                7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS





MANAGEMENT’S
      DISCUSSION AND ANALYSIS


Management’s
      discussion and analysis of financial condition and results of operations
      (MD&A) is designed to provide readers of these financial statements with a
      narrative from the perspective of the management of Titan International, Inc.
      (Titan or the Company) on Titan’s financial condition, results of operations,
      liquidity and other factors which may affect the Company’s future
      results.





FORWARD-LOOKING
      STATEMENTS


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




·
            Anticipated
                trends in the Company’s business




·
            Future
                expenditures for capital projects




·
            The
                Company’s ability to continue to control costs and maintain
                quality




·
            Ability
                to meet financial covenants and conditions of loan
                agreements




·
            The
                Company’s business strategies, including its intention to introduce new
                products




·
            Expectations
                concerning the performance and success of the Company’s existing and new
                products




·
            The
                Company’s intention to consider and pursue acquisitions and
                divestitures





Readers
      of this Form 10-K should understand that these forward-looking statements are
      based on the Company’s expectations and are subject to a number of risks and
      uncertainties, certain of which are beyond the Company’s control.





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




·
            Changes
                in the Company’s end-user markets as a result of world economic or
                regulatory influences




·
            Changes
                in the marketplace, including new products and pricing changes by
                the
                Company’s competitors




·
            Availability
                and price of raw materials




·
            Levels
                of operating efficiencies




·
            Actions
                of domestic and foreign governments




·
            Results
                of investments




·
            Fluctuations
                in currency translations




·
            Ability
                to secure financing at reasonable
                terms





Any
      changes in such factors could lead to significantly different
      results.  The Company cannot provide any assurance that the
      assumptions referred to in the forward-looking statements or otherwise are
      accurate or will prove to transpire.  Any assumptions that are
      inaccurate or do not prove to be correct could have a material adverse effect
      on
      the Company’s ability to achieve the results as indicated in forward-looking
      statements.  The Company undertakes no obligation to publicly update
      or revise any forward-looking statements, whether as a result of new
      information, future events or otherwise.  In light of these risks and
      uncertainties, there can be no assurance that the forward-looking information
      contained in this document will in fact transpire.





14





OVERVIEW


Titan
      International, Inc. and its subsidiaries are leading manufacturers of wheels,
      tires and assemblies for off-highway vehicles used in the agricultural,
      earthmoving/construction and consumer markets.  Titan’s
      earthmoving/construction market also includes products supplied to the U.S.
      government, while the consumer market includes products for all-terrain vehicles
      (ATVs) and recreational/utility trailer applications.  Titan
      manufactures both wheels and tires for the majority of these market
      applications, allowing the Company to provide the value-added service of
      delivering complete wheel and tire assemblies.  The Company offers a
      broad range of products that are manufactured in relatively short production
      runs to meet the specifications of original equipment manufacturers (OEMs)
      and/or the requirements of aftermarket customers.





The
      Company’s major OEM customers include large manufacturers of off-highway
      equipment such as AGCO Corporation, Caterpillar Inc., CNH Global N.V., Deere
      & Company and Kubota Corporation, in addition to many other off-highway
      equipment manufacturers.  The Company distributes products to OEMs,
      independent and OEM-affiliated dealers, and through a network of distribution
      facilities.





The
      following table provides highlights for the year ended December 31, 2007,
      compared to 2006 (amounts
      in
      thousands):


2007
            
            
            2006
            
            
            %
                IncreaseNet
                sales
            
            $
            837,021
            
            
            $
            679,454
            
            
            
            23
            %Gross
                profit
            
            
            84,131
            
            
            
            72,778
            
            
            
            16
            %Income
                from operations
            
            
            24,838
            
            
            
            22,011
            
            
            
            13
            %





The
      Company recorded sales of $837.0 million for 2007, which were 23% higher than
      2006 sales of $679.5 million.  The higher sales level was attributed
      to the expanded agricultural and earthmoving product offerings, which includes
      General branded off-the-road (OTR) tires.  The expanded OTR offerings
      came with the added manufacturing capacity from the Bryan, Ohio, OTR facility,
      which was acquired in July 2006.





Gross
      profit was $84.1 million for 2007, compared to $72.8 million for
      2006.  Income from operations was $24.8 million for 2007 as compared
      to $22.0 million in 2006.  The increases in gross profit and income
      from operations were primarily due to the higher sales volumes year over
      year.





RECENT
      DEVELOPMENTS


Affirmative
      Preliminary Antidumping Determination on OTR Tires from China


On
      February 6, 2008, Titan welcomed the U.S. Commerce Department’s preliminary
      decision to impose antidumping duties on imports of new pneumatic off-the-road
      (OTR) tires from China. OTR tires are used on construction and agricultural
      equipment.





As
      a
      result of this preliminary determination, Commerce will instruct U.S. Customs
      and Border Protection to collect a cash deposit or bond based on these
      preliminary rates. Commerce preliminarily determined that Chinese
      producers/exporters have sold new pneumatic off-the-road tires in the U.S.
      at
      10.98 to 210.48 percent less than fair value, with a majority of
      exporter/producers at 24.75 percent less than fair value.





The
      agency will now continue the
      proceeding by holding hearings, conducting verifications of information, and
      reaching a final determination by early June of this year. The International
      Trade Commission will also investigate the issue of injury and reach a
      determination on that issue thereafter.





Titan
      Builds First Radial 63-Inch Tire


On
      February 15, 2008, Titan announced that Titan Tire Corporation of Bryan had
      produced the Company’s first prototype of the giant radial 63-inch tire in its
      Ohio facility.  Titan announced its commitment to produce these giant
      radial tires, used in the mining industry, in May 2007 when the Company’s Board
      of Directors approved funding to increase tire production capacity to include
      57-inch and 63-inch giant radial tires.





15





RESULTS
      OF OPERATIONS


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.




As
                  a Percentage of Net SalesYear
                  ended December 31,2007
              
              
              2006
              
              
              2005Net
                  sales
              
              
              100.0
              %
              
              
              100.0
              %
              
              
              100.0
              %Cost
                  of sales
              
              
              89.9
              
              
              
              89.3
              
              
              
              86.3Gross
                  profit
              
              
              10.1
              
              
              
              10.7
              
              
              
              13.7Selling,
                  general and administrative expenses
              
              
              6.4
              
              
              
              6.7
              
              
              
              7.9Royalty
                  expense
              
              
              0.7
              
              
              
              0.7
              
              
              
              0.0Dyneer
                  legal charge
              
              
              0.0
              
              
              
              0.0
              
              
              
              3.2Income
                  from operations
              
              
              3.0
              
              
              
              3.3
              
              
              
              2.6Interest
                  expense
              
              
              (2.3
              )
              
              
              (2.5
              )
              
              
              (1.8
              )Noncash
                  convertible debt conversion charge
              
              
              (1.6
              )
              
              
              0.0
              
              
              
              (1.6
              )Other
                  income, net
              
              
              0.4
              
              
              
              0.5
              
              
              
              0.2(Loss)
                  income before income taxes
              
              
              (0.5
              )
              
              
              1.3
              
              
              
              (0.6
              )Provision
                  (benefit) for income taxes
              
              
              0.4
              
              
              
              0.5
              
              
              
              (2.9
              )Net
                  (loss) income
              
              
              (0.9
              )%
              
              
              0.8
              %
              
              
              2.3
              %


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):


2007
            
            
            2006
            
            
            2005Agricultural
            
            $
            515,642
            
            
            $
            421,096
            
            
            $
            310,361Earthmoving/Construction
            
            
            277,206
            
            
            
            183,357
            
            
            
            131,982Consumer
            
            
            44,173
            
            
            
            75,001
            
            
            
            27,790Total
            
            $
            837,021
            
            
            $
            679,454
            
            
            $
            470,133








16





OTR
      PRODUCTION REALIGNMENT


Due
      to
      capacity constraints at Titan’s Bryan, Ohio, OTR tire facility, the Company is
      adding OTR tire capacity at its Freeport, Illinois, and Des Moines, Iowa,
      facilities.  Titan is aligning synergies, which includes retooling,
      retraining personnel and redistribution of equipment at the Bryan, Freeport
      and
      Des Moines facilities.  These OTR realignment costs lowered the
      Company’s gross profit for 2007 as labor costs that are normally dedicated to
      making products were instead used for retooling, retraining and redistribution
      of equipment.  In 2007, these costs were approximately $22 million to
      $24 million.





GIANT
      OTR MINING TIRES


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.  This funding should allow Titan to produce up to an
      estimated 6,000 giant radial tires a year.  Titan estimates this may
      increase sales as much as $240 million on an annual basis.  The
      Company currently plans to be in start-up production of these giant mining
      tires
      by the end of the second quarter of 2008.





SENIOR
      UNSECURED NOTES


In
      December 2006, the Company closed its offering of $200 million 8% senior
      unsecured notes.  The notes were sold at par and are due January
      2012.  Titan used the net proceeds from this offering to repay
      outstanding existing debt, excluding the 5.25 percent senior unsecured
      convertible notes, and for general corporate purposes.





ACQUISITION
      OF CONTINENTAL’S OTR ASSETS


On
      July
      31, 2006, Titan Tire Corporation of Bryan, a subsidiary of Titan International,
      Inc., 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 OTR tire facility for approximately
      $53 million in cash proceeds.  The assets purchased included
      Continental’s OTR plant, property and equipment located in Bryan, Ohio,
      inventory and other current assets.  The acquisition included an
      agreement with Continental 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.





ACQUISITION
      OF GOODYEAR’S NORTH AMERICAN FARM TIRE ASSETS


On
      December 28, 2005, Titan Tire Corporation, a subsidiary of Titan International,
      Inc., acquired The Goodyear Tire & Rubber Company’s North American farm tire
      assets.  Titan Tire purchased the assets of Goodyear’s North American
      farm tire business for approximately $100 million in cash
      proceeds.  The assets purchased include Goodyear’s North American
      plant, property and equipment located in Freeport, Illinois, and Goodyear’s
      North American farm tire inventory.  In addition, the Company recorded
      intangibles related to the acquisition as noncurrent assets.  This
      acquisition expanded Titan’s product offering into Goodyear branded farm tires
      and added the manufacturing capacity of the Freeport, Illinois,
      facility.




17





SENIOR
      UNSECURED CONVERTIBLE NOTES CONVERSION


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.”





In
      June
      of 2005, Titan finalized a private transaction in which the Company issued
      3,022,275 shares of common stock in exchange for the cancellation of $33.8
      million principal amount of the Company’s outstanding 5.25% senior convertible
      notes due 2009, as proposed to the Company by certain note
      holders.  Titan recognized a noncash charge of $7.2 million in
      connection with this exchange in accordance with SFAS No. 84, “Induced
      Conversions of Convertible Debt.”





CRITICAL
      ACCOUNTING ESTIMATES


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


Inventories
      are valued at the lower of cost or market.  Cost is determined using
      the first-in, first-out (FIFO) method in 2007 for approximately 67% of
      inventories and the last-in, first-out (LIFO) method for approximately 33%
      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 this experience change, adjustments to the
      estimated provisions would be necessary.





Impairment
      of Goodwill


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,
      2007 and 2006.  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.





Valuation
      of Investment Accounted for as Available-for-Sale Security


The
      Company has an investment in Titan Europe Plc of $34.5 million as of December
      31, 2007, representing a 17.3% ownership position.  Titan Europe Plc
      is publicly traded on the AIM market in London, England.  This
      investment is recorded as “Investment in Titan Europe Plc” on the consolidated
      balance sheet.  In accordance with SFAS No. 115, the Company records
      the Titan Europe Plc investment as an available-for-sale security and reports
      this investment at fair value, with unrealized gains and losses excluded from
      earnings and reported in a separate component of stockholders’
equity.  Should the fair value decline below the cost basis, the
      Company would be required to determine if this decline is other than
      temporary.  If the decline in fair value were judged to be other than
      temporary, an impairment charge would be recorded.





18





The
      December 31, 2007, fair value of $34.5 million was below the Company’s cost
      basis of $40.3 million.  The unrealized loss on the Titan Europe Plc
      investment was $5.8 million.  The unrealized loss resulted from
      decline in the market price of Titan Europe Plc of over 40% in the fourth
      quarter of 2007.  No impairment charge has been recorded as this
      decline below cost basis was judged to be temporary at December 31,
      2007.  Should unforeseen events occur or investment trends change
      significantly, impairment losses could occur.  Declared dividends on
      this investment are recorded in income as a component of other
      income.





Income
      Taxes


Deferred
      income tax provisions are determined using the liability method whereby deferred
      tax assets and liabilities are recognized based upon temporary differences
      between the financial statement and income tax basis of assets and
      liabilities.  The Company assesses the realizability of its deferred
      tax asset positions in accordance with SFAS No. 109.





Asset
      and Business Acquisitions


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.





Retirement
      Benefit Obligations


Pension
      benefit obligations are based on various assumptions used by third-party
      actuaries in calculating these amounts.  These assumptions include
      discount rates, expected return on plan assets, mortality rates and other
      factors.  Revisions in assumptions and actual results that differ from
      the assumptions affect future expenses, cash funding requirements and
      obligations.  The Company has three frozen defined benefit pension
      plans and one defined benefit plan that purchased a final annuity settlement
      in
      2002.  Titan expects to contribute approximately $1 million to these
      frozen defined benefit pension plans in 2008.  For more information
      concerning these costs and obligations, see the discussion of the “Pensions” and
      Note 20 to the Company’s financial statements.





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


December
                31, 2007
            
            2008Increase
            Increase
            
            IncreasePercentage
            (Decrease)
            (Decrease)
            
            (Decrease)Assumptions
            Change
            PBO
                (a)
            Equity
            
            ExpensePensionDiscount
                rate
            +/-.5
            $(4,688)/$5,119
            $4,688/$(5,119)
            
            $(93)/$77Expected
                return on
                assets
            +/-.5
            
            
            
            $(459)/$459





(a)
            Projected
                benefit obligation (PBO) for pension
                plans.




19





FISCAL
      YEAR ENDED DECEMBER 31, 2007, COMPARED TO FISCAL YEAR ENDED DECEMBER
      31, 2006





RESULTS
      OF OPERATIONS


The
      following tables and discussions provide highlights for the year ended December
      31, 2007, compared to 2006 (amounts
      in
      thousands):


2007
            
            
            2006
            
            
            %
                IncreaseNet
                sales
            
            $
            837,021
            
            
            $
            679,454
            
            
            
            23
            %Cost
                of sales
            
            
            752,890
            
            
            
            606,676
            
            
            
            24
            %Gross
                profit
            
            
            84,131
            
            
            
            72,778
            
            
            
            16
            %Gross
                profit percentage
            
            
            10.1
            %
            
            
            10.7
            %





Net
      Sales


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 off-the-road (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.





Cost
      of Sales and Gross Profit


Cost
      of
      sales was $752.9 million for the year ended December 31, 2007, as compared
      to
      $606.7 million in 2006.  Gross profit for the year 2007 was $84.1
      million or 10.1% of net sales, compared to $72.8 million, or 10.7% of net sales
      for 2006.  Due to capacity constraints at Titan’s Bryan, Ohio, OTR
      tire facility, the Company is adding OTR tire capacity at its Freeport,
      Illinois, and Des Moines, Iowa, tire facilities.  Titan is aligning
      synergies, which includes retooling, retraining personnel and movement of
      equipment at the Bryan, Freeport and Des Moines facilities.





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.





Administrative
      Expenses


Selling,
      general and administrative expenses were as follows (amounts in
      thousands):


2007
            
            
            2006
            
            
            %
                IncreaseSelling,
                general and administrative
            
            $
            53,138
            
            
            $
            45,766
            
            
            
            16
            %Percentage
                of net sales
            
            
            6.3
            %
            
            
            6.7
            %





Selling,
      general and administrative (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.  Research and development (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.





Royalty
      Expense


Royalty
      expense was as follows (amounts
      in thousands):


2007
            
            
            2006
            
            
            %
                IncreaseRoyalty
                expense
            
            $
            6,155
            
            
            $
            5,001
            
            
            
            23
            %





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.





20





Income
      from Operations


Income
      from operations was as follows (amounts in
      thousands):


2007
            
            
            2006
            
            
            %
                IncreaseIncome
                from operations
            
            $
            24,838
            
            
            $
            22,011
            
            
            
            13
            %Percentage
                of net sales
            
            
            3.0
            %
            
            
            3.2
            %





Income
      from operations for the year ended December 31, 2007, was $24.8 million or
      3.0%
      of net sales, compared to $22.0 million or 3.2% in 2006.  Income from
      operations was affected by the items previously discussed in the cost of sales,
      administrative and royalty line items.





Interest
      Expense


Interest
      expense was as follows (amounts
      in thousands):


2007
            
            
            2006
            
            
            %
                IncreaseInterest
                expense
            
            $
            18,710
            
            
            $
            17,001
            
            
            
            10
            %





Interest
      expense for the year 2007 was $18.7 million compared to $17.0 million in
      2006.  The increase in interest expense in 2007 as compared to 2006
      was the result of a higher average interest rate of approximately 1% in
      2007.  In 2007, the Company capitalized $0.4 million of interest costs
      for the giant OTR project.





Noncash
      Convertible Debt Conversion Charge


Noncash
      convertible debt conversion charge was as follows (amounts in
      thousands):


2007
            
            
            2006
            
            
            %
                IncreaseNoncash
                debt conversion charge
            
            $
            13,376
            
            
            $
            0
            
            
            
            n/a





In
      March
      2007, the Company converted $81.2 million of 5.25% senior convertible notes
      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.”





Other
      Income


Other
      income was as follows (amounts in
      thousands):


2007
            
            
            2006
            
            
            %
                DecreaseOther
                income
            
            $
            3,364
            
            
            $
            3,564
            
            
            
            (6
            %)





Other
      income was $3.4 million for the year ended December 31, 2007, as compared to
      $3.6 million in 2006.  Interest income included in other income was
      $2.7 million and $1.7 million for the years ended December 31, 2007 and 2006,
      respectively.  In addition, dividend income from the Titan Europe
      investment of $1.8 million in 2007 and $1.3 million in 2006 was recorded in
      other income.  The year ended December 31, 2007, also included a loss
      of approximately $(1.1) million on foreign exchange and other expense
      items.





Income
      Tax Expense


Income
      taxes were as follows (amounts in
      thousands):


2007
            
            
            2006
            
            
            %
                DecreaseIncome
                taxes
            
            $
            3,363
            
            
            $
            3,430
            
            
            
            (2
            %)





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.





21





Net
      (Loss) Income


Net
      (loss) income was as follows (amounts in
      thousands):


2007
            
            
            2006
            
            
            %
                IncreaseNet
                (loss) income
            
            $
            (7,247
            )
            
            $
            5,144
            
            
            
            n/a





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 $(.28)
      for the year ended December 31, 2007, as compared to basic and diluted income
      per share of $.26 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.





Agricultural
      Segment Results


Agricultural
      segment results were as follows (amounts in
      thousands):


2007
            
            
            2006
            
            
            %
                Increase(Decrease)Net
                sales
            
            $
            515,642
            
            
            $
            421,096
            
            
            
            22
            %Gross
                profit
            
            
            35,742
            
            
            
            42,511
            
            
            
            (16
            %)Income
                from operations
            
            
            25,324
            
            
            
            27,351
            
            
            
            (7
            %)





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.





Earthmoving/Construction
      Segment Results


Earthmoving/construction
      segment results were as follows (amounts in
      thousands):


2007
            
            
            2006
            
            
            %
                IncreaseNet
                sales
            
            $
            277,206
            
            
            $
            183,357
            
            
            
            51
            %Gross
                profit
            
            
            47,848
            
            
            
            28,099
            
            
            
            70
            %Income
                from operations
            
            
            40,833
            
            
            
            21,837
            
            
            
            87
            %





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.





Gross
      profit in the earthmoving/construction market was $47.8 million, as compared
      to
      $28.1 million in 2006.  The Company’s earthmoving/construction market
      income from operations was $40.8 million for the year 2007, up from $21.8
      million in 2006.  The Bryan, Ohio, facility produces OTR tires for
      earthmoving, construction, and mining machinery in sizes larger than the Company
      was able to produce before this facility was acquired on July 31,
      2006.  The increase in gross profit and income from operations in the
      earthmoving/construction segment is the result of margins realized on these
      larger earthmoving, construction and mining tires and additional OTR
      capacity.





22





Consumer
      Segment Results


Consumer
      segment results were as follows (amounts in
      thousands):


2007
            
            
            2006
            
            
            %
                (Decrease)IncreaseNet
                sales
            
            $
            44,173
            
            
            $
            75,001
            
            
            
            (41
            %)Gross
                profit
            
            
            3,431
            
            
            
            2,771
            
            
            
            24
            %Income
                from operations
            
            
            2,546
            
            
            
            1,655
            
            
            
            54
            %





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.





Segment
      Summary


(Amounts
      in thousands)


2007
            
            Agricultural
            
            
            Earthmoving/
              Construction
            
            
            Consumer
            
            
            Corporate
              Expenses
            
            
            Consolidated
              TotalsNet
                sales
            
            $
            515,642
            
            
            $
            277,206
            
            
            $
            44,173
            
            
            $
            0
            
            
            $
            837,021Gross
                profit
                (loss)
            
            
            35,742
            
            
            
            47,848
            
            
            
            3,431
            
            
            
            (2,890
            )
            
            
            84,131Income
                (loss) from
                operations
            
            
            25,324
            
            
            
            40,833
            
            
            
            2,546
            
            
            
            (43,865
            )
            
            
            24,8382006Net
                sales
            
            $
            421,096
            
            
            $
            183,357
            
            
            $
            75,001
            
            
            $
            0
            
            
            $
            679,454Gross
                profit
                (loss)
            
            
            42,511
            
            
            
            28,099
            
            
            
            2,771
            
            
            
            (603
            )
            
            
            72,778Income
                (loss) from
                operations
            
            
            27,351
            
            
            
            21,837
            
            
            
            1,655
            
            
            
            (28,832
            )
            
            
            22,011





Corporate
      Expenses


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, was 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, was 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.





23





FISCAL
      YEAR ENDED DECEMBER 31, 2006, COMPARED TO FISCAL YEAR ENDED DECEMBER
      31, 2005





RESULTS
      OF OPERATIONS


The
      following tables and discussions provide highlights for the year ended December
      31, 2006, compared to 2005 (amounts
      in
      thousands):


2006
            
            
            2005
            
            
            %
                IncreaseNet
                sales
            
            $
            679,454
            
            
            $
            470,133
            
            
            
            45
            %Gross
                profit
            
            
            72,778
            
            
            
            64,210
            
            
            
            13
            %Gross
                profit margin
            
            
            10.7
            %
            
            
            13.7
            %





Net
      Sales


Net
      sales
      for the year ended December 31, 2006, were $679.5 million compared to $470.1
      million for the year ended December 31, 2005.  The large sales
      improvement of $209.4 million, or 45%, for the year ended December 31, 2006,
      was
      attributed to the expanded agricultural product offering of Goodyear branded
      farm tires and the expanded earthmoving, construction and mining product
      offering of Continental & General branded off-the-road (OTR)
      tires.  These product offerings came with the added manufacturing
      capacity from the Freeport, Illinois, facility, which was approximately $186
      million in 2006, and the Bryan, Ohio, OTR facility, which was approximately
      $41
      million from the acquisition date of July 31, 2006 through December 31,
      2006.





Cost
      of Sales and Gross Profit


Cost
      of
      sales was $606.7 million for the year ended December 31, 2006, as compared
      to
      $405.9 million in 2005.  Gross profit for the year 2006 was $72.8
      million or 10.7% of net sales, compared to $64.2 million, or 13.7% of net sales
      for 2005.  Due to capacity constraints at Titan’s Bryan, Ohio, OTR
      tire facility, the Company is adding OTR tire capacity at its Freeport,
      Illinois, and Des Moines, Iowa, tire facilities.  Titan is aligning
      synergies, which includes retooling, retraining personnel and movement of
      equipment at the Bryan, Freeport and Des Moines facilities.  These
      realignment costs of approximately $9 million to $11 million lowered the
      Company’s gross profit 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.  These costs resulted in an
      approximate 2% reduction in the annual gross profit percentage.





Administrative
      Expenses


Selling,
      general and administrative expenses were as follows (amounts in
      thousands):


2006
            
            
            2005
            
            
            %
                IncreaseSelling,
                general and administrative
            
            $
            45,766
            
            
            $
            37,006
            
            
            
            24
            %Percentage
                of net sales
            
            
            6.7
            %
            
            
            7.9
            %





Selling,
      general and administrative (SG&A) expenses were $45.8 million or 6.7% of net
      sales for the year ended December 31, 2006, as compared to $37.0 million or
      7.9%
      of net sales for 2005.  Research and development (R&D) expenses,
      which were previously shown separately, have been combined with the SG&A
      expenses due to the reduced level of R&D expenditures.  R&D
      expenses were $1.3 million and $0.8 million for the years ended December 31,
      2006 and 2005, respectively.  SG&A expenses for the year ended
      December 31, 2006, were approximately $5 million higher as a result of the
      Freeport and Bryan acquisitions and their associated selling
      expenses.  However, as a result of the higher sales levels, SG&A
      expenses decreased by approximately 1% when expressed as a percentage of net
      sales.





The
      Company’s profit margins have been negatively affected by the depreciation
      associated with the idled assets marketed for sale.  The Company
      incurred $3.6 million and $4.7 million in depreciation related to the idled
      assets for the years ended December 31, 2006 and 2005,
      respectively.  This idled asset depreciation, which was previously
      shown separately, is included in the SG&A expenses.  As a result
      of the Goodyear North American farm tire asset acquisition and the Continental
      OTR asset acquisition, the Company is placing these assets back into service
      primarily at the Des Moines, Iowa, Freeport, Illinois, and Bryan, Ohio
      facilities.  Therefore, in December 2006, the idled assets balance of
      approximately $14 million was reclassified to property, plant and equipment,
      leaving no balance at December 31, 2006.





24





Royalty
      Expense


Royalty
      expense was as follows (amounts
      in thousands):


2006
            
            
            2005
            
            
            %
                IncreaseRoyalty
                expense
            
            $
            5,001
            
            
            $
            0
            
            
            
            n/a





The
      December 2005 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.  Royalty expenses for
      the year ended December 31, 2006, were $5.0 million.  No royalty
      expense was recorded in the year ended December 31, 2005, as this license
      agreement was not yet in place.





Dyneer
      Legal Charge


The
      State
      Court of California in 2005 allowed the disbursement of restricted cash funds
      held in the Vehicular Technologies case.  In 2005, Titan recognized
      the Dyneer legal charge of approximately $15.2 million for the judgment related
      to this case, which is now closed.





Income
      from Operations


Income
      from operations was as follows (amounts in
      thousands):


2006
            
            
            2005
            
            
            %
                IncreaseIncome
                from operations
            
            $
            22,011
            
            
            $
            11,999
            
            
            
            83
            %Percentage
                of net sales
            
            
            3.2
            %
            
            
            2.6
            %





Income
      from operations for the year ended December 31, 2006, was $22.0 million or
      3.2%
      of net sales, compared to $12.0 million or 2.6% in 2005.  Income from
      operations was affected by the items previously discussed in the cost of sales,
      administrative, royalty, and legal charge line items.





Interest
      Expense


Interest
      expense was as follows (amounts
      in thousands):


2006
            
            
            2005
            
            
            %
                IncreaseInterest
                expense
            
            $
            17,001
            
            
            $
            8,617
            
            
            
            97
            %





Net
      interest expense for the year 2006 was $17.0 million compared to $8.6 million
      in
      2005.  The Company’s average debt balances in 2006 were substantially
      higher when compared to 2005.  The average 2006 debt balances were
      higher with the Goodyear farm asset acquisition of approximately $100 million
      and the Continental OTR asset acquisition of approximately $53
      million.  These higher average debt balances in 2006 resulted in an
      increase in interest expense of approximately $5 million when compared to
      2005.  The Company’s average interest rates were 7.7% in 2006,
      compared to 6.2% in 2005, resulting in an increase in interest expense of
      approximately $3 million.





Noncash
      Convertible Debt Conversion Charge


In
      June
      2005, Titan finalized a private transaction in which the Company issued
      3,022,275 shares of common stock in exchange for the cancellation of $33.8
      million principal amount of the Company’s outstanding 5.25% senior convertible
      notes due 2009, as proposed to the Company by certain note
      holders.  The Company recognized a noncash charge of $7.2 million in
      connection with this exchange in accordance with SFAS No. 84, “Induced
      Conversions of Convertible Debt.”





Other
      Income


Other
      income was as follows (amounts in
      thousands):


2006
            
            
            2005
            
            
            %
                IncreaseOther
                income
            
            $
            3,564
            
            
            $
            958
            
            
            
            272
            %





Other
      income of $3.6 million in 2006 included (i) interest income of $1.7 million,
      (ii) dividend income from the Titan Europe Plc investment of $1.3 million,
      (iii)
      currency exchange gain of $1.0 million and (iv) other expense of $0.4
      million.  The $3.6 million of other income in 2006 compares to $1.0
      million in 2005.





25





Income
      Tax Expense


The
      Company recorded an income tax expense of $3.4 million in 2006 as compared
      to an
      income tax benefit of $13.9 million in 2005.   As a result of several years
      of previous losses, the Company recorded a valuation allowance against its
      net
      deferred tax asset, consistent with the Company’s accounting
      policies.  As a result of anticipated utilization of net operating
      loss carryforward in connection with its future Federal income tax filings,
      the
      Company recorded a tax benefit of $13.9 million in 2005 as a result of the
      reversal of the Company’s valuation allowance in accordance with SFAS 109. The
      Company’s net operating loss carryforward of approximately $32 million expires
      in 2023.





Net
      Income


Net
      income was as follows (amounts in
      thousands):


2006
            
            
            2005
            
            
            %
                DecreaseNet
                income
            
            $
            5,144
            
            
            $
            11,042
            
            
            
            (53
            %)





Net
      income for the year ended December 31, 2006, was $5.1 million, compared to
      $11.0
      million in 2005.  Basic earnings per share were $.26 for the year
      ended December 31, 2006, as compared to $.61 in 2005.  Diluted
      earnings per share were $.26 for the year ended December 31, 2006, as compared
      to $.60 in 2005.





Agricultural
      Segment Results


Agricultural
      segment results were as follows (amounts in
      thousands):


2006
            
            
            2005
            
            
            %
                Increase(Decrease)Net
                sales
            
            $
            421,096
            
            
            $
            310,361
            
            
            
            36
            %Income
                from operations
            
            
            27,351
            
            
            
            31,750
            
            
            
            (14
            %)





Net
      sales
      in the agricultural market were $421.1 million for the year ended December
      31,
      2006, as compared to $310.4 million in 2005.  The expanded product
      offering of Goodyear branded farm tires, along with the added manufacturing
      capacity from the Freeport, Illinois, facility accounted for the agricultural
      market higher sales levels.





Income
      from operations in the agricultural market was $27.4 million for the year 2006
      as compared to $31.8 million in 2005.  The decrease in income from
      operations in the agricultural market was attributed to higher sales volumes
      in
      relation to higher fixed overhead costs including fourth quarter of 2006 costs
      normally dedicated to making products were instead used for retooling,
      retraining and movement of equipment.





Earthmoving/Construction
      Segment Results


Earthmoving/construction
      segment results were as follows (amounts in
      thousands):


2006
            
            
            2005
            
            
            %
                IncreaseNet
                sales
            
            $
            183,357
            
            
            $
            131,982
            
            
            
            39
            %Income
                from operations
            
            
            21,837
            
            
            
            17,664
            
            
            
            24
            %





The
      Company’s earthmoving/construction market net sales were $183.4 million for the
      year ended December 31, 2006, as compared to $132.0 million in
      2005.  The expanded product offering of the Continental and General
      brands for OTR tires, along with added manufacturing capacity from the Bryan,
      Ohio, facility accounted for the earthmoving/construction market higher sales
      levels in 2006.  These sales increases were offset by a decrease in
      sales to the United States government, which were approximately $21 million
      lower in 2006 as compared to 2005.  Sales to the United States
      government are dependent on government appropriations and have a tendency for
      significant fluctuations.





The
      Company’s earthmoving/construction market income from operations was $21.8
      million for the year 2006, up from $17.7 million in 2005.  The Bryan,
      Ohio, facility produces tires for earthmoving, construction, and mining
      machinery in sizes larger than the Company was able to produce before this
      facility was acquired on July 31, 2006.  The increase in income from
      operations in the earthmoving/construction segment is the result of margins
      realized on these larger earthmoving, construction and mining
      tires.





26





Consumer
      Segment Results


Consumer
      segment results were as follows (amounts in
      thousands):


2006
            
            
            2005
            
            
            %
                Increase(Decrease)Net
                sales
            
            $
            75,001
            
            
            $
            27,790
            
            
            
            170
            %Income
                from operations
            
            
            1,655
            
            
            
            1,825
            
            
            
            (9
            %)





Consumer
      market net sales were $75.0 million for the year ended December 31, 2006, as
      compared to $27.8 million in 2005.  The Goodyear farm tire acquisition
      included an off-take/mixing agreement for certain product sales to Goodyear,
      the
      majority of which are included in the consumer segment.  Sales to The
      Goodyear Tire and Rubber Company under this agreement of approximately $48
      million in 2006 were the reason for the substantial increase in consumer market
      sales.  Consumer market income from operations remained stable at $1.7
      million for the year 2006 as compared to $1.8 million in 2005.





Corporate
      Expenses


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 $28.8 million for the year ended
      December 31, 2006, as compared to $39.2 million in 2005.  Included in
      the December 31, 2005, corporate expenses of $39.2 million was $15.2 million
      for
      the Dyneer legal charge as previously discussed.  The December 31,
      2005, corporate expenses without the Dyneer legal charge would have been $24.0
      million.  The increase in corporate expenses without the Dyneer legal
      charge related primarily to higher sales and marketing expenses related to
      the
      acquisition of Freeport and Bryan of approximately $3 million for 2006 as
      compared to 2005.








27





LIQUIDITY
      AND CAPITAL RESOURCES





Cash
      Flows


As
      of
      December 31, 2007, the Company had $58.3 million of cash balances within various
      bank accounts.  This cash balance increased by $24.9 million from
      December 31, 2006, due to the following cash flow discussion items.





Operating
      Cash Flows


For
      the
      year ended December 31, 2007, operating activities provided cash of $76.0
      million.  This cash was primarily provided by a decrease in
      inventories of $26.6 million and increases of $18.1 million in accounts payable
      and $16.7 million in other current liabilities.  Positive cash flows
      were offset by net loss of $(7.2) million and an increase in accounts receivable
      of $24.5 million.  Included as a reduction to net income were noncash
      charges of $28.6 million for depreciation and amortization and $13.4 million
      for
      a debt conversion charge.





In
      comparison, 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
      decreasing its finished goods inventory at its 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.





For
      the
      year ended December 31, 2005, positive cash flows from operating activities
      of
      $23.2 million resulted primarily from income of $11.0 million and a decrease
      in
      accounts receivable of $5.7 million.  Included as a reduction to net
      income were noncash charges of $20.7 million for depreciation and amortization
      and $7.2 million for a convertible debt conversion charge.  Included
      as an addition to net income was a noncash benefit of $14.5 million for deferred
      income tax.





Operating
      cash flows decreased $28.5 million from the year ended December 31, 2005, to
      December 31, 2006.  This decrease was largely the result of cash flows
      from accounts receivable decreasing $32.4 million and cash flows from
      inventories decreasing $21.7 million.  These decreased cash flows
      resulted from large increases in accounts receivable and inventory as the result
      of higher sales levels.  These decreases were offset by an increase in
      noncash deferred income tax charges of $17.1 million.





Investing
      Cash Flows


Net
      cash
      used for investing activities was $46.4 million in 2007, as compared to $52.7
      million in 2006 and $76.7 million in 2005.  Titan invested $44.6
      million for the Continental OTR tire acquisition in 2006, while the Company
      invested $100.0 million for the Goodyear North American farm tire acquisition
      in
      2005.





The
      Company invested a total of $38.0 million in capital expenditures in 2007,
      compared to $8.3 million in 2006 and $6.8 million in 2005.  Of the
      $38.0 million of capital expenditures in 2007, approximately $22 million relates
      to the Company’s giant OTR mining tire project.  The remaining
      expenditures represent various equipment purchases and improvements to enhance
      production capabilities.  The Company estimates that current
      commitments related to the OTR Project at this time are approximately $59
      million, including the 2007 disbursement of approximately $22
      million.  In addition to the OTR Project, the Company estimates that
      its capital expenditures for other projects for 2008 could be approximately
      $18
      million.





Investing
      cash flows decreased $24.0 million from the year ended December 31, 2005, to
      December 31, 2006.  This decrease was primarily the result of less
      cash used for the Continental off-the-road (OTR) asset acquisition in 2006
      as
      compared to the cash used for the Goodyear North American farm tire acquisition
      in 2005.





28





Financing
      Cash Flows


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.  In 2005, cash of
      $53.0 million was provided by financing activities, the result of net debt
      proceeds of $53.4 million.





Financing
      cash flows decreased $95.5 million from the year ended December 31, 2006, to
      the
      year ended December 31, 2007.  Also, financing cash flows increased
      $37.8 million from the year ended December 31, 2005, to December 31,
      2006.  The large changes from year to year are primarily the result of
      changes in total debt borrowings.  The net debt amounts changed
      primarily as the result of cash used for acquisitions.





Debt
      Covenants


The
        Company’s revolving credit facility contains various covenants and
        restrictions.  The financial covenants in this agreement require
        that:
  ·
              Collateral
                  coverage be equal to or greater than 1.20 times the outstanding
                  revolver
                  balance.
  ·
              If
                  the 30-day average of the outstanding revolver balance exceeds
                  $225
                  million, the fixed charge coverage ratio be equal to or greater
                  than a 1.0
                  to 1.0 ratio.
  Restrictions
      include:




·
            Limits
                on payments of dividends and repurchases of the Company’s
                stock.




·
            Restrictions
                on the ability of the Company to make additional borrowings, or to
                consolidate, merge or otherwise fundamentally change the ownership
                of the
                Company.




·
            Limitations
                on investments, dispositions of assets and guarantees of
                indebtedness.




·
            Other
                customary affirmative and negative
                covenants.




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, 2007.  The collateral coverage was calculated to be 66.8 times the
      outstanding revolver balance at December 31, 2007.





The
      fixed
      charge coverage ratio did not apply for the quarter ended December 31,
      2007.  The credit facility usage was $6.1 million at December 31,
      2007, consisting exclusively of letters of credit of $6.1 million with no cash
      borrowings.





Other
      Items


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.





The
      Company’s Board of Directors authorized Titan to repurchase up to 10.0 million
      shares of its common stock.  No Titan stock was repurchased in 2007 or
      2006.  The Company repurchased 7.5 million shares in prior years
      leaving Titan with authorization to repurchase an additional 2.5 million common
      shares subject to debt agreement covenants.  The Company has no plans
      to repurchase any Titan common stock at this time.





29





LIQUIDITY
      OUTLOOK


At
      December 31, 2007, the Company had unrestricted cash and cash equivalents of
      $58.3 million and $243.9 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 $6.1 million for
      outstanding letters of credit.  The Company expects to contribute
      approximately $1 million to its frozen defined benefit pension plans during
      2008.  The Company has a net operating loss carryforward of
      approximately $13 million, expiring primarily in 2023, which is expected to
      reduce the Company’s income tax payments in the future.





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 “OTR Project”).  The Company estimates that current
      commitments related to the OTR Project at this time are approximately $59
      million, of which approximately $22 million was disbursed in
      2007.  Additional capital expenditure commitments will be incurred
      through 2008 as the 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 OTR Project.  In addition to
      the OTR Project, the Company estimates that its capital expenditures for other
      projects for 2008 could be approximately $18 million.





Cash
      on
      hand and anticipated internal cash flows from operations are expected to provide
      sufficient liquidity for working capital needs and capital expenditures
      including the OTR Project.  The Company has a $250 million credit
      facility and currently there are no cash borrowings on the
      facility.  If the Company were to exhaust the availability on this
      facility or were not to meet the financial covenants and conditions of its
      loan
      agreements, the Company’s ability to secure additional funding may be
      limited.





INFLATION


The
      Company is subject to the effect of price fluctuations.  During 2007,
      2006 and 2005, 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.





30





CONTRACTUAL
      OBLIGATIONS


The
      Company’s contractual obligations at December 31, 2007, consisted of the
      following (in
      thousands):


Payments
                due by periodContractual
                Obligations
            
            Total
            
            
            Less
                than 1 year
            
            
            1-3 years
            
            
            3-5 years
            
            
            More
                than 5 yearsLong-term
                debt
            
            $
            200,000
            
            
            $
            0
            
            
            $
            0
            
            
            $
            200,000
            
            
            $
            0Interest
                expense (a)
            
            
            64,667
            
            
            
            16,000
            
            
            
            32,000
            
            
            
            16,667
            
            
            
            0Operating
                leases
            
            
            4,713
            
            
            
            1,915
            
            
            
            2,207
            
            
            
            591
            
            
            
            0Purchase
                obligations
            
            
            6,262
            
            
            
            2,373
            
            
            
            3,889
            
            
            
            0
            
            
            
            0Other
                long-term liabilities (b)
            
            
            900
            
            
            
            900
            
            
            
            0
            
            
            
            0
            
            
            
            0Royalty
                payment (c)
            
            
            30,000
            
            
            
            6,000
            
            
            
            12,000
            
            
            
            12,000
            
            
            
            0Total
            
            $
            306,542
            
            
            $
            27,188
            
            
            $
            50,096
            
            
            $
            229,258
            
            
            $
            0





(a)
            Interest
                expense is estimated based on the Company’s year-end 2007 debt balances
                and maturities.  The estimates assume no revolver
                borrowings.  The Company’s actual debt balances and interest
                rates may fluctuate in the future.  Therefore, actual interest
                payments may vary from those payments detailed in the above
                table.





(b)
            Other
                long-term liabilities represent the Company’s estimated funding
                requirements for the frozen defined benefit pension plans. The Company’s
                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 with the
                assistance of outside actuaries.  Assumptions are based on past
                experience and anticipated future trends and are subject to a number
                of
                risks and uncertainties and may lead to significantly different pension
                liability funding requirements.





(c)
            The
                Company pays a royalty relating to a license agreement with The Goodyear
                Tire & Rubber Company to manufacture and sell certain off-highway
                tires in North America.  Under this agreement, royalty trademark
                payments would cease immediately if Titan discontinued using the
                Goodyear
                trademark.  Titan currently plans to continue using the Goodyear
                trademark until circumstances require a change.  Titan’s royalty
                payment to Goodyear for the next five years, the current term of
                the
                agreement, using the annual 2007 royalty payment of approximately
                $6
                million as an estimate would total approximately $30
                million.  The actual royalty amount paid to Goodyear in the
                future will vary based on the sales of certain off-highway tires
                in North
                America and the continuation of the license
                agreement.




OFF-BALANCE
      SHEET ARRANGEMENTS


The
      Company has no material off-balance sheet arrangements.




31




MARKET
      RISK SENSITIVE INSTRUMENTS


Exchange
      Rate Sensitivity


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 $34.5 million at December 31, 2007,
      and $65.9 million at December 31, 2006.  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, 2007,
      would amount to approximately $3.5 million.





Commodity
      Price Sensitivity


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.





Interest
      Rate Sensitivity


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, 2007, the
      Company had no cash borrowings on the credit facility.





At
      December 31, 2007, the fair value of the senior unsecured notes, based on market
      prices obtained through independent pricing sources, was approximately $193
      million, compared to a carrying value of $200 million.





MARKET
      CONDITIONS AND OUTLOOK


In
      2007,
      Titan experienced strong demand for the Company’s agricultural and
      earthmoving/construction products.  This strong demand is expected to
      continue into 2008.  The strength in the agricultural market is the
      result of high commodity prices which have resulted from the continuing increase
      in the use of biofuels.  High prices for metals, oil and gas have
      created a large demand for the Company’s earthmoving and mining
      products.





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.  This funding should allow Titan to produce up to an
      estimated 6,000 giant radial tires a year.  Titan estimates this may
      increase sales as much as $240 million on an annual basis.  The
      Company currently plans to be in start-up production of these giant mining
      tires
      by the end of the second quarter of 2008.





Higher
      energy, raw material and petroleum-based product costs may continue to
      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 OUTLOOK


Agricultural
      market sales are forecasted to remain strong for 2008.  The farm
      economy is being helped by strong commodity prices.  However, the farm
      economy is also affected by high input costs for fuel and
      fertilizer.  The increasing demand for grain-based ethanol and
      soybean-based biodiesel fuel has increased commodity prices and should support
      farm income levels in the long-term.  Ethanol production is projected
      to continue to expand sharply through 2009/2010.  The increasing
      demand for biofuels has supported all agricultural commodity prices as acreage
      has been shifted from other crops to those used in biofuels.  Many
      variables, including weather, grain prices, export markets and future government
      policies and payments can greatly influence the overall health of the
      agricultural economy.




32





EARTHMOVING/CONSTRUCTION
      MARKET OUTLOOK


Sales
      for
      the earthmoving/construction market are expected to remain strong in
      2008.  Metals, oil and gas prices have remained high and at levels
      that are attractive for continued investment, which will maintain support for
      earthmoving and mining sales.  However, the decline in the United
      States housing market has caused a decline in equipment used for housing
      construction.  The Company’s OTR production realignment is allowing
      Titan to expand production in earthmoving/construction tire sizes that are
      in
      short supply.  The OTR Project should begin to add significant
      capacity for giant mining tires in the second half of 2008.  The
      earthmoving/construction segment is affected by many variables, including
      commodity prices, road construction, infrastructure, government appropriations
      and housing starts.





CONSUMER
      MARKET OUTLOOK


The
      current overall uncertainty in consumer spending resulting from the housing
      market decline makes consumer market projections especially
      difficult.  Titan’s sales in the consumer market include sales to
      Goodyear, which fluctuate significantly based upon their future product
      requirements, including 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 may fluctuate
      significantly related to sales volumes under the off-take/mixing agreement
      with
      Goodyear.  The Company expects the remaining consumer market sales to
      be about even in 2008.  Many factors affect the consumer market
      including weather, competitive pricing, energy prices and consumer
      attitude.





PENSIONS


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 20 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 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, 2007, the
      Company contributed cash funds of approximately $1 million to the frozen defined
      benefit pension plans.  In addition, the Company contributed 0.2
      million shares of Titan common stock with an approximate value of $5 million
      to
      the frozen pension plans in 2007.  Titan expects to contribute
      approximately $1 million to these frozen defined benefit pension plans during
      2008.





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, 2007, was $95.4 million as compared
      to $68.8 million at December 31, 2006.  The Company’s defined benefit
      pension plans were underfunded by $0.9 million at December 31,
      2007.  During 2007, the Company recorded net periodic pension cost of
      $0.2 million.  Accumulated other comprehensive loss recorded for
      defined benefit pension plans, net of tax, was $15.6 million and $16.4 million
      at December 31, 2007 and 2006, 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.




33





RECENTLY
      ISSUED ACCOUNTING STANDARDS


Statement
      of Financial Accounting Standards Number 157


In
      September 2006, Statement of Financial Accounting Standards (SFAS) No. 157,
      “Fair Value Measurements,” was issued.  This statement defines fair
      value, establishes a framework for measuring fair value in generally accepted
      accounting principles and expands disclosures about fair value
      measurements.  This statement applies under other accounting
      pronouncements that require or permit fair value measurements.  This
      statement is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those fiscal
      years.  The Company is evaluating the effect the adoption of this
      standard will have on its consolidated financial position, results of operations
      and cash flows.





Statement
      of Financial Accounting Standards Number 159


In
      February 2007, SFAS No. 159, “The Fair Value Option for Financial Assets and
      Financial Liabilities,” was issued.  This statement permits entities
      to choose to measure many financial instruments and certain other items at
      fair
      value.  This statement is effective for fiscal years beginning after
      November 15, 2007.  The Company is evaluating the effect the adoption
      of this standard will have on its consolidated financial position, results
      of
      operations and cash flows.





Statement
      of Financial Accounting Standards Number 141 (revised 2007)


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 is evaluating the effect the
      adoption of this standard will have on its consolidated financial position,
      results of operations and cash flows.





Statement
      of Financial Accounting Standards Number 160


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 is evaluating the effect the adoption of this
      standard will have on its consolidated financial position, results of operations
      and cash flows.





34





ITEM
      7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





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








ITEM
      8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





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








ITEM
                9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                FINANCIAL DISCLOSURE





None.








ITEM
                9A – CONTROLS AND PROCEDURES





Evaluation
      of Disclosure Controls and Procedures


The
      Company’s principal executive officer and principal financial officer believe
      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.





Changes
      in Internal Controls


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.








ITEM
                9B – OTHER INFORMATION





None.





35





PART
      III





ITEM
      10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





Directors


The
      information required by this item regarding the Company’s directors is
      incorporated by reference to the Company’s 2008 Proxy Statement under the
      captions “Election of Mr. Cashin, Mr. Febbo and Mr. Quain as Directors,”
“Directors Continuing in Office,” “Committees and Meetings of the Board of
      Directors” and “Corporate Governance.”





Executive
      Officers


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., 63, 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.





Ernest
      J.
      Rodia, 64, joined the Company in 2005 as Executive Vice President and Chief
      Operating Officer.  Prior to Titan, Mr. Rodia was employed for over 35
      years by Goodyear Tire and Rubber Company, holding various engineering and
      manufacturing positions.





Kent
      W.
      Hackamack, 49, 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, 60, joined the Company in 1994 as General Counsel and
      Secretary.  Ms. Holley was appointed Vice President in
      1996.





Section
      16(a) beneficial ownership reporting compliance


The
      information required by this item regarding beneficial ownership reporting
      compliance is incorporated by reference to the Company’s 2008 Proxy Statement
      under the caption “Section 16(a) Beneficial Ownership Reporting
      Compliance.”





Business
      conduct policy


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:  Secretary of Titan International, Inc., 2701 Spruce Street,
      Quincy, IL 62301.








ITEM
      11 – EXECUTIVE COMPENSATION





The
      information required by this item is incorporated by reference to the Company’s
      2008 Proxy Statement under the caption “Compensation of Executive
      Officers.”





36





ITEM
                12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
                RELATED STOCKHOLDER MATTERS





Except
      for the information concerning equity compensation plans, the information
      required by this item is incorporated by reference to the Company’s 2008 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,
      2007:


Plan
                Category
            
            (i)
              Number
                of securities to
              be
                issued upon exercise
              of
                outstanding options,
              warrants
                and rights
            
            
            (ii)
              Weighted-average
              exercise
                price of outstanding options, warrants and
                rights
            
            
            (iii)
              Number
                of securities
              remaining
                available for
              future
                issuance under equity compensation plans (excluding securities reflected in column (i))Equity
                compensation plansapproved
                by security holders
            
            
            699,200
            (a)
            
            
            12.26
            
            
            
            1,217,720Equity
                compensation plans not approved by security holders
            
            
            0
            
            
            
            n/a
            
            
            
            0Total
            
            
            699,200
            
            
            
            12.26
            
            
            
            1,217,720





(a)
            Amount
                includes outstanding stock options under the Company’s 1993 Stock
                Incentive Plan, 1994 Non-Employee Director Stock Option Plan and
                2005
                Equity Incentive Plan.




For
      additional information regarding the Company’s stock option plans, please see
      Note 21 of the Company’s Notes to Consolidated Financial
      Statements.








ITEM
                13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE





The
      information required by this item is incorporated by reference to the Company’s
      2008 Proxy Statement under the caption “Related Party Transactions” and
“Corporate Governance” and also appears in Note 25 of the Company’s Notes to
      Consolidated Financial Statements.








ITEM
      14 – PRINCIPAL ACCOUNTING FEES AND SERVICES





The
      information required by this item is incorporated by reference to the Company’s
      2008 Proxy Statement under the caption “Audit and Other Fees.”





37





PART
      IV







ITEM
              15 –EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a) 1.
            Financial
                StatementsManagement’s
                Responsibility for Financial Statements and Report on Internal Control
                Over Financial Reporting
            F-1Report
                of Independent Registered Public Accounting Firm
            F-2Consolidated
                Statements of Operations for the years ended December 31, 2007, 2006
                and
                2005
            F-3Consolidated
                Balance Sheets at December 31, 2007 and 2006
            F-4Consolidated
                Statements of Changes in Stockholders’ Equity for the years ended December
                31, 2005, 2006 and 2007
            F-5Consolidated
                Statements of Cash Flows for the years ended December 31, 2007, 2006
                and
                2005
            F-6Notes
                to Consolidated Financial Statements
            F-7
                through F-342.
            Financial
                Statement ScheduleSchedule
                II – Valuation Reserves
            S-13.
            ExhibitsThe
                accompanying Exhibit Index is incorporated herein by
                reference.





38








SIGNATURES





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.





TITAN
                INTERNATIONAL, INC.(Registrant)








Date:
            February
                27, 2008
            By:
            /s/  MAURICE
                M. TAYLOR JR.Maurice
                M. Taylor Jr.Chairman
                and Chief Executive Officer





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 27, 2008.





Signatures
            Capacity/s/  MAURICE
                M. TAYLOR
                JR.
            Chairman
                and Chief Executive OfficerMaurice M. Taylor Jr.
            (Principal
                Executive Officer)/s/  KENT
                W.
                HACKAMACK
            Vice
                President of Finance and TreasurerKent W. Hackamack
            (Principal
                Financial Officer andPrincipal
                Accounting Officer)/s/  J.
                MICHAEL A.
                AKERS
            DirectorJ. Michael A. Akers/s/  ERWIN
                H.
                BILLIG
            DirectorErwin H. Billig/s/  EDWARD
                J.
                CAMPBELL
            DirectorEdward
                J.
                Campbell/s/  RICHARD
                M. CASHIN
                JR.
            DirectorRichard
                M. Cashin
                Jr./s/  ALBERT J.
                FEBBO
            DirectorAlbert
                J. Febbo/s/  MITCHELL
                I.
                QUAIN
            DirectorMitchell
                I. Quain/s/  ANTHONY
                L.
                SOAVE
            DirectorAnthony
                L. Soave





39








TITAN
      INTERNATIONAL, INC.





Exhibit
      Index


Annual
      Report on Form 10-K





ExhibitNo.
            DESCRIPTION3.1
                (a)
            Amended
                Restated Articles of Incorporation of the Company3.2
                (b)
            Bylaws
                of the Company4.1
                (c)
            Indenture
                between the Company and U.S. Bank National Association dated December
                28,
                200610.1
                (d)
            1994
                Non-Employee Director Stock Option Plan10.2
                (d)
            1993
                Stock Incentive Plan10.3
                (e)
            Credit
                Agreement dated July 23, 2004, among the Company and LaSalle Bank
                National
                Association and General Electric Capital Corporation10.4
                (f)
            First
                Amendment to Credit Agreement among the Company and LaSalle Bank
                National
                Association
                and General Electric Capital Corporation dated February 16,
                200510.5
                (g)
            2005
                Equity Incentive Plan10.6
                (h)
            Second
                Amendment to Credit Agreement among the Company and LaSalle Bank
                National
                Association dated October 21, 200510.7
                (i)
            Third
                Amendment to Credit Agreement among the Company and LaSalle Bank
                National
                Association dated June 28, 200610.8
                (j)
            Fourth
                Amendment to Credit Agreement among the Company and LaSalle Bank
                National
                Association dated February 8, 200710.9
                (k)
            Fifth
                Amendment to Credit Agreement among the Company and LaSalle Bank
                National
                Association dated December 12, 200721*
            Subsidiaries
                of the Registrant23*
            Consent
                of Independent Registered Public Accounting Firm31.1*
            Certification
                of the Principal Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2*
            Certification
                of the Principal Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200232*
            Certification
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002




*Filed
      herewith





(a)
            Incorporated
                by reference to the same numbered exhibit contained in the Company’s Form
                10-Q for the quarterly period ended September 30, 1998 (No.
                001-12936).


(b)
            Incorporated
                by reference to the same numbered exhibit contained in the Company’s
                Registration Statement on Form S-4 (No.
                33-69228).


(c)
            Incorporated
                by reference to the same numbered exhibit contained in the Company’s Form
                S-4 (No. 333-141865).


(d)
            Incorporated
                by reference to the Company’s Registration Statement on Form S-3 (No.
                333-61743).


(e)
            Incorporated
                by reference to the same numbered exhibit contained in the Company’s Form
                10-Q for the quarterly period ended June 30, 2004 (No.
                001-12936).


(f)
            Incorporated
                by reference to the same numbered exhibit contained in the Company’s
                Annual Report on Form 10-K for the year ended December 31, 2005 (No.
                001-12936).


(g)
            Incorporated
                by reference to Appendix A of the Company’s Definitive Proxy Statement
                filed on March 30, 2005.


(h)
            Incorporated
                by reference to the same numbered exhibit contained in the Company’s
                Current Report on Form 8-K filed on October 24,
                2005.


(i)
            Incorporated
                by reference to the same numbered exhibit contained in the Company’s
                Current Report on Form 8-K filed on June 29,
                2006.


(j)
            Incorporated
                by reference to the same numbered exhibit contained in the Company’s
                Current Report on Form 8-K filed on February 8,
                2007.


(k)
            Incorporated
                by reference to the same numbered exhibit contained in the Company’s
                Current Report on Form 8-K filed on December 13,
                2007.








40





Management’s
      Responsibility for Financial Statements





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, 2007, have been audited by
      PricewaterhouseCoopers LLP, an independent registered public accounting firm,
      as
      stated in their report, which is included herein.








Management’s
      Report on Internal Control Over Financial Reporting





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, 2007, 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, 2007.





The
      effectiveness of the Company’s internal control over financial reporting as of
      December 31, 2007, 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.





F-1





Report
      of Independent Registered Public Accounting Firm





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, 2007
      and 2006, and the results of their operations and their cash flows for each
      of
      the three years in the period ended December 31, 2007 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, 2007 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
      27, 2008





F-2





TITAN
      INTERNATIONAL, INC.


CONSOLIDATED
      STATEMENTS OF OPERATIONS


(All
      amounts in thousands, except per share data)




Year
                ended December 31,2007
            
            
            2006
            
            
            2005Net
                sales
            
            $
            837,021
            
            
            $
            679,454
            
            
            $
            470,133Cost
                of sales
            
            
            752,890
            
            
            
            606,676
            
            
            
            405,923Gross
                profit
            
            
            84,131
            
            
            
            72,778
            
            
            
            64,210Selling,
                general and administrative expenses
            
            
            53,138
            
            
            
            45,766
            
            
            
            37,006Royalty
                expense
            
            
            6,155
            
            
            
            5,001
            
            
            
            0Dyneer
                legal charge
            
            
            0
            
            
            
            0
            
            
            
            15,205Income
                from operations
            
            
            24,838
            
            
            
            22,011
            
            
            
            11,999Interest
                expense
            
            
            (18,710
            )
            
            
            (17,001
            )
            
            
            (8,617
            )Noncash
                convertible debt conversion charge
            
            
            (13,376
            )
            
            
            0
            
            
            
            (7,225
            )Other
                income, net
            
            
            3,364
            
            
            
            3,564
            
            
            
            958(Loss)
                income before income taxes
            
            
            (3,884
            )
            
            
            8,574
            
            
            
            (2,885
            )Provision
                (benefit) for income taxes
            
            
            3,363
            
            
            
            3,430
            
            
            
            (13,927
            )Net
                (loss) income
            
            $
            (7,247
            )
            
            $
            5,144
            
            
            $
            11,042(Loss)
                earnings per common share:Basic
            
            $
            (.28
            )
            
            $
            .26
            
            
            $
            .61Diluted
            
            
            (.28
            )
            
            
            .26
            
            
            
            .60Average
                common shares and equivalents outstanding:Basic
            
            
            25,665
            
            
            
            19,702
            
            
            
            18,053Diluted
            
            
            25,665
            
            
            
            20,044
            
            
            
            18,284






See
      accompanying Notes to Consolidated Financial Statements.





F-3





TITAN
      INTERNATIONAL, INC.


CONSOLIDATED
      BALANCE SHEETS


(All
      amounts in thousands, except share data)




December
                31,Assets
            
            2007
            
            
            2006Current
                assetsCash
                and cash equivalents
            
            $
            58,325
            
            
            $
            33,412Accounts
                receivable (net of
                allowance of $5,258 and $4,818, respectively)
            
            
            98,394
            
            
            
            73,882Inventories
            
            
            128,048
            
            
            
            154,604Deferred
                income taxes
            
            
            25,159
            
            
            
            29,234Prepaid
                and other current assets
            
            
            17,839
            
            
            
            18,801Total
                current assets
            
            
            327,765
            
            
            
            309,933Property,
                plant and equipment, net
            
            
            196,078
            
            
            
            184,616Investment
                in Titan Europe Plc
            
            
            34,535
            
            
            
            65,881Goodwill
            
            
            11,702
            
            
            
            11,702Other
                assets
            
            
            20,415
            
            
            
            12,994Total
                assets
            
            $
            590,495
            
            
            $
            585,126Liabilities
                and Stockholders’ EquityCurrent
                liabilitiesShort-term
                debt
            
            $
            0
            
            
            $
            98Accounts
                payable
            
            
            43,992
            
            
            
            25,884Other
                current liabilities
            
            
            43,788
            
            
            
            36,942Total
                current liabilities
            
            
            87,780
            
            
            
            62,924Long-term
                debt
            
            
            200,000
            
            
            
            291,266Deferred
                income taxes
            
            
            14,044
            
            
            
            27,924Other
                long-term liabilities
            
            
            16,149
            
            
            
            15,835Total
                liabilities
            
            
            317,973
            
            
            
            397,949Commitments
                and contingencies: Notes
                13, 22 and 23Stockholders’
                equityCommon
                stock(no par, 60,000,000
                shares authorized, 30,577,356 issued)
            
            
            30
            
            
            
            30Additional
                paid-in capital
            
            
            303,908
            
            
            
            258,071Retained
                earnings
            
            
            29,012
            
            
            
            36,802Treasury
                stock (at cost, 3,229,055
                and 10,678,454 shares, respectively)
            
            
            (29,384
            )
            
            
            (96,264
            )Accumulated
                other comprehensive loss
            
            
            (31,044
            )
            
            
            (11,462
            )Total
                stockholders’ equity
            
            
            272,522
            
            
            
            187,177Total
                liabilities and stockholders’ equity
            
            $
            590,495
            
            
            $
            585,126







See
      accompanying Notes to Consolidated Financial Statements.





F-4





TITAN
      INTERNATIONAL, INC.


CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


(All
      amounts in thousands, except share data)




Number
                of common shares
            
            
            Common
                Stock
            
            
            Additional
              paid-in
              capital
            
            
            Retained
                earnings
            
            
            Treasury
              stock
            
            
            Accumulated
                other comprehensive income (loss)
            
            
            TotalBalance
                January 1, 2005
            
            
            #16,326,426
            
            
            $
            27
            
            
            $
            203,239
            
            
            $
            21,385
            
            
            $
            (101,204
            )
            
            $
            (16,566
            )
            
            $
            106,881Comprehensive
                income (loss):Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            11,042
            
            
            
            
            
            
            
            
            
            
            
            11,042Currency
                translation adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3,168
            )
            
            
            (3,168
            )Minimum
                pension liability, net of tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (18
            )
            
            
            (18
            )Comprehensive
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            11,042
            
            
            
            
            
            
            
            (3,186
            )
            
            
            7,856Dividends
                paid on common stock
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (374
            )
            
            
            
            
            
            
            
            
            
            
            (374
            )Gain
                on investee transaction, net of tax
            
            
            
            
            
            
            
            
            
            
            10,471
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            10,471Note
                conversion
            
            
            3,022,275
            
            
            
            3
            
            
            
            40,928
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            40,931Exercise
                of stock options
            
            
            135,860
            
            
            
            
            
            
            
            568
            
            
            
            
            
            
            
            1,220
            
            
            
            
            
            
            
            1,788Issuance
                of treasury stock under 401(k) plan
            
            
            18,645
            
            
            
            
            
            
            
            93
            
            
            
            
            
            
            
            167
            
            
            
            
            
            
            
            260Balance
                December 31, 2005
            
            
            19,503,206
            
            
            
            30
            
            
            
            255,299
            
            
            
            32,053
            
            
            
            (99,817
            )
            
            
            (19,752
            )
            
            
            167,813Comprehensive
                income (loss):Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,144
            
            
            
            
            
            
            
            
            
            
            
            5,144Unrealized
                gain on investment, net of tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            6,126
            
            
            
            6,126Minimum
                pension liability, net of tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3,225
            
            
            
            3,225Comprehensive
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,144
            
            
            
            
            
            
            
            9,351
            
            
            
            14,495Adjustment
                to initially apply SFAS No. 158, net of tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,061
            )
            
            
            (1,061
            )Dividends
                paid on common stock
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (395
            )
            
            
            
            
            
            
            
            
            
            
            (395
            )Exercise
                of stock options
            
            
            382,190
            
            
            
            
            
            
            
            2,647
            
            
            
            
            
            
            
            3,432
            
            
            
            
            
            
            
            6,079Issuance
                of treasury stock under 401(k) plan
            
            
            13,506
            
            
            
            
            
            
            
            125
            
            
            
            
            
            
            
            121
            
            
            
            
            
            
            
            246Balance
                December 31, 2006
            
            
            19,898,902
            
            
            
            30
            
            
            
            258,071
            
            
            
            36,802
            
            
            
            (96,264
            )
            
            
            (11,462
            )
            
            
            187,177Comprehensive
                (loss) income:Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (7,247
            )
            
            
            
            
            
            
            
            
            
            
            (7,247
            )Unrealized
                loss on investment, net of tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (20,375
            )
            
            
            (20,375
            )Defined
                benefit pension plan entries, net of tax
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            793
            
            
            
            793Comprehensive
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (7,247
            )
            
            
            
            
            
            
            (19,582
            )
            
            
            (26,829
            )Dividends
                paid on common stock
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (543
            )
            
            
            
            
            
            
            
            
            
            
            (543
            )Note
                conversion
            
            
            6,577,200
            
            
            
            
            
            
            
            35,240
            
            
            
            
            
            
            
            59,049
            
            
            
            
            
            
            
            94,289Exercise
                of stock options
            
            
            444,530
            
            
            
            
            
            
            
            2,640
            
            
            
            
            
            
            
            3,991
            
            
            
            
            
            
            
            6,631Issuance
                of treasury stock for funding contractual obligations on employee
                contracts
            
            
            214,000
            
            
            
            
            
            
            
            4,184
            
            
            
            
            
            
            
            1,921
            
            
            
            
            
            
            
            6,105Issuance
                of treasury stock for pension plans
            
            
            200,000
            
            
            
            
            
            
            
            3,536
            
            
            
            
            
            
            
            1,796
            
            
            
            
            
            
            
            5,332Issuance
                of treasury stock under 401(k) plan
            
            
            13,669
            
            
            
            
            
            
            
            237
            
            
            
            
            
            
            
            123
            
            
            
            
            
            
            
            360Balance
                December 31, 2007
            
            
            #27,348,301
            
            
            $
            30
            
            
            $
            303,908
            
            
            $
            29,012
            
            
            $
            (29,384
            )
            
            $
            (31,044
            )
            
            $
            272,522





See
      accompanying Notes to Consolidated Financial Statements.





F-5





TITAN
      INTERNATIONAL, INC.


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


(All
      amounts in thousands)


Year
                  ended December 31,Cash
                  flows from operating activities:
              
              2007
              
              
              2006
              
              
              2005Net
                  (loss) income
              
              $
              (7,247
              )
              
              $
              5,144
              
              
              $
              11,042Adjustments
                  to reconcile net income to net cash provided
                  by operating activities:Depreciation
                  and amortization
              
              
              28,620
              
              
              
              26,850
              
              
              
              20,746Deferred
                  income tax provision (benefit)
              
              
              1,995
              
              
              
              2,597
              
              
              
              (14,476
              )Noncash
                  convertible debt conversion charge
              
              
              13,376
              
              
              
              0
              
              
              
              7,225Undistributed
                  earnings of unconsolidated affiliate
              
              
              0
              
              
              
              0
              
              
              
              (2,024
              )Excess
                  tax benefit from stock options exercised
              
              
              0
              
              
              
              (646
              )
              
              
              0Issuance
                  of treasury stock under 401(k) plan
              
              
              360
              
              
              
              246
              
              
              
              260(Increase)
                  decrease in assets:Accounts
                  receivable
              
              
              (24,512
              )
              
              
              (26,770
              )
              
              
              5,669Inventories
              
              
              26,556
              
              
              
              (19,509
              )
              
              
              2,212Prepaid
                  and other current assets
              
              
              (1,738
              )
              
              
              (3,675
              )
              
              
              1,938Other
                  assets
              
              
              (1,566
              )
              
              
              (3,525
              )
              
              
              852Increase
                  (decrease) in liabilities:Accounts
                  payable
              
              
              18,108
              
              
              
              1,449
              
              
              
              (2,298
              )Other
                  current liabilities
              
              
              16,668
              
              
              
              13,443
              
              
              
              (260
              )Other
                  liabilities
              
              
              5,373
              
              
              
              (898
              )
              
              
              (7,727
              )Net
                  cash provided by (used for) operating activities
              
              
              75,993
              
              
              
              (5,294
              )
              
              
              23,159Cash
                  flows from investing activities:Acquisition
                  of off-the-road (OTR) assets
              
              
              (8,900
              )
              
              
              (44,642
              )
              
              
              0Goodyear
                  North American farm tire acquisition
              
              
              0
              
              
              
              0
              
              
              
              (100,000
              )Capital
                  expenditures
              
              
              (38,048
              )
              
              
              (8,282
              )
              
              
              (6,752
              )Decrease
                  in restricted cash deposits
              
              
              0
              
              
              
              0
              
              
              
              24,500Asset
                  disposals
              
              
              532
              
              
              
              198
              
              
              
              5,509Net
                  cash used for investing activities
              
              
              (46,416
              )
              
              
              (52,726
              )
              
              
              (76,743
              )Cash
                  flows from financing activities:Proceeds
                  from borrowings
              
              
              0
              
              
              
              200,000
              
              
              
              0Payment
                  on debt
              
              
              (10,164
              )
              
              
              (11,995
              )
              
              
              (1,296
              )(Payment)
                  proceeds on revolving credit facility, net
              
              
              0
              
              
              
              (99,100
              )
              
              
              54,700Proceeds
                  from exercise of stock options
              
              
              6,631
              
              
              
              5,407
              
              
              
              1,500Excess
                  tax benefit from stock options exercised
              
              
              0
              
              
              
              646
              
              
              
              0Payment
                  of financing fees
              
              
              (625
              )
              
              
              (3,725
              )
              
              
              (1,500
              )Dividends
                  paid
              
              
              (506
              )
              
              
              (393
              )
              
              
              (358
              )Net
                  cash (used for) provided by financing activities
              
              
              (4,664
              )
              
              
              90,840
              
              
              
              53,046Net
                  increase (decrease) in cash and cash equivalents
              
              
              24,913
              
              
              
              32,820
              
              
              
              (538
              )Cash
                  and cash equivalents, beginning of year
              
              
              33,412
              
              
              
              592
              
              
              
              1,130Cash
                  and cash equivalents, end of year
              
              $
              58,325
              
              
              $
              33,412
              
              
              $
              592


See
      accompanying Notes to Consolidated Financial Statements.





F-6
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





1.
            DESCRIPTION
                OF BUSINESS AND SIGNIFICANT ACCOUNTING
                POLICIES





Business


Titan
      International, Inc. and its subsidiaries (Titan or the Company) are leading
      manufacturers of wheels, tires and assemblies for off-highway vehicles used
      in
      the agricultural, earthmoving/construction and consumer
      markets.  Titan’s earthmoving/construction market also includes
      products supplied to the U.S. military and other government entities, while
      the
      consumer market includes all-terrain vehicles (ATVs) and recreational/utility
      trailer applications.  Titan manufactures both wheels and tires for
      the majority of these market applications, allowing the Company to provide
      the
      value-added service of delivering complete wheel and tire
      assemblies.  The Company offers a broad range of products that are
      manufactured in relatively short production runs to meet the specifications
      of
      original equipment manufacturers (OEMs) and/or the requirements of aftermarket
      customers.





Principles
      of consolidation


The
      consolidated financial statements include the accounts of the Company and its
      wholly- and majority-owned subsidiaries.  Titan records its investment
      in each unconsolidated affiliated company (20% to 49% ownership) at its related
      equity in the net assets of such affiliate, as adjusted for equity earnings
      and
      losses.  Investments of less than 20% of non-publicly traded entities
      are carried at cost.  Investments of less than 20% of publicly traded
      entities are carried at fair value in accordance with Statement of Financial
      Accounting Standards (SFAS) No. 115, “Accounting for Certain Investments in Debt
      and Equity Securities.”  The Company records change of interest gains
      and losses directly to equity.  All significant intercompany accounts
      and transactions have been eliminated.





Inventories


Inventories
      are valued at the lower of cost or market.  Cost is determined using
      the first-in, first-out (FIFO) method in 2007 for approximately 67% of
      inventories and the last-in, first-out (LIFO) method for approximately 33%
      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.





Fixed
      assets


Property,
      plant and equipment have been recorded at cost.  Depreciation is
      provided using the straight-line method over the following estimated useful
      lives of the related assets:


YearsBuilding
                and improvements
            
            
            25Machinery
                and equipment
            
            
            10Tools,
                dies and molds
            
            
            5





Maintenance
      and repairs are expensed as incurred.  When property, plant and
      equipment are retired or otherwise disposed of, the related cost and accumulated
      depreciation are eliminated, and any gain or loss on disposition is included
      in
      the accompanying consolidated statements of operations.





Interest
      is capitalized on fixed asset projects which are constructed over a period
      of
      time.  The amount of interest capitalized is determined by applying an
      interest rate to the average amount of accumulated expenditures for the asset
      during the period.  The interest rate used is based on the rates
      applicable to borrowings outstanding during the
      period.





F-7
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





Deferred
      financing costs


Deferred
      financing costs are costs incurred in connection with the Company’s revolving
      credit facility and senior unsecured notes. The costs associated with the
      revolving credit facility are being amortized over the remaining term of the
      facility.  The costs associated with the senior unsecured notes are
      amortized straight line over five years, the term of the
      notes.  Amortization of deferred financing costs for the debt
      facilities approximates the effective interest rate method.





Fair
      value of financial instruments


The
      Company records all financial instruments, including cash and cash equivalents,
      accounts receivable, notes receivable, accounts payable, other accruals and
      notes payable at cost, which approximates fair value.  Investments in
      marketable equity securities are recorded at fair value.  The senior
      unsecured notes are the only significant financial instrument of the Company
      with a fair value different from the recorded value.  At December 31,
      2007, the fair value of the senior unsecured notes, based on market prices
      obtained through independent pricing sources, was approximately $193 million,
      compared to a carrying value of $200 million.





Available-for-sale
      securities


The
      Company has an investment in Titan Europe Plc of $34.5 million as of December
      31, 2007, representing a 17.3% ownership position.  Titan Europe Plc is
      publicly traded on the AIM market in London, England.  This investment
      is recorded as “Investment in Titan Europe Plc” on the consolidated balance
      sheet.  In accordance with SFAS No. 115, the Company records the Titan
      Europe Plc investment as an available-for-sale security and reports this
      investment at fair value, with unrealized gains and losses excluded from
      earnings and reported in a separate component of stockholders’
equity.  Should the fair value decline below the cost basis, the
      Company would be required to determine if this decline is other than
      temporary.  If the decline in fair value were judged to be other than
      temporary, an impairment charge would be recorded.  Declared dividends
      on this investment are recorded in income as a component of other
      income.





Impairment
      of fixed assets


The
      Company reviews fixed assets to assess recoverability from future operations
      whenever events and circumstances indicate that the carrying values may not
      be
      recoverable.  Impairment losses are recognized in operating results
      when expected undiscounted future cash flows are less than the carrying value
      of
      the asset.  Impairment losses are measured as the excess of the
      carrying value of the asset over the discounted expected future cash flows
      or
      the estimated fair value of the asset.





Foreign
      currency translation


The
      financial statements of the Company’s foreign subsidiaries are translated to
      United States currency in accordance with SFAS No. 52, “Foreign Currency
      Translation.”  Assets and liabilities are translated to United States
      dollars at period-end exchange rates.  Income and expense items are
      translated at average rates of exchange prevailing during the
      period.  Translation adjustments are included in “Accumulated other
      comprehensive loss” in stockholders’ equity.  As of December 2007, the
      Company’s investment in Titan Europe Plc was classified as available-for-sale
      securities and this investment is recorded as “Investment in Titan Europe Plc”
on the consolidated balance sheet.  Gains and losses that result from
      foreign currency transactions are included in the accompanying consolidated
      statements of operations.





Impairment
      of goodwill


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, as
      required by the adoption of SFAS No. 142, Goodwill and Other Intangible
      Assets.  The carrying amount of $11.7 million of goodwill by segment
      at December 31, 2007, was (i) agricultural of $6.9 million, (ii)
      earthmoving/construction of $3.6 million and (iii) consumer of $1.2
      million.  Based on a discounted cash flow method at December 31, 2007,
      the Company’s computation showed no impairment.  See Note 8 for
      additional information.





F-8
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





Revenue
      recognition


The
      Company records sales revenue when products are shipped to customers and both
      title and the risks and rewards of ownership are
      transferred.  Provisions are established for sales returns and
      uncollectible accounts based on historical experience.  Should these
      trends change, adjustments would be necessary to the estimated
      provisions.





Cost
      of sales


Cost
      of
      sales is comprised primarily of direct materials and supplies consumed in the
      manufacturing of the Company’s products, as well as manufacturing labor,
      depreciation expense and overhead expense necessary to acquire and convert
      the
      purchased materials and supplies into a finished product.  Cost of
      sales also includes all purchasing, receiving, inspection, internal transfers,
      and related distribution costs.





Selling,
      general and administrative expense


Selling,
      general and administrative expense is comprised primarily of sales commissions,
      marketing expense, selling and administrative wages, information system costs,
      legal fees, bank charges, audit fees, research and development, depreciation
      and
      amortization expense on non-manufacturing assets, and other administrative
      items.





Research
      and development expense


Research
      and development (R&D) expenses are expensed as incurred and included as part
      of selling, general and administrative expense.  R&D costs were
      $1.7 million, $1.3 million and $0.8 million for the years of 2007, 2006 and
      2005, respectively.





Advertising


Advertising
      expenses are included in selling, general and administrative expense and are
      expensed as incurred.  Advertising expenses were approximately $2
      million for the year ended December 31, 2007, and less than $1 million for
      the
      years ended December 31, 2006 and 2005.





Warranty
      costs


The
      Company provides limited warranties on workmanship on its products in all market
      segments.  The provision for estimated warranty costs is made in the
      period when such costs become probable and is based on past warranty
      experience.  Warranty costs were $8.9 million, $5.5 million and $2.6
      million for the years of 2007, 2006 and 2005, respectively.  Warranty
      costs have increased due to the acquisition of the Freeport and Bryan facilities
      and the resulting higher sales levels.





Income
      taxes


Deferred
      income tax provisions are determined using the liability method whereby deferred
      tax assets and liabilities are recognized based upon temporary differences
      between the financial statement and income tax basis of assets and
      liabilities.  The Company assesses the realizability of its deferred
      tax asset positions to determine if a valuation allowance is
      necessary.





Earnings
      per share


Basic
      earnings per share (EPS) is computed by dividing consolidated net earnings
      by
      the weighted average number of common shares outstanding.  Diluted EPS
      is computed by dividing adjusted consolidated net earnings by the sum of the
      weighted average number of common shares outstanding and the weighted average
      number of potential common shares outstanding.  Potential common
      shares consist of outstanding options under the Company’s stock option plans and
      the conversion of the Company’s senior unsecured convertible notes.





Statement
      of cash flows


For
      purposes of the Consolidated Statements of Cash Flows, the Company considers
      short-term debt securities with an original maturity of three months or less
      to
      be cash equivalents.





Interest
      paid


The
      Company paid $10.2 million, $15.6 million and $7.5 million for interest in
      2007,
      2006 and 2005, respectively.  In 2006, the increase in interest paid
      of approximately $8 million was due to borrowings related to acquisition of
      the
      Freeport and Bryan facilities.  In 2007, the decrease in interest paid
      of approximately $5 million was due to higher accrued interest balance resulting
      from the timing of interest payments.





F-9
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





Income
      taxes paid


Titan
      paid $2.4 million, $0.2 million and $1.9 million for income taxes in 2007,
      2006
      and 2005, respectively.





Global
      market risk


The
      Company manufactures and sells products and purchases goods in the United States
      and foreign countries.  The Company is potentially subject to foreign
      currency exchange risk relating to receipts from customers and payments to
      suppliers in foreign currencies.  As a result, the Company’s financial
      results could be affected by factors such as changes in foreign currency
      exchange rates or weak economic conditions in the foreign markets in which
      the
      Company conducts business.  Gains and losses arising from the
      settlement of foreign currency transactions are charged to the Consolidated
      Statement of Operations for the related period.  Translation
      adjustments arising from the translation of foreign subsidiary financial
      statements are recorded in accumulated other comprehensive income in
      stockholders’ equity in the accompanying consolidated balance
      sheets.





Environmental
      liabilities


Environmental
      expenditures that relate to current operations are expensed or capitalized
      as
      appropriate.  Expenditures that relate to an existing condition caused
      by past operations and that do not contribute to current or future revenue
      are
      expensed.  Liabilities are recorded when environmental assessments
      and/or remedial efforts are probable and can be reasonably
      estimated.





Stock-based
      compensation


At
      December 31, 2007, the Company has three stock-based compensation plans, which
      are described in Note 21. In
      2005
      and prior years, the Company applied the recognition and measurement principles
      of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock
      Issued to Employees,” and related Interpretations in accounting for those
      plans.  No stock-based compensation expense was recorded in the
      consolidated financial statements under this method, as any stock options
      granted had an exercise price equal to the market value of the underlying common
      stock on the date of the grant.  The following table illustrates the
      effect on net income and income per share if the Company had applied the fair
      value recognition provisions of SFAS No. 123, “Accounting for Stock-Based
      Compensation,” to stock-based compensation for the year ended December 31, 2005
      (in
      thousands, except share
      data):


2005Net
                income – as reported
            
            $
            11,042Deduct:  Total
                stock-based compensation expensedetermined
                under fair value method for all awards,net
                of related tax effects
            
            
            (5,255
            )Pro
                forma net income
            
            $
            5,787Income
                per share:Basic
                – as reported
            
            $
            .61Basic
                – pro forma
            
            
            .32Diluted
                – as reported
            
            $
            .60Diluted
                – pro forma
            
            
            .32





The
      Company granted no stock options in 2007 or 2006.  The
      weighted-average fair value of stock options granted in 2005 was $9.56 and
      was
      calculated at the time of issue using the Black-Scholes option-pricing model
      with the following assumptions used for grants:


2007(a)
            
            
            2006(a)
            
            
            2005Stock
                price volatility
            
            
            n/a
            
            
            
            n/a
            
            
            
            66
            %Risk-free
                interest rate
            
            ─
            
            
            ─
            
            
            
            3.7%
              - 4.4
            %Expected
                life of options
            
            ─
            
            
            ─
            
            
            6
                yearsDividend
                yield
            
            ─
            
            
            ─
            
            
            
            .43%
              - .62
            %





(a)
            The
                Company granted no stock options during 2007 or
                2006.





F-10
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





Reclassification


Certain
      amounts from prior years have been reclassified to conform to the current year’s
      presentation.  The predominant reclassification was that the 2006 and
      2005 Consolidated Statements of Operations have been revised to combine idled
      assets for sale depreciation, which was previously shown separately, with the
      selling, general and administrative expenses.





Use
      of estimates


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





Recently
      issued accounting standards





Statement
      of Financial Accounting Standards Number 157


In
      September 2006, Statement of Financial Accounting Standards (SFAS) No. 157,
      “Fair Value Measurements,” was issued.  This statement defines fair
      value, establishes a framework for measuring fair value in generally accepted
      accounting principles and expands disclosures about fair value
      measurements.  This statement applies under other accounting
      pronouncements that require or permit fair value measurements.  This
      statement is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those fiscal
      years.  The Company is evaluating the effect the adoption of this
      standard will have on its consolidated financial position, results of operations
      and cash flows.





Statement
      of Financial Accounting Standards Number 159


In
      February 2007, SFAS No. 159, “The Fair Value Option for Financial Assets and
      Financial Liabilities,” was issued.  This statement permits entities
      to choose to measure many financial instruments and certain other items at
      fair
      value.  This statement is effective for fiscal years beginning after
      November 15, 2007.  The Company is evaluating the effect the adoption
      of this standard will have on its consolidated financial position, results
      of
      operations and cash flows.





Statement
      of Financial Accounting Standards Number 141 (revised 2007)


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 is evaluating the effect the
      adoption of this standard will have on its consolidated financial position,
      results of operations and cash flows.





Statement
      of Financial Accounting Standards Number 160


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 is evaluating the effect the adoption of this
      standard will have on its consolidated financial position, results of operations
      and cash flows.





F-11
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





2.
            ACQUISITIONS





Acquisition
      of Continental’s OTR Assets


On
      July
      31, 2006, Titan Tire Corporation of Bryan, a subsidiary of Titan International,
      Inc., 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 OTR tire facility for approximately
      $53 million in cash proceeds, including an initial cash payment of approximately
      $44 million and subsequent payment, made in the third quarter of 2007, of
      approximately $9 million.  The assets purchased included Continental’s
      OTR plant, property and equipment located in Bryan, Ohio, inventory and other
      current assets.  In addition, the Company recorded intangibles related
      to the acquisition as noncurrent assets and assumed certain 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.





The
      allocation of the Continental OTR asset acquisition was as follows (in thousands):


Inventory
            
            $
            11,053Prepaid
                and other current assets
            
            
            1,350Property,
                plant and equipment
            
            
            42,197Noncurrent
                assets
            
            
            742Liabilities
                assumed
            
            
            (1,800
            )$
            53,542




Acquisition
      of Goodyear’s North American Farm Tire Assets


On
      December 28, 2005, Titan Tire Corporation, a subsidiary of Titan International,
      Inc., acquired The Goodyear Tire & Rubber Company’s North American farm tire
      assets.  Titan Tire purchased the assets of Goodyear’s North American
      farm tire business for approximately $100 million in cash
      proceeds.  The assets purchased include Goodyear’s North American
      plant, property and equipment located in Freeport, Illinois, and Goodyear’s
      North American farm tire inventory.  In addition, the Company recorded
      intangibles related to the acquisition as noncurrent assets.  This
      acquisition expanded Titan’s product offering into Goodyear branded farm tires
      and added the manufacturing capacity of the Freeport, Illinois,
      facility.





The
      allocation of the Goodyear North American farm tire acquisition was as follows
      (in
      thousands):


Inventory
            
            $
            40,246Prepaid
                and other current assets
            
            
            4,680Property,
                plant and equipment
            
            
            55,074Noncurrent
                assets
            
            
            604$
            100,604





F-12
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





Pro
      forma financial information


The
      following unaudited pro forma financial information gives effect to the
      acquisition of Continental’s OTR assets and the acquisition of Goodyear’s North
      American farm tire assets as if the acquisitions had taken place on January
      1,
      2005.  The pro forma information for the Bryan, Ohio, facility was
      derived from a carve-out of Continental’s OTR historical accounting
      records.  The pro forma information for the Freeport, Illinois,
      facility was derived from a carve-out of The Goodyear Tire & Rubber
      Company’s historical accounting records.





Pro
      forma
      information for the year (in
      thousands, except per share data):


2006
            
            
            2005Net
                sales
            
            $
            761,796
            
            
            $
            828,183Income
                before income taxes
            
            
            21,786
            
            
            
            8,383Net
                income
            
            
            13,072
            
            
            
            17,803Diluted
                earnings per share
            
            
            .61
            
            
            
            .92





The
      pro
      forma information is presented for illustrative purposes only and may not be
      indicative of the results that would have been obtained had the acquisitions
      actually occurred on January 1, 2005, nor is it necessarily indicative of
      Titan’s future consolidated results of operations or financial
      position.  No pro forma information is presented for 2007 as both
      acquisitions were included in the consolidated results for the full
      year.





3.
            ACCOUNTS
                RECEIVABLE





Accounts
      receivable at December 31, 2007 and 2006, consisted of the following (in thousands):


2007
            
            
            2006Accounts
                receivable
            
            $
            103,652
            
            
            $
            78,700Allowance
                for doubtful accounts
            
            
            (5,258
            )
            
            
            (4,818
            )Accounts
                receivable, net
            
            $
            98,394
            
            
            $
            73,882





The
      Company had net accounts receivable of $98.4 million and $73.9 million at
      December 31, 2007 and 2006, respectively.  These amounts are net of
      allowance for doubtful accounts of $5.3 million and $4.8 million for the years
      ended 2007 and 2006, respectively.





4.
            INVENTORIES





Inventories
      at December 31, 2007 and 2006, consisted of the following (in thousands):


2007
            
            
            2006Raw
                material
            
            $
            50,368
            
            
            $
            57,814Work-in-process
            
            
            21,533
            
            
            
            16,738Finished
                goods
            
            
            61,880
            
            
            
            84,863133,781
            
            
            
            159,415Adjustment
                to LIFO basis
            
            
            (5,733
            )
            
            
            (4,811
            )$
            128,048
            
            
            $
            154,604




The
      Company had inventories of $128.0 million and $154.6 million at December 31,
      2007 and 2006, respectively.  Included in the above inventory balances
      at year-end 2007 and 2006 are reserves for slow-moving and obsolete inventory
      of
      $4.7 million and $3.2 million, respectively.





F-13
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





5.
            PREPAID
                AND OTHER CURRENT ASSETS





Prepaid
      and other current assets at December 31, 2007 and 2006, consisted of the
      following (in
      thousands):


2007
            
            
            2006Prepaid
                supplies
            
            $
            10,023
            
            
            $
            9,227Other
            
            
            7,816
            
            
            
            9,574$
            17,839
            
            
            $
            18,801





Prepaid
      and other current assets consist primarily of prepaid supplies, which were
      $10.0
      million and $9.2 million at December 31, 2007 and 2006,
      respectively.





6.
            PROPERTY,
                PLANT AND EQUIPMENT





Property,
      plant and equipment at December 31, 2007 and 2006, consisted of the following
      (in
      thousands):


2007
            
            
            2006Land
                and improvements
            
            $
            3,098
            
            
            $
            3,088Buildings
                and improvements
            
            
            78,462
            
            
            
            78,230Machinery
                and equipment
            
            
            276,326
            
            
            
            269,730Tools,
                dies and molds
            
            
            53,873
            
            
            
            52,205Construction-in-process
            
            
            31,801
            
            
            
            4,587443,560
            
            
            
            407,840Less
                accumulated depreciation
            
            
            (247,482
            )
            
            
            (223,224
            )$
            196,078
            
            
            $
            184,616




The
      large
      increase in the construction-in-process balance relates to the giant OTR mining
      tire project.  At December
      31, 2007, there was $22.5 million in construction-in-process related to this
      project, including $0.4 million of capitalized interest.





Depreciation
      on fixed assets for the years 2007, 2006 and 2005 totaled $26.1 million, $24.3
      million, and $19.0 million, respectively.





7.
            INVESTMENT
                IN TITAN EUROPE





Investment
      in Titan Europe Plc at December 31, 2007 and 2006, consisted of the following
      (in
      thousands):


2007
            
            
            2006Investment
                in Titan Europe Plc
            
            $
            34,535
            
            
            $
            65,881





The
      Company owns a 17.3% ownership in Titan Europe Plc.  In accordance
      with SFAS No. 115, the Company records the Titan Europe Plc investment as an
      available-for-sale security and reports the investment at fair value, with
      unrealized gains and losses excluded from earnings and reported as a separate
      component of comprehensive income in stockholders’ equity.





The
      fair
      value of the Company’s investment in Titan Europe Plc was $34.5 million and
      $65.9 million at December 31, 2007 and 2006, respectively.  Titan
      Europe is publicly traded on the AIM market in London, England.  The
      December 31, 2007, fair value of $34.5 million was below the Company’s cost
      basis of $40.3 million.  The unrealized loss on the Titan Europe Plc
      investment was $5.8 million.  The unrealized loss resulted from a
      decline in the market price of Titan Europe Plc of over 40% in the fourth
      quarter of 2007.  No impairment charge has been recorded as this
      decline below cost basis was judged to be temporary at December 31,
      2007.





Cash
      dividends received from Titan Europe Plc were $1.8 million, $1.3 million and
      $0.9 million for the years ended December 31, 2007, 2006 and 2005,
      respectively.





F-14
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





8.
            GOODWILL





The
      carrying amount of goodwill at December 31, 2007 and 2006, consisted of the
      following (in
      thousands):


2007
            
            
            2006Agricultural
                segment
            
            $
            6,912
            
            
            $
            6,912Earthmoving/construction
                segment
            
            
            3,552
            
            
            
            3,552Consumer
                segment
            
            
            1,238
            
            
            
            1,238$
            11,702
            
            
            $
            11,702





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 as
      required by the adoption of SFAS No. 142, Goodwill and Other Intangible
      Assets.  Based on a discounted cash flow method at December 31, 2007,
      the Company’s computation showed no impairment.  There can
      be no
      assurance that future goodwill tests will not result in an impairment
      charge.





9.
            OTHER
                ASSETS





Other
      assets at December 31, 2007 and 2006, consisted of the following (in thousands):


2007
            
            
            2006Contractual
                obligations
            
            $
            6,277
            
            
            $
            0Deferred
                financing
            
            
            4,897
            
            
            
            7,534Other
                receivable
            
            
            2,700
            
            
            
            0Other
            
            
            6,541
            
            
            
            5,460$
            20,415
            
            
            $
            12,994





The
      contractual obligations asset of $6.3 million at December 31, 2007, represents
      assets held in trusts to provide contractual obligations to certain executive
      officers that are due upon retirement or voluntary termination of
      employment.





10.
            OTHER
                CURRENT LIABILITIES





Other
      current liabilities at December 31, 2007 and 2006, consisted of the following
      (in
      thousands):


2007
            
            
            2006Wages
                and commissions
            
            $
            10,850
            
            
            $
            8,800Accrued
                interest
            
            
            7,487
            
            
            
            322Warranty
            
            
            5,854
            
            
            
            4,688Insurance
            
            
            4,250
            
            
            
            4,458Utilities
            
            
            3,599
            
            
            
            1,941OTR
                asset acquisition
            
            
            0
            
            
            
            8,900Other
            
            
            11,748
            
            
            
            7,833$
            43,788
            
            
            $
            36,942





The
      large
      increase in accrued interest is the result of the timing of due dates of
      interest payments primarily relating to the senior unsecured notes issued in
      December 2006.  The OTR asset acquisition liability was the remaining
      amount due after final settlement, which was paid in the third quarter of
      2007.





F-15
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





11.
            WARRANTY
                COSTS





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


2007
            
            
            2006Warranty
                liability, January 1
            
            $
            4,688
            
            
            $
            1,838Warranty
                assumed with asset purchase
            
            
            0
            
            
            
            1,800Provision
                for warranty liabilities
            
            
            8,901
            
            
            
            5,534Warranty
                payments made
            
            
            (7,735
            )
            
            
            (4,484
            )Warranty
                liability, December 31
            
            $
            5,854
            
            
            $
            4,688





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 Balance
      Sheets.





12.
            OTHER
                LONG-TERM LIABILITIES





Other
      long-term liabilities at December 31, 2007 and 2006, consisted of the following
      (in
      thousands):


2007
            
            
            2006Accrued
                employment liabilities
            
            $
            11,726
            
            
            $
            4,741Accrued
                pension liabilities
            
            
            2,092
            
            
            
            8,682Other
            
            
            2,331
            
            
            
            2,412$
            16,149
            
            
            $
            15,835





Accrued
      employment liabilities at December 31, 2007, includes approximately $8 million
      for contractual and performance obligations upon retirement for certain
      executive officers.  The large increase in accrued employment
      liabilities is primarily the result of approximately $4 million in additional
      liability for the CEO’s performance incentives.  See Note 20 for
      additional information regarding the decrease in accrued pension
      liabilities.





13.
            REVOLVING
                CREDIT FACILITY AND LONG-TERM DEBT





Long-term
      debt at December 31, 2007 and 2006, consisted of the following (in thousands):


2007
            
            
            2006Senior
                unsecured notes
            
            $
            200,000
            
            
            $
            200,000Senior
                unsecured convertible notes
            
            
            0
            
            
            
            81,200Industrial
                revenue bonds and other
            
            
            0
            
            
            
            10,164200,000
            
            
            
            291,364Less
                amounts due within one year
            
            
            0
            
            
            
            98$
            200,000
            
            
            $
            291,266





Aggregate
      maturities of long-term debt
      are as follows (in
      thousands):


2008
            
            $
            02009
            
            
            02010
            
            
            02011
            
            
            02012
            
            
            200,000Thereafter
            
            
            0$
            200,000




F-16
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





Senior
      unsecured notes


In
      December 2006, the Company closed its offering of $200 million 8% senior
      unsecured notes.  The notes were sold at par and are due January
      2012.  Titan used the net proceeds from this offering to repay
      outstanding existing debt, excluding the senior unsecured convertible notes,
      and
      for general corporate purposes.





Revolving
      credit facility


The
      Company’s $250 million revolving credit facility (Credit Facility) with agent
      LaSalle Bank National Association (a Bank of America company) has an October
      2009 termination date and is collateralized by a first priority security
      interest in certain assets of Titan and its domestic subsidiaries.  At
      December 31, 2007, the borrowings under the Credit Facility bore interest at
      a
      floating rate of prime rate plus 0% to 1% or LIBOR plus 1% to
      2%.  There were no cash borrowings under this Credit Facility at
      December 31, 2007.  The facility contains certain financial covenants,
      restrictions and other customary affirmative and negative
      covenants.  The Company is in
      compliance with these covenants and restrictions as of December 31,
      2007.





Credit
      facility amendments


In
      February 2007, the Company amended the Credit Facility.  The amendment
      extended the termination date to October 2009 (previously October
      2008).  The amendment also lowered borrowing rates, which are now
      based on a pricing grid that varies with the amount borrowed.  The
      borrowings under the Credit Facility bear interest at a floating rate of LIBOR
      plus 1% to 2% (previously 2.75%).  The amendment lowered the revolving
      loan availability from $250 million to $125 million with the ability to request
      an increase back to $250 million.




In
      December 2007, the Company amended the facility and increased the revolving
      loan
      availability back to a $250 million Credit Facility.





Senior
      unsecured convertible notes


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 $81.2 million 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.”





Industrial
      revenue bonds and other


Other
      debt primarily consisted of industrial revenue bonds, loans from local and
      state
      entities, and other long-term notes.  All industrial revenue bonds and
      other debt were fully paid off in the first quarter of 2007.





F-17
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





14.
            ACCUMULATED
                OTHER COMPREHENSIVE INCOME (LOSS)





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


Currency
              Translation
              Adjustments
            
            
            Unrealized
              Gain
                (Loss) on
              Investments
            
            
            Minimum
              Pension
              Liability
              Adjustment
            
            
            Unrecognized
              Losses
                and
              Prior
                Service
              Cost
            
            
            TotalBalance
                at January 1, 2006
            
            $
            (1,183
            )
            
            $
            0
            
            
            $
            (18,569
            )
            
            $
            0
            
            
            $
            (19,752
            )Unrealized
                  gain on investment,net
                  of taxof
                  $3,299
            
            
            0
            
            
            
            6,126
            
            
            
            0
            
            
            
            0
            
            
            
            6,126Minimum
                  pension liabilityadjustment, net of tax of
                  $595
            
            
            0
            
            
            
            0
            
            
            
            3,225
            
            
            
            0
            
            
            
            3,225Adoption
                  of SFAS No. 158,net of tax of $651
            
            
            0
            
            
            
            0
            
            
            
            15,344
            
            
            
            (16,405
            )
            
            
            (1,061
            )Balance
                at December 31, 2006
            
            
            (1,183
            )
            
            
            6,126
            
            
            
            0
            
            
            
            (16,405
            )
            
            
            (11,462
            )Unrealized
                  loss on investment,net
                  of tax of
                  $10,971
            
            
            0
            
            
            
            (20,375
            )
            
            
            0
            
            
            
            0
            
            
            
            (20,375
            )Defined
                benefit pension plan entries:Plan
                acquisition, net of tax of $481
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            785
            
            
            
            785Unrecognized
                prior service cost, net of tax of $53
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            84
            
            
            
            84Unrecognized
                net loss, net of tax of $26
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            (42
            )
            
            
            (42
            )Unrecognized
                deferred tax liability, net of tax of $22
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            (34
            )
            
            
            (34
            )Balance
                at December 31, 2007
            
            $
            (1,183
            )
            
            $
            (14,249
            )
            
            $
            0
            
            
            $
            (15,612
            )
            
            $
            (31,044
            )





15.
            STOCKHOLDERS’
                EQUITY





The
      Company is authorized by the Board of Directors to repurchase an additional
      2.5
      million common shares subject to debt agreement covenants.  The
      Company has no plans to repurchase any Titan common stock at this
      time.  Titan paid cash dividends of $.02 per share of common stock
      each year for 2007, 2006 and 2005.  Dividends paid totaled $0.5
      million, $0.4 million and $0.4 million for 2007, 2006 and 2005,
      respectively.





In
      March
      2007, the Company converted 100% of the 5.25% senior unsecured convertible
      notes
      due 2009 into Titan common stock at an increased conversion rate.  The
      exchange resulted in a decrease in treasury stock of $59.0 million and an
      increase to additional paid-in-capital of approximately $35.2
      million.  Stockholder’s equity increased by $80.9 million in total as
      a result of this exchange.  See Note 17 for additional
      information.





16.
            ROYALTY
                EXPENSE





Royalty
      expense consisted of the following (in thousands):


2007
            
            
            2006
            
            
            2005Royalty
                expense
            
            $
            6,155
            
            
            $
            5,001
            
            
            $
            0





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 recorded for the years ended December 31, 2007 and 2006, were $6.2
      million and $5.0 million, respectively.  No royalty expense was
      recorded in 2005, as this license agreement was not yet in place during
      2005.




F-18
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





17.
            NONCASH
                CONVERTIBLE DEBT CONVERSION CHARGE




Noncash
      convertible debt conversion charge consisted of the following (in thousands):


2007
            
            
            2006
            
            
            2005Noncash
                convertible debt charge
            
            $
            13,376
            
            
            $
            0
            
            
            $
            7,225





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 $81.2 million of accepted notes were converted into
      6,577,200 shares of Titan common stock.





The
      Company recognized a noncash charge of $13.4 million in connection with this
      exchange in accordance with Statement of Financial Accounting Standards (SFAS)
      No. 84, “Induced Conversions of Convertible Debt.”  This charge does
      not reflect $1.0 million of interest previously accrued on the
      notes.  The shares issued for the conversion were issued out of
      treasury shares.  The exchange resulted in a decrease in treasury
      stock of $59.0 million and an increase to additional paid-in capital of
      approximately $35.2 million.  Stockholder’s equity increased by $80.9
      million in total as a result of this exchange.





In
      June
      of 2005, Titan finalized a private transaction to exchange $33.8 million of
      the
      Company’s outstanding 5.25% senior unsecured convertible notes due 2009 for
      3,022,275 shares of common stock as proposed to the Company by certain note
      holders.  The Company recognized a noncash charge of $7.2 million in
      connection with this exchange in accordance with SFAS No. 84, “Induced
      Conversions of Convertible Debt,” during the second quarter of
      2005.





18.
            OTHER
                INCOME, NET





Other
      income consisted of the following (in thousands):


2007
            
            
            2006
            
            
            2005Interest
                income
            
            $
            2,717
            
            
            $
            1,681
            
            
            $
            367Dividend
                income – Titan Europe Plc
            
            
            1,768
            
            
            
            1,281
            
            
            
            0Equity
                income – Titan Europe Plc
            
            
            0
            
            
            
            0
            
            
            
            2,938Foreign
                exchange (loss) gain
            
            
            (268
            )
            
            
            975
            
            
            
            (1,338
            )Other
                expense
            
            
            (853
            )
            
            
            (373
            )
            
            
            (1,009
            )$
            3,364
            
            
            $
            3,564
            
            
            $
            958





Interest
      income increased in 2007 as the result of higher cash
      balances.  Dividend income was recorded on the investment in Titan
      Europe Plc in 2007 and 2006, the years in which Titan Europe Plc was recorded
      as
      an available for sale security and reported at fair value.





Equity
      income was recorded on the Titan Europe Plc investment in 2005.  As a
      result of decreased ownership percentage in Titan Europe Plc and lack of
      significant influence over Titan Europe Plc, effective December 2005, the
      Company no longer uses the equity method to account for its interest in Titan
      Europe Plc.





F-19
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





19.
            INCOME
                TAXES





Income
      (loss) before income taxes, consisted of the following (in thousands):


2007
            
            
            2006
            
            
            2005Domestic
            
            $
            (6,306
            )
            
            $
            5,310
            
            
            $
            (5,048
            )Foreign
            
            
            2,422
            
            
            
            3,264
            
            
            
            2,163$
            (3,884
            )
            
            $
            8,574
            
            
            $
            (2,885
            )





The
      provision (benefit) for income taxes, was as follows (in thousands):


2007
            
            
            2006
            
            
            2005CurrentFederal
            
            $
            562
            
            
            $
            120
            
            
            $
            549State
            
            
            547
            
            
            
            475
            
            
            
            0Foreign
            
            
            1,574
            
            
            
            183
            
            
            
            872,683
            
            
            
            778
            
            
            
            636DeferredFederal
            
            
            2,725
            
            
            
            2,442
            
            
            
            (13,413
            )State
            
            
            408
            
            
            
            210
            
            
            
            (1,150
            )Foreign
            
            
            (2,453
            )
            
            
            0
            
            
            
            0680
            
            
            
            2,652
            
            
            
            (14,563
            )Provision
                (benefit) for income taxes
            
            $
            3,363
            
            
            $
            3,430
            
            
            $
            (13,927
            )





The
      provision (benefit) for income taxes differs from the amount of income tax
      determined by applying the statutory U.S. federal income tax rate to pre-tax
      income (loss) as a result of the following:


2007
            
            
            2006
            
            
            2005Statutory
                U.S. federal tax rate
            
            
            35.0
            %
            
            
            35.0
            %
            
            
            (35.0
            )%Nondeductible
                debt conversion charge
            
            
            (120.6
            )
            
            
            0.0
            
            
            
            87.7Irish
                capital gains tax
            
            
            29.3
            
            
            
            0.0
            
            
            
            0.0Repatriation
                of foreign earnings
            
            
            (29.2
            )
            
            
            11.6
            
            
            
            19.0Foreign
                taxes, net
            
            
            18.8
            
            
            
            (12.0
            )
            
            
            (18.1
            )State
                taxes, net
            
            
            (16.0
            )
            
            
            6.2
            
            
            
            (2.9
            )Valuation
                allowance
            
            
            0.0
            
            
            
            0.0
            
            
            
            (488.7
            )Dyneer
                legal charge
            
            
            0.0
            
            
            
            0.0
            
            
            
            (60.7
            )State
                tax rate change
            
            
            0.0
            
            
            
            0.0
            
            
            
            21.2Other,
                net
            
            
            (3.9
            )
            
            
            (0.8
            )
            
            
            (5.2
            )Effective
                tax rate
            
            
            (86.6
            )%
            
            
            40.0
            %
            
            
            (482.7
            )%





Federal
      income taxes are provided on earnings of foreign subsidiaries except to the
      extent that such earnings are expected to be indefinitely reinvested
      abroad.




F-20
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





Deferred
      income taxes reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes.  Significant components of
      the Company’s deferred tax assets and liabilities at December 31, 2007 and 2006,
      are as follows (in
      thousands):


2007
            
            
            2006Deferred
                tax assets:Net
                operating loss carryforward
            
            $
            7,062
            
            
            $
            12,618Employee
                benefits and related costs
            
            
            4,197
            
            
            
            3,720Warranty
            
            
            2,224
            
            
            
            1,112Unrealized
                loss on available-for-sale security
            
            
            2,034
            
            
            
            0Allowance
                for bad debts
            
            
            1,998
            
            
            
            1,830Inventory
            
            
            1,417
            
            
            
            1,351EPA
                reserve
            
            
            1,201
            
            
            
            1,226Pension
            
            
            529
            
            
            
            4,501Other
            
            
            7,043
            
            
            
            2,876Deferred
                tax assets
            
            
            27,705
            
            
            
            29,234Deferred
                tax liabilities:Fixed
                assets
            
            
            (16,590
            )
            
            
            (16,534
            )Unrealized
                gain on available-for-sale security
            
            
            0
            
            
            
            (8,937
            )Foreign
                deferred gain
            
            
            0
            
            
            
            (2,453
            )Deferred
                tax liabilities
            
            
            (16,590
            )
            
            
            (27,924
            )Net
                deferred tax asset
            
            $
            11,115
            
            
            $
            1,310





The
      Company recorded an income tax expense of $3.4 million, an income tax expense
      of
      $3.4 million and an income tax benefit of $13.9 million for the years ended
      December 31, 2007, 2006 and 2005, respectively.  The Company’s 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 100%
      conversion of the Company’s convertible debt.  This noncash debt
      charge is not deductible for income tax purposes.  The Company’s
      Federal net operating loss carryforward of approximately $13 million expires
      in
      2023.  In addition, the Company has various state net operating loss
      carryforwards which are subject to expiration from 2019 to 2026.





The
      Company has applied the provisions of FIN 48, “Accounting for Uncertainty in
      Income Taxes”, for the year ended December 31, 2007.  No adjustment
      was made to retained earnings in adopting FIN 48 and at this time the Company
      does not expect any significant increases or decreases to its unrecognized
      tax
      benefits within 12 months of this reporting date.  Titan has
      identified its federal tax return and its Illinois state tax return as “major”
tax jurisdictions.  The Company is subject to (i) federal tax
      examinations for periods 2004 to 2007 and (ii) Illinois state income tax
      examinations for years 2005 to 2007.





F-21
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





20.
            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).  In October 2007, the 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.  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.  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, 2007, presentation are the Titan
      Tire and Walcott plans which have a projected benefit obligation of $71.2
      million, exceeding the fair value of plan assets of $69.1 million at December
      31, 2007.  Included in the December 31, 2006, presentation are the
      Titan Tire and Walcott plans, which have a projected benefit obligation and
      accumulated benefit obligation of $68.8 million, exceeding the fair value of
      plan assets of $60.2 million at December 31, 2006.





The
      projected benefit obligation and the accumulated benefit obligation are the
      same
      amount since the Plans are frozen and there are no future compensation levels
      to
      factor into the obligations.  The Company absolved itself from the
      liabilities associated with the Dico plan with the purchase of a final annuity
      settlement contract in October 2002.  Therefore, the plan no longer
      maintains a projected or accumulated benefit obligation.  The fair
      value of the Dico plan assets was $0.5 million at December 31, 2007, 2006 and
      2005.





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, 2007 and 2006 (in thousands):


Change
                in benefit obligation:
            
            2007
            
            
            2006Benefit
                obligation at beginning of year
            
            $
            68,844
            
            
            $
            71,796Acquisition
            
            
            23,948
            
            
            
            0Interest
                cost
            
            
            4,109
            
            
            
            3,934Actuarial
                loss (gain)
            
            
            4,898
            
            
            
            (144
            )Benefits
                paid
            
            
            (6,437
            )
            
            
            (6,742
            )Benefit
                obligation at end of year
            
            $
            95,362
            
            
            $
            68,844Change
                in plan assets:Fair
                value of plan assets at beginning of year
            
            $
            60,666
            
            
            $
            56,802Acquisition
            
            
            25,214
            
            
            
            0Actual
                return on plan assets
            
            
            8,822
            
            
            
            6,578Employer
                contributions
            
            
            6,234
            
            
            
            4,028Benefits
                paid
            
            
            (6,437
            )
            
            
            (6,742
            )Fair
                value of plan assets at end of year
            
            $
            94,499
            
            
            $
            60,666Unfunded
                status at end of year
            
            $
            (863
            )
            
            $
            (8,178
            )Amounts
                recognized in consolidated balance sheet:Noncurrent
                assets
            
            $
            1,229
            
            
            $
            504Noncurrent
                liabilities
            
            
            (2,092
            )
            
            
            (8,682
            )Net
                amount recognized in the consolidated balance sheet
            
            $
            (863
            )
            
            $
            (8,178
            )




F-22
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS




Amounts
                recognized in accumulated other comprehensive loss:2007
            
            
            2006Plan
                acquisition
            
            $
            1,266
            
            
            $
            0Unrecognized
                prior service cost
            
            
            (1,574
            )
            
            
            (1,711
            )Unrecognized
                net loss
            
            
            (25,098
            )
            
            
            (25,030
            )Deferred
                tax effect of unrecognized items
            
            
            9,794
            
            
            
            10,336Net
                amount recognized in accumulated other comprehensive loss
            
            $
            (15,612
            )
            
            $
            (16,405
            )





The
              weighted-average assumptions used in the actuarial computation that
              derived the benefit obligations at December 31 were as
              follows:2007
            
            
            2006Discount
                rate
            
            
            5.75
            %
            
            
            5.75
            %Expected
                long-term return on plan assets
            
            
            8.50
            %
            
            
            8.50
            %




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, 2007, 2006 and
      2005 (in
      thousands):


Components
                of net periodic benefit cost and otheramounts
                recognized in other comprehensive incomeNet
                periodic benefit cost:
            
            2007
            
            
            2006
            
            
            2005Interest
                cost
            
            $
            4,109
            
            
            $
            3,934
            
            
            $
            4,158Assumed
                return on assets
            
            
            (5,561
            )
            
            
            (4,673
            )
            
            
            (4,809
            )Amortization
                of unrecognized prior service cost
            
            
            137
            
            
            
            137
            
            
            
            137Amortization
                of unrecognized deferred taxes
            
            
            (56
            )
            
            
            (56
            )
            
            
            (56
            )Amortization
                of net unrecognized loss
            
            
            1,593
            
            
            
            1,848
            
            
            
            1,754Net
                periodic pension cost
            
            $
            222
            
            
            $
            1,190
            
            
            $
            1,184





The
      estimated net loss, prior service cost, and deferred taxes that will be
      amortized from accumulated other comprehensive income into net periodic benefit
      cost over the next fiscal year are $1.6 million, $0.1 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, 2007, 2006 and
      2005:


2007
            
            
            2006
            
            
            2005Discount
                rate
            
            
            5.75
            %
            
            
            5.75
            %
            
            
            5.75
            %Expected
                long-term return on plan assets
            
            
            8.50
            %
            
            
            8.50
            %
            
            
            8.50
            %





F-23
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





The
      allocation of the fair value of plan assets was as follows:


Percentage
                of Plan Assets
              at
                December 31,
            
            
            Target
              AllocationAsset
                Category
            
            2007
            
            
            2006
            
            
            2008U.S.
                equities (a)
            
            
            56
            %
            
            
            65
            %
            
            
            40%
              - 80
            %Fixed
                income
            
            
            27
            %
            
            
            21
            %
            
            
            20%
              - 50
            %Cash
                and cash equivalents
            
            
            6
            %
            
            
            5
            %
            
            
            0%
              - 20
            %International
                equities (a)
            
            
            11
            %
            
            
            9
            %
            
            
            0%
              - 16
            %100
            %
            
            
            100
            %





(a)
            Total
                equities may not exceed 80% of total plan
                assets.





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 Lehman
      Government / Corporate Index.  The U.S. equities asset category
      included the Company’s common stock in the amount of $5.1 million (approximately
      five percent of total plan assets) and $2.3 million (approximately four percent
      of total plan assets) at December 31, 2007 and 2006, respectively.





The
      long-term rate of return for plan assets is determined using a weighted-average
      of long-term historical 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 8.5% over the long-term.  This rate assumes
      historical returns of 10% for equities and 7% 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 2008 minimum pension funding calculations are not finalized, the Company
      estimates those funding requirements will be approximately $1
      million.





Projected
      benefit payments from the plans as of December 31, 2007, are estimated as
      follows (in thousands):


2008
            
            $
            6,3932009
            
            
            6,4722010
            
            
            6,4902011
            
            
            6,5362012
            
            
            6,6312013-2017
            
            
            35,090





401(k)


The
      Company sponsors five 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 13,669
      shares, 13,506 shares and 18,645 shares of treasury stock in connection with
      this 401(k) plan during 2007, 2006 and 2005, respectively.  Expenses
      to the Company related to this common stock matching contribution were $0.4
      million for 2007 and $0.3 million for each of 2006 and 2005.





A
      second
      plan is for employees covered by a collective bargaining arrangement at Titan
      Tire Corporation and does not include a Company matching
      contribution.  Employees are fully vested with respect to their
      contributions.





The
      Company’s third plan received a 401(k) plan transfer in 2006 for the employees
      covered by a collective bargaining agreement at Titan Tire Corporation of
      Freeport.  This plan does not include a Company matching
      contribution.  Employees are fully vested with respect to their
      contributions.





F-24
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





A
      fourth
      plan is for employees covered by a collective bargaining agreement at Titan
      Tire
      Corporation of Bryan.  This plan does not include a Company matching
      contribution.  Employees are fully vested with respect to their
      contributions.





Previously,
      the Company adopted a 401(k) plan for the former employees of Titan Tire
      Corporation of Natchez.  This plan relates to the non-operational
      facility in Natchez, Mississippi.





21.
            STOCK
                OPTION PLANS





On
      January 1, 2006, the Company adopted SFAS 123(R), “Share-Based Payment,” using
      the modified prospective method of adoption, which does not require restatement
      of prior periods.  The Company previously applied the recognition and
      measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to
      Employees,” and related Interpretations in accounting for share-based option
      awards.  SFAS 123(R) requires companies to estimate the fair value of
      share-based option awards on the date of the grant using an option-pricing
      model.  The value of the portion of the award that is ultimately
      expected to vest is recognized as expense over the vesting period.  No
      stock-based compensation expense was recorded during 2007, 2006, or
      2005.  See Note 1 for 2005 pro forma information illustrating the
      effect on net income and income per share if the Company had applied the
      provisions of SFAS 123(R).  The Company granted no stock options
      during 2007 or 2006.  All previously granted stock options were fully
      vested before January 1, 2006.





In
      accordance with SFAS 123(R), cash flows from income tax benefits resulting
      from
      tax deductions in excess of compensation cost recognized for share-based option
      awards have been classified as financing cash flows prospectively from January
      1, 2006.  Previously, these excess tax benefits were presented as
      operating cash flows.





Stock
      Incentive
      Plan


The
      Company adopted the 1993 Stock Incentive Plan (the Plan) to provide grants
      of
      stock options as a means of attracting and retaining qualified employees for
      the
      Company.  There will be no additional issuance of stock options under
      this plan as it has expired.  Options previously granted were fully
      vested in 2005 and expire 10 years from the grant date of the
      option.





Non-Employee
      Director Stock Option
      Plan


The
      Company adopted the 1994 Non-Employee Director Stock Option Plan (the Director
      Plan) to provide for grants of stock options as a means of attracting and
      retaining qualified independent directors for the Company.  There will
      be no additional issuance of stock options under this plan as it has
      expired.  Options previously granted were fully vested in 2005 and
      expire 10 years from the grant date of the option.





2005
      Equity Incentive Plan


The
      Company adopted the 2005 Equity Incentive Plan to provide stock options as
      a
      means of attracting and retaining qualified independent directors and employees
      for the Company.  A total of 2.1 million shares are reserved for the
      plan.  The exercise price of stock options may not be less than the
      fair market value of the common stock on the date of the grant.  The
      vesting and term of each option is set by the Board of Directors.  In
      2007 and 2006 no stock options were granted under this plan.  In 2005,
      a total of 890,380 options were granted under this plan.  These
      options were fully vested in 2005 and expire 10 years from the grant date of
      the
      option.





Stock
      options outstanding and exercisable as of December 31, 2007, were as
      follows:


Options
                Outstanding
            
            
            Options
                ExercisablePrice
                Range
            
            Weighted
                Average
              Contractual
                Life
            
            Number
                  ofOptions
            
            
            Weighted
                  AverageExercise
                Price
            
            
            Number
                  ofOptions
            
            
            Weighted
                  AverageExercise
                Price$
                4.54 - $ 6.69
            
            3.3
                years
            
            
            135,000
            
            
            $
            5.47
            
            
            
            135,000
            
            
            $
            5.47$
                8.00 - $ 9.50
            
            1.2
                years
            
            
            150,500
            
            
            $
            8.45
            
            
            
            150,500
            
            
            $
            8.45$13.35
                - $14.45
            
            7.4
                years
            
            
            174,435
            
            
            $
            13.66
            
            
            
            174,435
            
            
            $
            13.66$17.18
                - $18.00
            
            5.3
                years
            
            
            239,265
            
            
            $
            17.46
            
            
            
            239,265
            
            
            $
            17.46699,200
            
            
            $
            12.26
            
            
            
            699,200
            
            
            $
            12.26




F-25
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





The
      following is a summary of activity in the stock option plans for 2005, 2006
      and
      2007:


Shares
                Subject
              to
                Option
            
            
            Weighted-
                Average
              Exercise
                PriceOutstanding,
                January 1, 2005
            
            
            802,390
            
            
            $
            11.25Granted
            
            
            890,380
            
            
            
            15.20Exercised
            
            
            (135,860
            )
            
            
            11.04Canceled/Expired
            
            
            (9,400
            )
            
            
            13.47Outstanding,
                December 31, 2005
            
            
            1,547,510
            
            
            
            13.53Granted
            
            
            0
            
            
            
            -
            (a)Exercised
            
            
            (382,190
            )
            
            
            14.15Canceled/Expired
            
            
            (15,260
            )
            
            
            16.00Outstanding,
                December 31, 2006
            
            
            1,150,060
            
            
            
            13.29Granted
            
            
            0
            
            
            
            -
            (a)Exercised
            
            
            (444,530
            )
            
            
            14.92Canceled/Expired
            
            
            (6,330
            )
            
            
            13.13Outstanding,
                December 31, 2007
            
            
            699,200
            
            
            $
            12.26





(a)
            The
                Company granted no stock options during 2006 or
                2007.





The
      total
      intrinsic value of stock options exercised in 2007 was $5.2
      million.  Cash received from the exercise of options was $6.6 million
      for 2007.  There was no tax benefit realized for the tax deductions
      from stock options exercised for 2007.





The
      total
      intrinsic value of options exercised in 2006 was $1.7 million.  Cash
      received from the exercise of stock options was $5.4 million for
      2006.  The tax benefit realized for the tax deductions from stock
      options exercised was
      $0.6
      million for 2006.





The
      Company currently uses treasury shares to satisfy any stock option
      exercises.  At December 31, 2007, the Company had 3.2 million shares
      of treasury stock.





22.
            LEASE
                COMMITMENTS





The
      Company leases certain buildings and equipment under operating
      leases.  Certain lease agreements provide for renewal options, fair
      value purchase options, and payment of property taxes, maintenance and insurance
      by the Company.  Total rental expense was $3.0 million, $3.2 million
      and $3.2 million for the years ended December 31, 2007, 2006 and 2005,
      respectively.





At
      December 31, 2007, future minimum rental commitments under noncancellable
      operating leases with initial or remaining terms in excess of one year are
      as
      follows (in thousands):


2008
            
            $
            1,9152009
            
            
            1,2932010
            
            
            9142011
            
            
            5602012
            
            
            31Thereafter
            
            
            0Total
                future minimum lease payments
            
            $
            4,713




F-26
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





23.
            LITIGATION





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





24.
            CONCENTRATION
                OF CREDIT RISK





Net
      sales
      to Deere & Company in Titan’s agricultural, earthmoving/construction and
      consumer markets represented 17% of the Company’s consolidated revenues for the
      years ended December 31, 2007 and 2006, and 20% of the Company’s consolidated
      revenues for the year ended December 31, 2005.  Net sales to CNH
      Global N.V. in Titan’s three markets represented 11% of the Company’s
      consolidated revenues for each of the years ended December 31, 2007, 2006 and
      2005.  No other customer accounted for more than 10% of Titan’s net
      sales in 2007, 2006 or 2005.





25.
            RELATED
                PARTY TRANSACTIONS





The
      Company sells products and pays commissions to companies controlled by persons
      related to the chief executive officer of the Company.  During 2007,
      2006 and 2005, sales of Titan product to these companies were approximately
      $5.1
      million, $6.4 million and $6.5 million, respectively.  On other sales
      referred to Titan from these manufacturing representative companies, commissions
      were approximately $1.8 million, $2.0 million and $1.6 million during 2007,
      2006
      and 2005, respectively.  These sales and commissions were made in the
      ordinary course of business and were made on terms no less favorable to Titan
      than comparable sales and commissions to unaffiliated third
      parties.  At December 31, 2007 and 2006, Titan had trade receivables
      of approximately $0.2 million and $0.6 million due from these companies,
      respectively.





26.
            RECENT
                DEVELOPMENTS





Affirmative
      Preliminary Antidumping Determination on OTR Tires from China


On
      February 6, 2008, Titan welcomed the U.S. Commerce Department’s preliminary
      decision to impose antidumping duties on imports of new pneumatic off-the-road
      (OTR) tires from China. OTR tires are used on construction and agricultural
      equipment.





As
      a
      result of this preliminary determination, Commerce will instruct U.S. Customs
      and Border Protection to collect a cash deposit or bond based on these
      preliminary rates. Commerce preliminarily determined that Chinese
      producers/exporters have sold new pneumatic off-the-road tires in the U.S.
      at
      10.98 to 210.48 percent less than fair value, with a majority of
      exporter/producers at 24.75 percent less than fair value.





The
      agency will now continue the
      proceeding by holding hearings, conducting verifications of information, and
      reaching a final determination by early June of this year. The International
      Trade Commission will also investigate the issue of injury and reach a
      determination on that issue thereafter.





Titan
      Builds First Radial 63-Inch Tire


On
      February 15, 2008, Titan announced that Titan Tire Corporation of Bryan had
      produced the Company’s first prototype of the giant radial 63-inch tire in its
      Ohio facility.  Titan announced its commitment to produce these giant
      radial tires, used in the mining industry, in May 2007 when the Company’s Board
      of Directors approved funding to increase tire production capacity to include
      57-inch and 63-inch giant radial tires.





F-27
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





27.
            SEGMENT
                AND GEOGRAPHICAL INFORMATION





The
      Company has aggregated its operating units into reportable segments based on
      its
      three customer markets: agricultural, earthmoving/construction and
      consumer.  These segments are based on the information used by the
      chief executive officer and chief operating officer to make certain operating
      decisions, allocate portions of capital expenditures and assess segment
      performance.  The accounting policies of the segments are the same as
      those described in Note 1, “Description of Business and Significant Accounting
      Policies.”  Segment external revenues, expenses and income from
      operations are determined on the basis of the results of operations of operating
      units of manufacturing facilities.  Segment assets are generally
      determined on the basis of the tangible assets located at such operating units’
manufacturing facilities and the intangible assets associated with the
      acquisitions of such operating units.  However, certain operating
      units’ goodwill and property, plant and equipment balances are carried at the
      corporate level.





Titan
      is
      organized primarily on the basis of products being included in three marketing
      segments, with each reportable segment including wheels, tires and wheel/tire
      assemblies.





The
      table
      below presents information about certain revenues and expenses, income (loss)
      from operations and segment assets used by the chief operating decision maker
      of
      the Company as of and for the years ended December 31, 2007, 2006 and 2005
(in thousands):


2007
            
            Agricultural
            
            
            Earthmoving/
              Construction
            
            
            Consumer
            
            
            Reconciling
              Items
            
            
            Consolidated
              TotalsRevenues
                from externalcustomers
            
            $
            515,642
            
            
            $
            277,206
            
            
            $
            44,173
            
            
            $
            0
            
            
            $
            837,021Depreciation
&
                amortization
            
            
            14,255
            
            
            
            10,330
            
            
            
            1,320
            
            
            
            2,715
            (a)
            
            
            28,620Gross
                profit
                (loss)
            
            
            35,742
            
            
            
            47,848
            
            
            
            3,431
            
            
            
            (2,890
            )
              (b)
            
            
            84,131Income
                (loss) from
                operations
            
            
            25,324
            
            
            
            40,833
            
            
            
            2,546
            
            
            
            (43,865
            )
              (b)
            
            
            24,838Total
                assets
            
            
            257,005
            
            
            
            176,144
            
            
            
            22,515
            
            
            
            134,831
            (c)
            
            
            590,495Capital
                expenditures
            
            
            11,267
            
            
            
            22,950
            
            
            
            1,654
            
            
            
            2,177
            (d)
            
            
            38,0482006Revenues
                from externalcustomers
            
            $
            421,096
            
            
            $
            183,357
            
            
            $
            75,001
            
            
            $
            0
            
            
            $
            679,454Depreciation
&
                amortization
            
            
            15,324
            
            
            
            7,402
            
            
            
            1,409
            
            
            
            2,715
            (a)
            
            
            26,850Gross
                profit
                (loss)
            
            
            42,511
            
            
            
            28,099
            
            
            
            2,771
            
            
            
            (603
            )
              (b)
            
            
            72,778Income
                (loss) from
                operations
            
            
            27,351
            
            
            
            21,837
            
            
            
            1,655
            
            
            
            (28,832
            )
              (b)
            
            
            22,011Total
                assets
            
            
            273,787
            
            
            
            145,964
            
            
            
            22,678
            
            
            
            142,697
            (c)
            
            
            585,126Capital
                expenditures
            
            
            5,184
            
            
            
            2,192
            
            
            
            339
            
            
            
            567
            (d)
            
            
            8,2822005Revenues
                from externalcustomers
            
            $
            310,361
            
            
            $
            131,982
            
            
            $
            27,790
            
            
            $
            0
            
            
            $
            470,133Depreciation
&
                amortization
            
            
            11,738
            
            
            
            5,183
            
            
            
            1,447
            
            
            
            2,378
            (a)
            
            
            20,746Gross
                profit
                (loss)
            
            
            42,060
            
            
            
            21,222
            
            
            
            2,758
            
            
            
            (1,830
            )
              (b)
            
            
            64,210Income
                (loss) from
                operations
            
            
            31,750
            
            
            
            17,664
            
            
            
            1,825
            
            
            
            (39,240
            )
              (b)
            
            
            11,999Total
                assets
            
            
            239,581
            
            
            
            89,241
            
            
            
            22,963
            
            
            
            88,971
            (c)
            
            
            440,756Capital
                expenditures
            
            
            3,365
            
            
            
            1,615
            
            
            
            230
            
            
            
            1,542
            (d)
            
            
            6,752





(a)
            Represents
                depreciation expense related to property, plant and equipment carried
                at
                the corporate level.





(b)
            Represents
                corporate expenses including those referred to in (a).  Loss
                from operations includes Dyneer legal charge of $15.2 million in
                2005.





(c)
            Represents
                property, plant and equipment and goodwill related to certain acquisitions
                and other corporate assets.  Approximately $37 million of the
                increase in 2006 from 2005 related to the higher 2006 year-end cash
                balance.





(d)
            Represents
                corporate capital expenditures.





F-28
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





The
      table
      below presents information by geographic area.  Revenues from external
      customers were determined based on the location of the selling
      subsidiary.  Geographic information as of and for the years ended
      December 31, 2007, 2006 and 2005 was as follows (in thousands):


2007
            
            United
                States
            
            
            Other
                Countries
            
            
            Consolidated
              TotalsRevenues
                from external customers
            
            $
            837,021
            
            
            $
            0
            
            
            $
            837,021Long-lived
                assets
            
            
            207,780
            
            
            
            0
            
            
            
            207,7802006Revenues
                from external customers
            
            $
            679,454
            
            
            $
            0
            
            
            $
            679,454Long-lived
                assets (a)
            
            
            196,318
            
            
            
            0
            
            
            
            196,3182005Revenues
                from external customers
            
            $
            470,133
            
            
            $
            0
            
            
            $
            470,133Long-lived
                assets (b)
            
            
            152,084
            
            
            
            0
            
            
            
            152,084





(a)
            Idled
                assets marketed for sale in the amount of $14 million reclassed/included
                in the 2006 long-lived assets.





(b)
            Idled
                assets marketed for sale in the amount of $18 million are not included
                in
                the 2005 long-lived assets.





28.
            EARNINGS
                PER SHARE





Earnings
      per share for 2007, 2006 and 2005, are (amounts in thousands, except
      share and
      per share data):


2007
            
            Net
                (loss)income
            
            
            Weighted-
              average
                shares
            
            
            Per
                share
              amountBasic
                and diluted loss per share (a)
            
            $
            (7,247
            )
            
            
            25,665,015
            
            
            $
            (.28
            )2006Basic
                earnings per share
            
            $
            5,144
            
            
            
            19,701,614
            
            
            $
            .26Effect
                of stock options
            
            
            0
            
            
            
            342,685Diluted
                earnings per share (b)
            
            $
            5,144
            
            
            
            20,044,299
            
            
            $
            .262005Basic
                earnings per share
            
            $
            11,042
            
            
            
            18,052,946
            
            
            $
            .61Effect
                of stock options
            
            
            0
            
            
            
            230,663Diluted
                earnings per share (c)
            
            $
            11,042
            
            
            
            18,283,609
            
            
            $
            .60





(a)
            The
                effect of stock options has been excluded as they were
                anti-dilutive.  The weighted-average share amount excluded for
                stock options totaled 444,129 shares.  The effect of convertible
                notes has not been included as they were anti-dilutive.  The
                weighted-average share amount excluded for convertible notes totaled
                1,301,837 shares.





(b)
            The
                effect of convertible notes has not been included as they were
                anti-dilutive.  The weighted-average share amount excluded for
                convertible notes totaled 6,014,815
                shares.





(c)
            The
                effect of convertible notes has not been included as they were
                anti-dilutive.  The weighted-average share amount excluded for
                convertible notes totaled 7,146,627
                shares.





F-29
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS





29.
            SUPPLEMENTARY
                DATA – QUARTERLY FINANCIAL INFORMATION
                (UNAUDITED)





(All
      amounts in thousands, except per share data)


Quarter
                  ended
              
              March
                  31
              
              
              June
                  30
              
              
              September
                  30
              
              
              December
                  31
              
              
              Year
                  ended
                December
                  312007Net
                  sales
              
              $
              226,278
              
              
              $
              210,333
              
              
              $
              195,472
              
              
              $
              204,938
              
              
              $
              837,021Gross
                  profit
              
              
              27,191
              
              
              
              27,311
              
              
              
              18,294
              
              
              
              11,335
              
              
              
              84,131Net
                  (loss) income
              
              
              (2,483
              )
                (a)
              
              
              4,962
              
              
              
              (878
              )
              
              
              (8,848
              )
              
              
              (7,247
              )Per
                  share amounts: (b)Basic
              
              
              (.12
              )
                (a)
              
              
              .18
              
              
              
              (.03
              )
              
              
              (.32
              )
              
              
              (.28
              )Diluted
              
              
              (.12
              )
                (a)
              
              
              .18
              
              
              
              (.03
              )
              
              
              (.32
              )
              
              
              (.28
              )2006Net
                  sales
              
              $
              182,577
              
              
              $
              175,194
              
              
              $
              156,120
              
              
              $
              165,563
              
              
              $
              679,454Gross
                  profit
              
              
              31,114
              
              
              
              22,442
              
              
              
              17,080
              
              
              
              2,142
              
              
              
              72,778Net
                  income (loss)
              
              
              8,593
              
              
              
              5,603
              
              
              
              488
              
              
              
              (9,540
              )
              
              
              5,144Per
                  share amounts:Basic
              
              
              .44
              
              
              
              .28
              
              
              
              .02
              
              
              
              (.48
              )
              
              
              .26Diluted
                  (b)
              
              
              .36
              
              
              
              .24
              
              
              
              .02
              
              
              
              (.48
              )
              
              
              .26




(a)
            Noncash
                convertible debt conversion charge of $13.4 million was included
                in the
                quarter ended March 31, 2007.





(b)
            As
                a result of changes in outstanding share balances, year-end per share
                amounts do not agree to the sum of the
                quarters.





30.
            SUBSIDIARY
                GUARANTOR FINANCIAL INFORMATION





The
      Company’s $200 million 8% senior unsecured 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 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)Year
                Ended December 31,
                2007Titan
            
            
            
            
            
            Non-Intl.,
                Inc.
            
            
            Guarantor
            
            
            Guarantor(Parent)
            
            
            Subsidiaries
            
            
            Subsidiaries
            
            
            Eliminations
            
            
            ConsolidatedNet
                sales
            
            $
            0
            
            
            $
            837,021
            
            
            $
            0
            
            
            $
            0
            
            
            $
            837,021Cost
                of sales
            
            
            1,905
            
            
            
            750,985
            
            
            
            0
            
            
            
            0
            
            
            
            752,890Gross
                (loss) profit
            
            
            (1,905
            )
            
            
            86,036
            
            
            
            0
            
            
            
            0
            
            
            
            84,131Selling,
                general and administrative expenses
            
            
            19,572
            
            
            
            33,364
            
            
            
            202
            
            
            
            0
            
            
            
            53,138Royalty
                expense
            
            
            0
            
            
            
            6,155
            
            
            
            0
            
            
            
            0
            
            
            
            6,155(Loss)
                income from operations
            
            
            (21,477
            )
            
            
            46,517
            
            
            
            (202
            )
            
            
            0
            
            
            
            24,838Interest
                expense
            
            
            (18,707
            )
            
            
            (3
            )
            
            
            0
            
            
            
            0
            
            
            
            (18,710
            )Intercompany
                interest income (expense)
            
            
            11,472
            
            
            
            (12,324
            )
            
            
            852
            
            
            
            0
            
            
            
            0Noncash
                convertible debt conversion charge
            
            
            (13,376
            )
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            (13,376
            )Other
                income (expense)
            
            
            1,925
            
            
            
            (333
            )
            
            
            1,772
            
            
            
            0
            
            
            
            3,364(Loss)
                income before income taxes
            
            
            (40,163
            )
            
            
            33,857
            
            
            
            2,422
            
            
            
            0
            
            
            
            (3,884
            )(Benefit)
                provision for income taxes
            
            
            (10,423
            )
            
            
            12,866
            
            
            
            920
            
            
            
            0
            
            
            
            3,363Equity
                in earnings of subsidiaries
            
            
            22,493
            
            
            
            0
            
            
            
            0
            
            
            
            (22,493
            )
            
            
            0Net
                (loss) income
            
            $
            (7,247
            )
            
            $
            20,991
            
            
            $
            1,502
            
            
            $
            (22,493
            )
            
            $
            (7,247
            )





F-30
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS




Consolidating
                Condensed Statements of Operations(Amounts
                in thousands)Year
                Ended December 31,
                2006Titan
            
            
            
            
            
            Non-Intl.,
                Inc.
            
            
            Guarantor
            
            
            Guarantor(Parent)
            
            
            Subsidiaries
            
            
            Subsidiaries
            
            
            Eliminations
            
            
            ConsolidatedNet
                sales
            
            $
            0
            
            
            $
            679,454
            
            
            $
            0
            
            
            $
            0
            
            
            $
            679,454Cost
                of sales
            
            
            (194
            )
            
            
            606,870
            
            
            
            0
            
            
            
            0
            
            
            
            606,676Gross
                profit
            
            
            194
            
            
            
            72,584
            
            
            
            0
            
            
            
            0
            
            
            
            72,778Selling,
                general and administrative expenses
            
            
            15,031
            
            
            
            30,591
            
            
            
            144
            
            
            
            0
            
            
            
            45,766Royalty
                expense
            
            
            0
            
            
            
            5,001
            
            
            
            0
            
            
            
            0
            
            
            
            5,001(Loss)
                income from operations
            
            
            (14,837
            )
            
            
            36,992
            
            
            
            (144
            )
            
            
            0
            
            
            
            22,011Interest
                expense
            
            
            (16,553
            )
            
            
            (448
            )
            
            
            0
            
            
            
            0
            
            
            
            (17,001
            )Intercompany
                interest income (expense)
            
            
            4,495
            
            
            
            (5,457
            )
            
            
            962
            
            
            
            0
            
            
            
            0Other
                income, net
            
            
            432
            
            
            
            686
            
            
            
            2,446
            
            
            
            0
            
            
            
            3,564(Loss)
                income before income taxes
            
            
            (26,463
            )
            
            
            31,773
            
            
            
            3,264
            
            
            
            0
            
            
            
            8,574(Benefit)
                provision for income taxes
            
            
            (10,585
            )
            
            
            12,709
            
            
            
            1,306
            
            
            
            0
            
            
            
            3,430Equity
                in earnings of subsidiaries
            
            
            21,022
            
            
            
            0
            
            
            
            0
            
            
            
            (21,022
            )
            
            
            0Net
                income
            
            $
            5,144
            
            
            $
            19,064
            
            
            $
            1,958
            
            
            $
            (21,022
            )
            
            $
            5,144








Year
                Ended December 31,
                2005Titan
            
            
            
            
            
            Non-Intl.,
                Inc.
            
            
            Guarantor
            
            
            Guarantor(Parent)
            
            
            Subsidiaries
            
            
            Subsidiaries
            
            
            Eliminations
            
            
            ConsolidatedNet
                sales
            
            $
            0
            
            
            $
            470,133
            
            
            $
            0
            
            
            $
            0
            
            
            $
            470,133Cost
                of sales
            
            
            312
            
            
            
            405,611
            
            
            
            0
            
            
            
            0
            
            
            
            405,923Gross
                (loss) profit
            
            
            (312
            )
            
            
            64,522
            
            
            
            0
            
            
            
            0
            
            
            
            64,210Selling,
                general and administrative expenses
            
            
            11,874
            
            
            
            24,983
            
            
            
            149
            
            
            
            0
            
            
            
            37,006Dyneer
                legal charge
            
            
            0
            
            
            
            15,205
            
            
            
            0
            
            
            
            0
            
            
            
            15,205(Loss)
                income from operations
            
            
            (12,186
            )
            
            
            24,334
            
            
            
            (149
            )
            
            
            0
            
            
            
            11,999Interest
                expense
            
            
            (8,426
            )
            
            
            (191
            )
            
            
            0
            
            
            
            0
            
            
            
            (8,617
            )Noncash
                convertible debt conversion charge
            
            
            (7,225
            )
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            (7,225
            )Intercompany
                interest income (expense)
            
            
            4,644
            
            
            
            (5,098
            )
            
            
            454
            
            
            
            0
            
            
            
            0Other
                (expense) income, net
            
            
            (606
            )
            
            
            (294
            )
            
            
            1,858
            
            
            
            0
            
            
            
            958(Loss)
                income before income taxes
            
            
            (23,799
            )
            
            
            18,751
            
            
            
            2,163
            
            
            
            0
            
            
            
            (2,885
            )Benefit
                for income taxes
            
            
            0
            
            
            
            (13,927
            )
            
            
            0
            
            
            
            0
            
            
            
            (13,927
            )Equity
                in earnings of subsidiaries
            
            
            34,841
            
            
            
            0
            
            
            
            0
            
            
            
            (34,841
            )
            
            
            0Net
                income
            
            $
            11,042
            
            
            $
            32,678
            
            
            $
            2,163
            
            
            $
            (34,841
            )
            
            $
            11,042




F-31
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS




Consolidating
                Condensed Balance Sheets(Amounts
                in thousands)December
                31, 2007Titan
            
            
            
            
            
            Non-Intl.,
                Inc.
            
            
            Guarantor
            
            
            Guarantor(Parent)
            
            
            Subsidiaries
            
            
            Subsidiaries
            
            
            Eliminations
            
            
            ConsolidatedAssetsCash
                and cash equivalents
            
            $
            57,285
            
            
            $
            63
            
            
            $
            977
            
            
            $
            0
            
            
            $
            58,325Accounts
                receivable
            
            
            (458
            )
            
            
            98,852
            
            
            
            0
            
            
            
            0
            
            
            
            98,394Inventories
            
            
            0
            
            
            
            128,048
            
            
            
            0
            
            
            
            0
            
            
            
            128,048Prepaid
                and other current assets
            
            
            26,898
            
            
            
            16,100
            
            
            
            0
            
            
            
            0
            
            
            
            42,998Total
                current
                assets
            
            
            83,725
            
            
            
            243,063
            
            
            
            977
            
            
            
            0
            
            
            
            327,765Property,
                plant and equipment, net
            
            
            2,291
            
            
            
            193,787
            
            
            
            0
            
            
            
            0
            
            
            
            196,078Investment
                in Titan Europe Plc
            
            
            (5,812
            )
            
            
            0
            
            
            
            40,347
            
            
            
            0
            
            
            
            34,535Investment
                in subsidiaries
            
            
            18,714
            
            
            
            0
            
            
            
            0
            
            
            
            (18,714
            )
            
            
            0Other
                assets
            
            
            12,256
            
            
            
            19,861
            
            
            
            0
            
            
            
            0
            
            
            
            32,117Total
                assets
            
            $
            111,174
            
            
            $
            456,711
            
            
            $
            41,324
            
            
            $
            (18,714
            )
            
            $
            590,495Liabilities
                and Stockholders’ EquityAccounts
                payable
            
            $
            2,059
            
            
            $
            41,933
            
            
            $
            0
            
            
            $
            0
            
            
            $
            43,992Other
                current liabilities
            
            
            10,456
            
            
            
            33,347
            
            
            
            (15
            )
            
            
            0
            
            
            
            43,788Total
                current
                liabilities
            
            
            12,515
            
            
            
            75,280
            
            
            
            (15
            )
            
            
            0
            
            
            
            87,780Long-term
                debt
            
            
            200,000
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            200,000Other
                long-term liabilities
            
            
            22,931
            
            
            
            7,262
            
            
            
            0
            
            
            
            0
            
            
            
            30,193Intercompany
                accounts
            
            
            (396,794
            )
            
            
            386,883
            
            
            
            9,911
            
            
            
            0
            
            
            
            0Stockholders’
                equity
            
            
            272,522
            
            
            
            (12,714
            )
            
            
            31,428
            
            
            
            (18,714
            )
            
            
            272,522Total
                liabilities and stockholders’ equity
            
            $
            111,174
            
            
            $
            456,711
            
            
            $
            41,324
            
            
            $
            (18,714
            )
            
            $
            590,495








December
                31, 2006Titan
            
            
            
            
            
            Non-Intl.,
                Inc.
            
            
            Guarantor
            
            
            Guarantor(Parent)
            
            
            Subsidiaries
            
            
            Subsidiaries
            
            
            Eliminations
            
            
            ConsolidatedAssetsCash
                and cash equivalents
            
            $
            33,220
            
            
            $
            69
            
            
            $
            123
            
            
            $
            0
            
            
            $
            33,412Accounts
                receivable
            
            
            (38
            )
            
            
            73,920
            
            
            
            0
            
            
            
            0
            
            
            
            73,882Inventories
            
            
            0
            
            
            
            154,604
            
            
            
            0
            
            
            
            0
            
            
            
            154,604Prepaid
                and other current assets
            
            
            3,937
            
            
            
            44,036
            
            
            
            62
            
            
            
            0
            
            
            
            48,035Total
                current
                assets
            
            
            37,119
            
            
            
            272,629
            
            
            
            185
            
            
            
            0
            
            
            
            309,933Property,
                plant and equipment, net
            
            
            1,279
            
            
            
            183,337
            
            
            
            0
            
            
            
            0
            
            
            
            184,616Investment
                in Titan Europe Plc
            
            
            25,534
            
            
            
            0
            
            
            
            40,347
            
            
            
            0
            
            
            
            65,881Investment
                in subsidiaries
            
            
            14,517
            
            
            
            0
            
            
            
            0
            
            
            
            (14,517
            )
            
            
            0Other
                assets
            
            
            8,802
            
            
            
            15,894
            
            
            
            0
            
            
            
            0
            
            
            
            24,696Total
                assets
            
            $
            87,251
            
            
            $
            471,860
            
            
            $
            40,532
            
            
            $
            (14,517
            )
            
            $
            585,126Liabilities
                and Stockholders’ EquityAccounts
                payable
            
            $
            1,058
            
            
            $
            24,826
            
            
            $
            0
            
            
            $
            0
            
            
            $
            25,884Other
                current liabilities
            
            
            3,437
            
            
            
            33,607
            
            
            
            (11
            )
            
            
            7
            
            
            
            37,040Total
                current
                liabilities
            
            
            4,495
            
            
            
            58,433
            
            
            
            (11
            )
            
            
            7
            
            
            
            62,924Long-term
                debt
            
            
            290,700
            
            
            
            566
            
            
            
            0
            
            
            
            0
            
            
            
            291,266Other
                long-term liabilities
            
            
            10,896
            
            
            
            30,393
            
            
            
            2,470
            
            
            
            0
            
            
            
            43,759Intercompany
                accounts
            
            
            (406,017
            )
            
            
            398,856
            
            
            
            7,168
            
            
            
            (7
            )
            
            
            0Stockholders’
                equity
            
            
            187,177
            
            
            
            (16,388
            )
            
            
            30,905
            
            
            
            (14,517
            )
            
            
            187,177Total
                liabilities and stockholders’ equity
            
            $
            87,251
            
            
            $
            471,860
            
            
            $
            40,532
            
            
            $
            (14,517
            )
            
            $
            585,126




F-32
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS




Consolidating
                Condensed Statements of Cash Flows(Amounts
                in thousands)Year
                Ended December 31,
                2007Titan
            
            
            
            
            
            Non-Intl.,
                Inc.
            
            
            Guarantor
            
            
            Guarantor(Parent)
            
            
            Subsidiaries
            
            
            Subsidiaries
            
            
            ConsolidatedNet
                cash provided by operating activities
            
            $
            38,364
            
            
            $
            36,775
            
            
            $
            854
            
            
            $
            75,993Cash
                flows from investing activities:Capital
                expenditures
            
            
            (1,402
            )
            
            
            (36,646
            )
            
            
            0
            
            
            
            (38,048
            )Acquisition
                off-the-road (OTR)
                assets
            
            
            (8,900
            )
            
            
            0
            
            
            
            0
            
            
            
            (8,900
            )Asset
                disposals
            
            
            3
            
            
            
            529
            
            
            
            0
            
            
            
            532Net
                cash used for investing
                activities
            
            
            (10,299
            )
            
            
            (36,117
            )
            
            
            0
            
            
            
            (46,416
            )Cash
                flows from financing activities:Payment
                of debt
            
            
            (9,500
            )
            
            
            (664
            )
            
            
            0
            
            
            
            (10,164
            )Proceeds
                from exercise of stock
                options
            
            
            6,631
            
            
            
            0
            
            
            
            0
            
            
            
            6,631Other,
                net
            
            
            (1,131
            )
            
            
            0
            
            
            
            0
            
            
            
            (1,131
            )Net
                cash used for financing
                activities
            
            
            (4,000
            )
            
            
            (664
            )
            
            
            0
            
            
            
            (4,664
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            24,065
            
            
            
            (6
            )
            
            
            854
            
            
            
            24,913Cash
                and cash equivalents, beginning of year
            
            
            33,220
            
            
            
            69
            
            
            
            123
            
            
            
            33,412Cash
                and cash equivalents, end of year
            
            $
            57,285
            
            
            $
            63
            
            
            $
            977
            
            
            $
            58,325








Year
                Ended December 31,
                2006Titan
            
            
            
            
            
            Non-Intl.,
                Inc.
            
            
            Guarantor
            
            
            Guarantor(Parent)
            
            
            Subsidiaries
            
            
            Subsidiaries
            
            
            ConsolidatedNet
                cash (used for) provided by operating activities
            
            $
            (69,433
            )
            
            $
            64,500
            
            
            $
            (361
            )
            
            $
            (5,294
            )Cash
                flows from investing activities:Acquisition
                off-the-road (OTR)
                assets
            
            
            0
            
            
            
            (44,642
            )
            
            
            0
            
            
            
            (44,642
            )Capital
                expenditures
            
            
            (390
            )
            
            
            (7,892
            )
            
            
            0
            
            
            
            (8,282
            )Other,
                net
            
            
            149
            
            
            
            49
            
            
            
            0
            
            
            
            198Net
                cash used for investing
                activities
            
            
            (241
            )
            
            
            (52,485
            )
            
            
            0
            
            
            
            (52,726
            )Cash
                flows from financing activities:Proceeds
                from
                borrowings
            
            
            200,000
            
            
            
            0
            
            
            
            0
            
            
            
            200,000Payment
                of debt
            
            
            0
            
            
            
            (11,995
            )
            
            
            0
            
            
            
            (11,995
            )Payment
                on revolving credit
                facility, net
            
            
            (99,100
            )
            
            
            0
            
            
            
            0
            
            
            
            (99,100
            )Proceeds
                from exercise of stock
                options
            
            
            5,407
            
            
            
            0
            
            
            
            0
            
            
            
            5,407Excess
                tax benefits from stock
                options exercised
            
            
            646
            
            
            
            0
            
            
            
            0
            
            
            
            646Payment
                of financing
                fees
            
            
            (3,725
            )
            
            
            0
            
            
            
            0
            
            
            
            (3,725
            )Dividends
                paid
            
            
            (393
            )
            
            
            0
            
            
            
            0
            
            
            
            (393
            )Net
                cash provided by (used for)
                financing activities
            
            
            102,835
            
            
            
            (11,995
            )
            
            
            0
            
            
            
            90,840Net
                increase (decrease) in cash and cash equivalents
            
            
            33,161
            
            
            
            20
            
            
            
            (361
            )
            
            
            32,820Cash
                and cash equivalents, beginning of year
            
            
            59
            
            
            
            49
            
            
            
            484
            
            
            
            592Cash
                and cash equivalents, end of year
            
            $
            33,220
            
            
            $
            69
            
            
            $
            123
            
            
            $
            33,412




F-33
 TITAN
              INTERNATIONAL, INC.
 NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS




Consolidating
                Condensed Statements of Cash Flows(Amounts
                in thousands)Year
                Ended December 31,
                2005Titan
            
            
            
            
            
            Non-Intl.,
                Inc.
            
            
            Guarantor
            
            
            Guarantor(Parent)
            
            
            Subsidiaries
            
            
            Subsidiaries
            
            
            ConsolidatedNet
                cash (used for) provided by operating activities
            
            $
            (77,943
            )
            
            $
            101,650
            
            
            $
            (548
            )
            
            $
            23,159Cash
                flows from investing activities:Goodyear
                North American farm
                tire acquisition
            
            
            0
            
            
            
            (100,000
            )
            
            
            0
            
            
            
            (100,000
            )Capital
                expenditures
            
            
            (882
            )
            
            
            (5,870
            )
            
            
            0
            
            
            
            (6,752
            )Decrease
                in restricted cash
                deposits
            
            
            24,500
            
            
            
            0
            
            
            
            0
            
            
            
            24,500Asset
                disposals
            
            
            0
            
            
            
            5,509
            
            
            
            0
            
            
            
            5,509Net
                cash provided by (used for)
                investing activities
            
            
            23,618
            
            
            
            (100,361
            )
            
            
            0
            
            
            
            (76,743
            )Cash
                flows from financing activities:Payment
                of debt
            
            
            0
            
            
            
            (1,296
            )
            
            
            0
            
            
            
            (1,296
            )Proceeds
                on revolving credit
                facility, net
            
            
            54,700
            
            
            
            0
            
            
            
            0
            
            
            
            54,700Proceeds
                from exercise of stock
                options
            
            
            1,500
            
            
            
            0
            
            
            
            0
            
            
            
            1,500Payment
                of financing
                fees
            
            
            (1,500
            )
            
            
            0
            
            
            
            0
            
            
            
            (1,500
            )Dividends
                paid
            
            
            (358
            )
            
            
            0
            
            
            
            0
            
            
            
            (358
            )Net
                cash provided by (used for)
                financing activities
            
            
            54,342
            
            
            
            (1,296
            )
            
            
            0
            
            
            
            53,046Net
                increase (decrease) in cash and cash equivalents
            
            
            17
            
            
            
            (7
            )
            
            
            (548
            )
            
            
            (538
            )Cash
                and cash equivalents, beginning of year
            
            
            42
            
            
            
            56
            
            
            
            1,032
            
            
            
            1,130Cash
                and cash equivalents, end of year
            
            $
            59
            
            
            $
            49
            
            
            $
            484
            
            
            $
            592




F-34
 TITAN
              INTERNATIONAL, INC.
  SCHEDULE
              II – VALUATION
              RESERVES




Description
            
            Balance
                at
              beginning
              of
                year
            
            
            Additions
                to
              costs
                and
              expenses
            
            
            Deductions
            
            
            Balance
              at
                end
              of
                yearYear
                ended December 31, 2007Reserve
                deducted in the balance sheet from the assets to which it
                appliesAllowance
                for doubtful accounts
            
            $
            4,818,000
            
            
            $
            461,000
            
            
            $
            (21,000
            )
            
            $
            5,258,000Year
                ended December 31, 2006Reserve
                deducted in the balance sheet from the assets to which it
                appliesAllowance
                for doubtful accounts
            
            $
            5,654,000
            
            
            $
            1,596,000
            
            
            $
            (2,432,000
            )
            
            $
            4,818,000Year
                ended December 31, 2005Reserve
                deducted in the balance sheet from the assets to which it
                appliesAllowance
                for doubtful accounts
            
            $
            4,259,000
            
            
            $
            1,455,000
            
            
            $
            (60,000
            )
            
            $
            5,654,000






S-1