Titan International(TWI) - 2019 Q4 - Annual Report

PART I This section provides an overview of Titan International's business, including its global operations, strategic priorities, competitive landscape, and associated risk factors, along with details on properties, legal proceedings, and mine safety disclosures Item 1. Business Titan International, Inc. is a global manufacturer and supplier of wheels, tires, and undercarriage industrial products for agricultural, earthmoving/construction, and consumer markets - Titan International, Inc. is a global manufacturer and supplier of wheels, tires, and undercarriage systems for agricultural, earthmoving/construction, and consumer markets, tracing its roots back to 1890[16] - The company has expanded its global footprint and product offerings through major acquisitions, including Goodyear's North American and Latin American farm tire assets, Continental Tire's OTR tire assets, and a controlling interest in Titan Australia and Voltyre-Prom[16][20] - Titan manufactures and sells tires under the Goodyear Farm Tire and Titan Tire brands, offering complete wheel and tire assemblies to OEM and aftermarket customers[17][19][21] - Key competitive strengths include a strong market position in the global off-highway market, comprehensive wheel and tire manufacturing capabilities, and long-term relationships with core customers like AGCO, Caterpillar, CNH Global, and Deere & Company[23][24][25][26] - Strategic considerations include enhancing LSW tire technology for improved performance and fuel economy, increasing aftermarket tire business for higher margins and less cyclicality, improving operating efficiencies, and developing new products in collaboration with customers[27][28][29][30] - The company operates manufacturing facilities in Latin America (18% of 2019 net sales), Europe (22%), and Russia (6%), with 4,200 of its 6,200 employees located outside the United States as of December 31, 2019[47][54] Research and Development Expenses (2017-2019) | Year | R&D Expenses (Millions) | | :--- | :----------------------:| | 2019 | $9.9 | | 2018 | $11.1 | | 2017 | $10.3 | - Deere & Company accounted for 11% of Titan's consolidated revenues in 2019, making it the largest single customer, while the top 10 customers represented 38% of net sales[50] Item 1A. Risk Factors The company faces significant risks including volatile commodity prices, reliance on limited suppliers, restrictive debt covenants, and cyclical industry dependence - The Company is exposed to price fluctuations of key commodities (steel, natural rubber, synthetic rubber, carbon black, bead wire, and fabric) and relies on a limited number of suppliers for these materials, which could impact margins and operations if price increases cannot be passed on or supply is disrupted[63][64] - Titan's business is highly dependent on cyclical industries (agricultural, earthmoving/construction, consumer products) and is subject to general economic downturns, which can lead to significant fluctuations in profits and cash flow[66][67] - Revenues are seasonal, with typically lower sales in the second half of the year, leading to potential volatility in profit margins due to fixed overhead expenses[68] - Customer concentration is a risk, with the top ten customers accounting for 38% of net sales in 2019, and Deere & Company alone representing 11%[69] - International operations, which accounted for 54% of net sales in 2019, expose the company to risks such as currency exchange rate fluctuations, economic and political destabilization, restrictive foreign government actions, and changes in trade laws[82][83][84] - The company faces substantial competition from domestic and international companies, some with greater resources, and competes on price, quality, service, design, and delivery time[74][75] - Other risks include potential unfavorable outcomes of legal proceedings (e.g., environmental litigation), challenges in integrating acquisitions or executing divestitures, and disruptions to information technology systems, including ongoing ERP system upgrades[78][79][87] Item 1B. Unresolved Staff Comments The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[95] Item 2. Properties Titan International owns and leases manufacturing and distribution facilities globally, with significant square footage in North America, Europe, and South America Major Properties by Location (Square Footage in Thousands) | Location | Approximate Square Footage (Owned) | Use | Segment | | :------------------ | :--------------------------------- | :------------------------ | :---------- | | Volzhsky, Russia | 2,153 | Manufacturing, distribution | All segments| | Union City, Tennessee | 2,149 | Manufacturing, distribution | All segments| | Des Moines, Iowa | 1,930 | Manufacturing, distribution | All segments| | Sao Paulo, Brazil | 1,282 | Manufacturing, distribution | All segments| | Quincy, Illinois | 1,205 | Manufacturing, distribution | All segments| | Freeport, Illinois | 1,202 | Manufacturing, distribution | All segments| Total Properties by Continent (Square Footage in Thousands) | Location | Owned | Leased | Use | Segment | | :------------ | :---- | :----- | :------------------------ | :---------- | | North America | 8,596 | 535 | Manufacturing, distribution | All segments| | Europe | 3,910 | 19 | Manufacturing, distribution | All segments| | South America | 2,929 | 104 | Manufacturing, distribution | All segments| | Australia | | 1,205 | Manufacturing, distribution | All segments| | Asia | 646 | 281 | Manufacturing, distribution | All segments| - Management believes its facilities are in good condition and have sufficient capacity to meet current market demand[96] Item 3. Legal Proceedings The company is involved in routine legal proceedings, including environmental issues and product liability claims, arising from its normal business operations - The Company is subject to various legal proceedings and claims in the normal course of business, covering environmental issues, product liability, contracts, and labor matters[97] - Further discussion on legal proceedings can be found in Note 24 to the Company's consolidated financial statements[97] Item 4. Mine Safety Disclosures The company has no mine safety disclosures to report - There are no mine safety disclosures[98] PART II This section details Titan International's common stock market performance, selected financial data, management's discussion and analysis of operations, market risk disclosures, and internal controls Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Titan International's common stock is traded on the NYSE under the symbol TWI, with approximately 350 holders of record as of February 25, 2020, and showed underperformance against key indices over the past five years - Titan International, Inc. common stock is traded on the New York Stock Exchange (NYSE) under the symbol TWI[100] - As of February 25, 2020, there were approximately 350 holders of record of Titan common stock[100] Cumulative Total Return (December 31, 2014 = $100) | Index | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | | :------------------------------------- | :------ | :------ | :------- | :------- | :------- | :------- | | Titan International, Inc. | $100.00 | $37.18 | $106.07 | $122.09 | $44.29 | $34.58 | | S&P 500 Index | $100.00 | $101.38 | $113.51 | $138.29 | $132.23 | $173.86 | | S&P 600 Agricultural & Farm Machinery Index | $100.00 | $94.38 | $129.33 | $153.70 | $123.57 | $119.70 | Item 6. Selected Financial Data Titan International's selected financial data for 2015-2019 shows declining net sales, a shift to net loss in 2019, and general decreases in gross profit, income from operations, working capital, and total equity Selected Financial Data (Amounts in Thousands, Except Per Share Data) | Metric | 2019 | 2018 | 2017 | 2016 | 2015 | | :------------------------------------ | :------------ | :------------ | :------------ | :------------ | :------------ | | Net sales | $1,448,666 | $1,602,408 | $1,468,922 | $1,265,497 | $1,394,771 | | Gross profit | $129,004 | $198,266 | $160,311 | $141,415 | $136,583 | | (Loss) income from operations | $(28,432) | $42,244 | $(11,151) | $(22,400) | $(25,505) | | Net (loss) income attributable to Titan | $(48,425) | $16,087 | $(60,042) | $(37,605) | $(75,174) | | Net (loss) income per share – basic | $(0.84) | $0.06 | $(1.12) | $(0.87) | $(1.73) | | Dividends declared per common share | $0.02 | $0.02 | $0.02 | $0.02 | $0.02 | | Working capital, excluding cash | $250,310 | $322,728 | $266,701 | $215,250 | $246,279 | | Total assets | $1,114,307 | $1,251,256 | $1,290,112 | $1,265,896 | $1,273,793 | | Long-term debt | $443,349 | $409,572 | $407,171 | $408,760 | $475,443 | | Total equity | $238,988 | $270,097 | $310,084 | $292,879 | $351,246 | Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's Discussion and Analysis provides an overview of Titan's financial performance, market conditions, and liquidity, highlighting a significant decline in 2019 net sales and a shift to operating loss due to challenging market conditions, offset by improved operating cash flow from working capital management Business This section refers to Part I, Item 1 for a description of the Company's business and segments - The Company's business and segments are described in Part 1, Item 1 of this Form 10-K[107] Market Conditions and Outlook Titan anticipates soft market conditions for North American and European agriculture in 2020, with modest growth in Russia and Latin America, while earthmoving/construction is expected to decline modestly and the consumer market to see modest growth - Agricultural market conditions for North America and Europe are expected to remain soft in 2020, while Russia and Latin America are anticipated to experience modest growth[108] - The earthmoving/construction market is projected to see modest declines for small and medium-sized equipment in 2020, with mining industry demand generally flat compared to 2019[109] - Overall, the consumer market is expected to experience modest growth in 2020[110] Summary of Results of Operations In 2019, Titan's net sales decreased by 9.6% to $1.45 billion, leading to a significant drop in gross profit margin from 12.4% in 2018 to 8.9%, and a net loss of 3.5% of net sales, with all segments experiencing sales decreases Statement of Operations as a Percentage of Net Sales | Metric | 2019 | 2018 | 2017 | | :------------------------------------ | :------ | :------ | :------ | | Net sales | 100.0 % | 100.0 % | 100.0 % | | Cost of sales | 91.1 | 87.6 | 88.4 | | Gross profit | 8.9 | 12.4 | 10.9 | | Selling, general and administrative expenses | 9.5 | 8.4 | 10.3 | | Research and development | 0.7 | 0.7 | 0.7 | | Royalty expense | 0.7 | 0.7 | 0.7 | | (Loss) income from operations | (2.0) | 2.6 | (0.8) | | Interest expense | (2.3) | (1.9) | (2.0) | | Foreign exchange gain (loss) | 0.3 | (0.7) | (0.1) | | Other income | 0.7 | 1.2 | 0.6 | | (Loss) income before income taxes | (3.3) | 1.2 | (3.6) | | Income tax provision | 0.2 | 0.4 | 0.8 | | Net (loss) income | (3.5)% | 0.8 % | (4.4)% | | Net (loss) income attributable to Titan | (3.3)% | 1.0 % | (4.1)% | Net Sales by Segment (Amounts in Thousands) | Segment | 2019 | 2018 | 2017 | | :---------------------- | :------------ | :------------ | :------------ | | Agricultural | $652,558 | $694,268 | $690,238 | | Earthmoving/construction | $648,753 | $741,733 | $608,894 | | Consumer | $147,355 | $166,407 | $169,790 | | Total | $1,448,666 | $1,602,408 | $1,468,922 | Fiscal Year Ended December 31, 2019, Compared to Fiscal Year Ended December 31, 2018 In 2019, Titan's net sales decreased by 9.6% to $1.45 billion, primarily due to lower sales volume and unfavorable currency translation, resulting in a 34.9% decline in gross profit and a significant operating loss of $28.4 million Key Financial Highlights (2019 vs. 2018, Amounts in Thousands) | Metric | 2019 | 2018 | % Change | | :---------------------------- | :------------ | :------------ | :--------- | | Net sales | $1,448,666 | $1,602,408 | (9.6)% | | Cost of sales | $1,319,662 | $1,404,142 | (6)% | | Gross profit | $129,004 | $198,266 | (34.9)% | | Selling, general and administrative expenses | $137,697 | $134,789 | 2.2 % | | Research and development expenses | $9,859 | $11,146 | (11.5)% | | Royalty expense | $9,880 | $10,087 | (2.1)% | | (Loss) income from operations | $(28,432) | $42,244 | 167.3 % | - Net sales decreased by 9.6% due to a 10.0% decrease in volume and a 3.4% unfavorable currency translation, partially offset by a 3.8% favorable price/mix[115] - Gross profit margin decreased from 12.4% in 2018 to 8.9% in 2019, primarily due to lower sales volume, production inefficiencies, and approximately $15 million in higher material costs in North American wheel operations[116] - SG&A expenses increased by 2.2% to $137.7 million, driven by higher technology expenses for ERP platform stabilization and corporate systems investments, and $2.7 million related to a postponed public listing of the ITM subsidiary[117] - R&D expenses decreased by 11.5% to $9.9 million, mainly due to lower salaries, benefits, and facility costs from more focused efforts[118] - The company reported a net loss of $51.5 million in 2019, compared to a net income of $13.0 million in 2018, resulting in a basic EPS of $(0.84) versus $0.06[126] Segment Performance (2019 vs. 2018, Amounts in Thousands) | Segment | Net Sales 2019 | Net Sales 2018 | % Decrease | Gross Profit 2019 | Gross Profit 2018 | % Decrease | Income (Loss) from Operations 2019 | Income (Loss) from Operations 2018 | % Decrease | | :---------------------- | :------------- | :------------- | :--------- | :---------------- | :---------------- | :--------- | :--------------------------------- | :--------------------------------- | :--------- | | Agricultural | $652,558 | $694,268 | (6.0)% | $55,971 | $94,217 | (40.6)% | $10,991 | $62,065 | (82.3)% | | Earthmoving/construction | $648,753 | $741,733 | (12.5)% | $57,678 | $80,056 | (28.0)% | $(1,892) | $31,141 | (106)% | | Consumer | $147,355 | $166,407 | (11.4)% | $15,355 | $23,993 | (36.0)% | $1,849 | $11,994 | (84.6)% | Fiscal Year Ended December 31, 2018, Compared to Fiscal Year Ended December 31, 2017 The comparison of 2018 results to 2017 has been omitted from this Form 10-K and can be found in the Company's Form 10-K for the fiscal year ended December 31, 2018 - The comparison of 2018 results to 2017 is omitted from this Form 10-K and is available in the Company's Form 10-K for the fiscal year ended December 31, 2018[136] Liquidity and Capital Resources As of December 31, 2019, Titan had $66.8 million in cash, a $14.9 million decrease from 2018, with operating activities providing $45.4 million in cash due to working capital management, while investing activities used $92.6 million and financing activities provided $32.1 million - Cash and cash equivalents decreased by $14.9 million to $66.8 million as of December 31, 2019[137] Summary of Cash Flows (Amounts in Thousands) | Cash Flow Activity | 2019 | 2018 | Change | | :----------------------------- | :------------ | :------------ | :------------ | | Net cash provided by (used for) operating activities | $45,442 | $(36,176) | $81,618 | | Net cash used for investing activities | $(92,591) | $(36,931) | $(55,660) | | Net cash provided by financing activities | $32,122 | $17,536 | $14,586 | - Operating cash flows improved significantly by $81.6 million in 2019, driven by decreases in inventories ($63.7 million) and accounts receivable ($56.8 million) due to strategic inventory management[137][138] - Investing activities included $36.4 million in capital expenditures and $71.7 million in payments for redeemable noncontrolling interest, partially offset by $19.0 million from the sale of Wheels India Limited shares[140] - As of December 31, 2019, the company had $30.8 million available under its $125 million revolving credit facility, with $36 million in borrowings[143] - Forecasted capital expenditures for 2020 are approximately $35 million, and cash payments for interest are expected to be around $30 million[144] - The company plans to pursue sales of non-core or idle assets to generate cash flow and improve working capital, and may consider strategic acquisitions[145][146] Contractual Obligations As of December 31, 2019, Titan's total contractual obligations amounted to $699.1 million, with $122.5 million due within one year, primarily comprising senior secured notes due 2023 and other debt/capital leases Contractual Obligations as of December 31, 2019 (Amounts in Thousands) | Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :-------------------------------- | :-------- | :--------------- | :-------- | :-------- | :---------------- | | 6.50% senior secured notes due 2023 | $400,000 | $— | $— | $400,000 | $— | | Other debt and capital leases | $108,642 | $61,253 | $44,204 | $1,636 | $1,549 | | Interest expense (a) | $107,002 | $30,379 | $52,790 | $23,833 | $— | | Operating leases | $28,487 | $8,244 | $11,261 | $5,399 | $3,583 | | Purchase obligations | $22,731 | $17,853 | $4,610 | $268 | $— | | Other long-term liabilities (b) | $32,200 | $4,800 | $16,400 | $11,000 | $— | | Total | $699,062 | $122,529 | $129,265 | $442,136 | $5,132 | Off-Balance Sheet Arrangements As of December 31, 2019, Titan International did not have any off-balance sheet arrangements - As of December 31, 2019, the Company did not have any off-balance sheet arrangements[150] Critical Accounting Policies and Estimates Titan's critical accounting policies involve significant management estimates and judgments in areas such as asset acquisitions, inventory valuation, income taxes, retirement benefits, product warranties, and asset impairment, where changes could materially impact financial statements - Critical accounting policies include asset and business acquisitions, inventories, income taxes, retirement benefit obligations, product warranties, and impairment of long-lived assets, all requiring significant management estimates and judgments[151][152][153][154][155][157][158] - A future change in estimates, assumptions, or judgments related to these policies could have a material impact on future financial statements[151] Item 7A. Quantitative and Qualitative Disclosures about Market Risk Titan is exposed to market risks from foreign currency fluctuations, commodity price volatility, and interest rate changes, using derivatives for currency risk and attempting to pass on commodity price changes to customers - The Company is exposed to foreign currency risk due to international operations, with a hypothetical 10% adverse change in foreign currency exchange rates potentially resulting in a $28.7 million loss in net investment value as of December 31, 2019[160] - Titan is exposed to commodity price risk (steel, natural rubber, synthetic rubber, carbon black) as it does not generally use long-term contracts or derivatives to hedge, attempting to pass price changes to customers[161] - The company faces interest rate risk on its variable debt, specifically its $125 million revolving credit facility; a 100 basis point increase in interest rate would change interest expense by approximately $0.8 million if fully drawn to available funds[162] Item 8. Financial Statements and Supplementary Data This section refers to Part IV, Item 15 for the company's financial statements and supplementary data - Financial statements and supplementary data are referenced in Part IV, Item 15 of this report[164] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reported no changes in or disagreements with accountants on accounting and financial disclosure - There were no changes in or disagreements with accountants on accounting and financial disclosure[164] Item 9A. Controls and Procedures As of December 31, 2019, Titan's management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting, and an unqualified opinion from Grant Thornton LLP on the effectiveness of internal control over financial reporting - As of December 31, 2019, Titan's CEO and CFO concluded that the company's disclosure controls and procedures were effective[165] - No material changes in internal control over financial reporting occurred during the fourth quarter of fiscal 2019[166] - Management assessed and concluded that the company maintained effective internal control over financial reporting as of December 31, 2019, based on the COSO framework[168] - Grant Thornton LLP, an independent registered public accounting firm, audited and expressed an unqualified opinion on the effectiveness of Titan's internal control over financial reporting[169][204][210] Item 9B. Other Information The company reported no other information required to be disclosed in this item - There is no other information to report[172] PART III This section outlines Titan International's corporate governance, including information on directors, executive officers, executive compensation, security ownership, related party transactions, and principal accounting fees Item 10. Directors, Executive Officers and Corporate Governance This section provides information on Titan's directors and executive officers, including Paul G. Reitz (President and CEO), David A. Martin (CFO), and Michael G. Troyanovich (General Counsel), along with details on the company's business conduct policy and corporate governance guidelines - Paul G. Reitz serves as President and Chief Executive Officer, appointed in December 2016[176] - David A. Martin joined as Chief Financial Officer in June 2018, previously serving as CFO at Aegion Corporation[177] - Michael G. Troyanovich is the General Counsel and Secretary, appointed in June 2013[178] - The Company has adopted a business conduct policy and corporate governance guidelines applicable to directors, officers, and employees, available on its website[179] Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the company's 2020 Proxy Statement - Executive compensation information is incorporated by reference from the Company's 2020 Proxy Statement[180] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information concerning security ownership of certain beneficial owners and management is incorporated by reference from the company's 2020 Proxy Statement - Security ownership information is incorporated by reference from the Company's 2020 Proxy Statement[180] Item 13. Certain Relationships, Related Transactions, and Director Independence Information on certain relationships, related party transactions, and director independence is incorporated by reference from the company's 2020 Proxy Statement and Note 27 of the Consolidated Financial Statements - Information on relationships, related party transactions, and director independence is incorporated by reference from the Company's 2020 Proxy Statement and Note 27 of the Consolidated Financial Statements[181] Item 14. Principal Accounting Fees and Services Information regarding principal accounting fees and services is incorporated by reference from the company's 2020 Proxy Statement - Information on audit fees and services is incorporated by reference from the Company's 2020 Proxy Statement[182] PART IV This section details the financial statements, financial statement schedules, and exhibits included in the Form 10-K, providing comprehensive disclosures on accounting policies, financial instruments, debt, equity, employee benefits, and other financial details Item 15. Exhibits and Financial Statement Schedules This section lists the consolidated financial statements, extensive notes, and supporting schedules, including the statements of operations, comprehensive income (loss), balance sheets, changes in equity, and cash flows, along with an exhibit index - The section includes consolidated financial statements: Statements of Operations, Comprehensive Income (Loss), Balance Sheets, Statements of Changes in Equity, and Statements of Cash Flows for the years ended December 31, 2019, 2018, and 2017[184][217][220][223][226][230] - It also contains detailed Notes to Consolidated Financial Statements (Notes 1-32) providing extensive disclosures on accounting policies, financial instruments, debt, equity, employee benefits, and other financial details[184][234] - An Exhibit Index lists various corporate documents, agreements, and certifications incorporated into the report[184][186][187] - A Financial Statement Schedule (Schedule II) for Valuation and Qualifying Accounts is provided[184][409] Notes to Consolidated Financial Statements The Notes to Consolidated Financial Statements provide detailed explanations of Titan's accounting policies, financial statement line items, and significant transactions, covering business description, valuation methods, revenue recognition, debt obligations, equity changes, employee benefits, litigation, and recent accounting standard adoptions - Note 1 details the Company's business as a manufacturer of wheels, tires, and undercarriage systems for off-highway vehicles and outlines significant accounting policies including principles of consolidation, cash equivalents, accounts receivable, inventories, fixed assets, fair value measurements, investments, foreign currency translation, revenue recognition, cost of sales, SG&A, R&D, advertising, warranty costs, income taxes, EPS, environmental liabilities, stock-based compensation, use of estimates, and the adoption of new accounting standards (e.g., ASU 2016-02 Leases, ASU 2018-02 Tax Effects, ASC 606 Revenue from Contracts with Customers)[235][236][237][238][239][240][243][244][245][246][247][248][249][250][251][253][254][255][256][257][258][259][260][262][263][264][265][266][267] - Notes 2-9 provide details on specific balance sheet accounts: Accounts Receivable ($185.2 million net in 2019), Inventories ($333.4 million in 2019), Prepaid and Other Current Assets ($58.9 million in 2019), Property, Plant, and Equipment ($374.8 million net in 2019), Other Long-Term Assets ($69.0 million in 2019), Intangible Assets ($9.8 million net in 2019), Other Current Liabilities ($107.3 million in 2019), and Warranty Liability ($14.3 million in 2019)[271][272][274][275][278][279][282][283] - Note 10 details Revolving Credit Facility and Long-Term Debt, including $400 million in 6.50% senior secured notes due 2023, Titan Europe credit facilities ($43.6 million), and a $125 million revolving credit facility with $36 million borrowed and $30.8 million available as of Dec 31, 2019[284][286][287][288][289][290][291] - Note 13 describes the Redeemable Noncontrolling Interest related to Voltyre-Prom, where Titan acquired additional interest, increasing its ownership to 64.3% in 2019, and settled put options with RDIF and OEP for $25 million cash and restricted stock, and $46.7 million cash, respectively[295][296][297][299][300][301] - Note 21 on Income Taxes shows a 2019 effective tax rate of (7.2)% on a pre-tax loss, with a valuation allowance of $164.7 million primarily related to net operating losses in the U.S., Italy, Australia, and Luxembourg[319][320][324] - Note 22 on Employee Benefit Plans details pension plans with an unfunded status of $(32.2) million in 2019 and 401(k) plans, with $1.2 million in common stock matching contributions in 2019[336][351] - Note 24 on Litigation highlights an ongoing environmental legal proceeding where Titan Tire and Dico were found liable for $5.45 million in response costs and Dico for $5.45 million in punitive damages, with a $6.5 million contingent liability accrued[362][366][367] - Note 28 on Segment and Geographical Information provides detailed revenues, gross profit, income from operations, capital expenditures, and depreciation/amortization by agricultural, earthmoving/construction, and consumer segments, and by geographic area (United States, Europe/CIS, Latin America, Other international)[377][379][382] - Note 31 on Subsequent Events reports the sale of Wheels India shares in February 2020 for $6.9 million, reducing ownership to 20.0% and using proceeds to pay down debt[387] SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS Schedule II presents the changes in the allowance for doubtful accounts for the years ended December 31, 2019, 2018, and 2017, showing an increase to $3.714 million in 2019 from $3.404 million in 2018 Allowance for Doubtful Accounts (Amounts in Thousands) | Year Ended December 31, | Balance at beginning of year | Additions to costs and expenses | Deductions | Balance at end of year | | :---------------------- | :--------------------------- | :------------------------------ | :--------- | :--------------------- | | 2019 | $3,404 | $821 | $(511) | $3,714 | | 2018 | $2,974 | $541 | $(111) | $3,404 | | 2017 | $3,344 | $(362) | $(8) | $2,974 | Item 16. Form 10-K Summary The company did not include a Form 10-K summary in this report - There is no Form 10-K Summary[189]