Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's discussion and analysis of financial condition and results of operations (MD&A) is designed to provide a reader 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. The MD&A in this quarterly report should be read in conjunction with the MD&A in Titan's 2008 annual report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2009.

FORWARD-LOOKING STATEMENTS

This Form 10-Q 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-Q 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:

· The effect of the current banking and credit crisis on the Company and its customers and suppliers

· 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.

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 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.

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.

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.

Consumer Market: Titan builds select products for all-terrain vehicles (ATV), turf, golf and trailer applications. Titan's sales in the consumer market include sales to Goodyear, which are under an off-take/mixing agreement. This agreement includes mixed stock, which is a prepared rubber compound used in tire production. The Company provides wheels/tires and assembles brakes, actuators and components for the domestic boat, recreational and utility trailer markets.

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 quarter ended September 30, 2009, compared to 2008 (amounts in thousands):

                                   Three months ended September 30,
                                      2009                   2008
Net sales                       $        141,496       $        255,463
Gross profit (loss)                       (3,030 )               37,423
Income (loss) from operations            (15,766 )               21,263
Net income (loss)                        (11,113 )               10,303

Quarter: The Company recorded sales of $141.5 million for the third quarter of 2009, which were 45% lower than the third quarter 2008 sales of $255.5 million. The lower sales levels resulted from reduced demand for the Company's products, as many of the Company's major customers implemented extended shutdowns during the period as a consequence of the worldwide recession and economic crisis. Titan in turn scheduled extended shutdowns at its production facilities to manage lower demand during the quarter. These events had a significant impact on Titan's agricultural sales, which were down approximately 41%, and earthmoving/construction sales, which were down approximately 57%, when comparing quarter over quarter.

The following operating results were primarily related to the significantly lower sales levels. The Company's loss from operations was $(15.8) million for the third quarter of 2009, compared to income from operations of $21.3 million in 2008. Net loss was $(11.1) million for the quarter, compared to net income of $10.3 million in 2008. Basic loss per share was $(.32) in for the three months ended September 30, 2009, compared to earnings per share of $.30 in 2008.

                           TITAN INTERNATIONAL, INC.
                    Management's Discussion and Analysis of
                 Financial Condition and Results of Operations

The following table provides highlights for the nine months ended September 30,
2009, compared to 2008 (amounts in thousands):
                             Nine months ended September 30,
                               2009                   2008
Net sales                $        581,083       $        778,102
Gross profit                       56,779                111,713
Income from operations             11,231                 61,772
Net income                          1,838                 31,743

Year-to-date: The Company recorded sales of $581.1 million for the nine months ended September 30, 2009, as compared to $778.1 million in 2008. The lower sales levels resulted from reduced demand for the Company's products, as many of the Company's major customers implemented extended shutdowns during the third quarter of 2009 as a consequence of the worldwide recession and economic crisis. Titan in turn scheduled extended shutdowns at its production facilities to manage lower demand during the third quarter. These events had a significant impact on Titan's agricultural year-to-date sales, which were down approximately 16%, and earthmoving/construction year-to-date sales, which were down approximately 49%, when comparing to the first nine months of 2008.

The following operating results were primarily related to the lower sales levels. Titan's income from operations was $11.2 million for the nine months ended September 30, 2009, as compared to $61.8 million in 2008. Net income was $1.8 million for the nine months ended September 30, 2009, as compared to $31.7 million in 2008. Basic earnings per share were $.05 for the nine months ended September 30, 2009, compared to $.92 in 2008.

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 lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method for approximately 77% of inventories and the last-in, first-out (LIFO) method for approximately 23% 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 slow-moving and obsolete inventory, as well as inventory carried above market price based on historical experience. Should experience change, adjustments to 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 had goodwill of $11.7 million at September 30, 2009. 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 continue, impairment losses could occur. Due to the difficult nature of predicting future markets and business outcomes, the Company cannot always anticipate or predict when a goodwill impairment loss may be required by the Company in the future.

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 and recognizes and measures uncertain tax positions in accordance with ASC 740 Income Taxes.

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 previously purchased a final annuity settlement. During the first nine months of 2009, the Company contributed cash funds of $0.1 million to its frozen pension plans. Titan expects to contribute approximately $0.1 million to these frozen defined pension plans during the remainder of 2009. For more information concerning these costs and obligations, see the discussion of the "Pensions" and Note 21 to the Company's financial statements on Form 10-K for the fiscal year ended December 31, 2008.

RESULTS OF OPERATIONS
Highlights for the three and nine months ended September 30, 2009, compared to
2008 (amounts in thousands):
                         Three months ended           Nine months ended
                           September 30,                September 30,
                        2009           2008          2008          2008
Net sales             $ 141,496      $ 255,463     $ 581,083     $ 778,102
Cost of sales           144,526        218,040       524,304       666,389
Gross profit (loss)      (3,030 )       37,423        56,779       111,713
Gross profit margin        (2.1 )%        14.6 %         9.8 %        14.4 %

Net Sales
Quarter: Net sales for the quarter ended September 30, 2009, were $141.5 million, compared to $255.5 million in 2008. The lower sales levels resulted from reduced demand for the Company's products, as many of the Company's major customers implemented extended shutdowns during the period as a consequence of the worldwide recession and economic crisis. Titan in turn scheduled extended shutdowns at its production facilities to manage lower demand during the quarter. These events had a significant impact on Titan's agricultural sales, which were down approximately 41%, and earthmoving/construction sales, which were down approximately 57%, when comparing quarter over quarter.

Year-to-date: Net sales for the nine months ended September 30, 2009, were $581.1 million, compared to 2008 net sales of $778.1 million. The lower sales levels resulted from reduced demand for the Company's products, as many of the Company's major customers implemented extended shutdowns during the third quarter of 2009 as a consequence of the worldwide recession and economic crisis. Titan in turn scheduled extended shutdowns at its production facilities to manage lower demand during the third quarter. These events had a significant impact on Titan's agricultural year-to-date sales, which were down approximately 16%, and earthmoving/construction year-to-date sales, which were down approximately 49%, when comparing to the first nine months of 2008.

Cost of Sales and Gross Profit (Loss)
Quarter: Cost of sales was $144.5 million and $218.0 million for the quarters ended September 30, 2009 and 2008, respectively. The cost of sales decreased as a result of the significantly lower sales levels.

Gross loss for the third quarter of 2009 was $(3.0) million or (2.1)% of net sales, compared to gross profit of $37.4 million or 14.6% of net sales for the third quarter of 2008. In response to significantly lower demand from customers, Titan scheduled extended shutdowns at all Company production facilities during the third quarter of 2009. These extended shutdowns, in conjunction with lower production levels when operating, drastically reduced the Company's manufacturing efficiencies. These lower efficiencies resulted in the gross profit reduction.

Year-to-date: Cost of sales was $524.3 million for the nine months ended September 30, 2009, compared to $666.4 million in 2008. The cost of sales decreased as a result of the significantly lower sales levels.

Gross profit for the nine months ended September 30, 2009, was $56.8 million or 9.8% of net sales, compared to $111.7 million or 14.4% of net sales in 2008. The gross profit margin decreased primarily as the result of extended production facility shutdowns and the resulting reduction in manufacturing efficiencies in the third quarter.

                           TITAN INTERNATIONAL, INC.
                    Management's Discussion and Analysis of
                 Financial Condition and Results of Operations

Administrative Expenses
Selling, general and administrative expenses were as follows (amounts in
thousands):
                                        Three months ended          Nine months ended
                                           September 30,              September 30,
                                         2009          2008         2009          2008
Selling, general and administrative   $   11,272     $ 13,789     $  39,425     $ 43,155
Percentage of net sales                      8.0 %        5.4 %         6.8 %        5.5 %

Quarter: Selling, general and administrative (SG&A) expenses for the third quarter of 2009 were $11.3 million or 8.0% of net sales, compared to $13.8 million or 5.4% of net sales for 2008. SG&A expenses were down primarily as the result of lower professional fees. The Company's third quarter 2009 SG&A expense was lower than that of the previous year's quarter. However, when the SG&A expenses are expressed as a percentage of net sales, the percentage is higher due to the significantly lower sales levels.

Year-to-date: Expenses for SG&A for the nine months ended September 30, 2009, were $39.4 million or 6.8% of net sales, compared to $43.2 million or 5.5% of net sales in 2008. SG&A expenses were down primarily as the result of lower professional fees. The Company's SG&A expense for the first nine months of 2009 was lower than that of the previous year's first nine months. However, when the SG&A expenses are expressed as a percentage of net sales, the percentage is higher due to the lower sales levels.

Royalty Expense
Royalty expense was as follows (amounts in thousands):

The Company has a license agreement with The Goodyear Tire & Rubber Company to manufacture and sell certain off-highway tires in North America under the Goodyear name.

Quarter: Royalty expenses recorded were $1.5 million and $2.4 million for the quarters ended September 30, 2009 and 2008, respectively. As sales subject to the license agreement have decreased, the Company's third quarter 2009 royalty expense has decreased when compared to the previous year's quarter.

Year-to-date: Year-to-date royalty expenses recorded were $6.1 million and $6.8 million for the nine months ended September 30, 2009 and 2008, respectively. As sales subject to the license agreement have decreased, the Company's royalty expense for the first nine months of 2009 has decreased when compared to the previous year's first nine months.

Income (Loss) from Operations
Income (loss) from operations was as follows (amounts in thousands):
                                  Three months ended          Nine months ended
                                     September 30,              September 30,
                                  2009           2008         2009          2008
Income (loss) from operations   $ (15,766 )    $ 21,263     $  11,231     $ 61,772
Percentage of net sales             (11.1 )%        8.3 %         1.9 %        7.9 %

Quarter: Loss from operations for the third quarter of 2009 was $(15.8) million or (11.1)% of net sales, compared to income from operations of $21.3 million or 8.3% of net sales in 2008. The reduction in income from operations was the net result of the items previously discussed in the sales, cost of sales, administrative and royalty line items.

Year-to-date: Income from operations for the nine months ended September 30, 2009, was $11.2 million or 1.9% of net sales, compared to $61.8 million or 7.9% of net sales in 2008. The reduction in income from operations was the net result of the items previously discussed in the sales, cost of sales, administrative and royalty line items.

Interest Expense
Interest expense was as follows (amounts in thousands):

Quarter: Interest expense was $4.0 million and $3.7 million for the quarters ended September 30, 2009 and 2008, respectively. The Company's third quarter 2009 interest expense has remained relatively consistent with that of the previous year's quarter.

Year-to-date: Year-to-date interest expense was $11.8 million and $11.4 million for the nine months ended September 30, 2009 and 2008, respectively. The Company's interest expense for the first nine months of 2009 has remained relatively consistent with that of the previous year's corresponding period.

Other Income (Expense)
Other income (expense) was as follows (amounts in thousands):

Quarter: Other income was $0.6 million for the quarter ended September 30, 2009, as compared to other expense of $(0.4) million for the quarter ended September 30, 2008.

Year-to-date: Other income was $2.7 million for nine months ended September 30, 2009, as compared to $2.6 million in 2008. Dividend income of zero and $1.2 million from the Titan Europe Plc investment was recorded in the nine months ended September 30, 2009 and 2008, respectively. Interest income included in other income was $0.1 million and $1.2 million for the nine months ended September 30, 2009 and 2008, respectively. The nine months ended September 30, 2009, includes a $1.4 million gain on senior note repurchases.

Income Taxes
Income taxes were as follows (amounts in thousands):

Quarter: The Company recorded income tax benefit of $(8.0) million for the three months ended September 30, 2009, as compared to income tax provision of $6.9 million in 2008. The Company's effective income tax rate was 42% and 40% for the quarters ended September 30, 2009 and 2008, respectively.

Year-to-date: Income tax provision for the nine months ended September 30, 2009 and 2008, was $0.3 million and $21.2 million, respectively. The Company's effective income tax rate was 13% and 40% for the nine months ended September 30, 2009 and 2008, respectively. The 2009 effective income tax rate was impacted by a reduction to the Company's income tax provision of $0.5 million that related to one of the Company's foreign subsidiaries. At this time, Titan currently projects a full year 2009 tax rate of approximately 40% for the Company.

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

Quarter: Net loss for the quarter ended September 30, 2009, was $(11.1) million, compared to net income of $10.3 million in 2008. For the quarters ended September 30, 2009 and 2008, basic and diluted earnings per share were $(.32) and $.30, respectively. The Company's net income and earnings per share were lower due to the items previously discussed.

Year-to-date: Net income for the nine months ended September 30, 2009 and 2008, was $1.8 million and $31.7 million, respectively. For the nine months ended September 30, 2009 and 2008, basic earnings per share were $.05 and $.92, respectively, and diluted earnings per share were $.05 and $.91, respectively. The Company's net income and earnings per share were lower due to the items previously discussed.

Agricultural Segment Results
Agricultural segment results were as follows (amounts in thousands):
                                  Three months ended           Nine months ended
                                     September 30,               September 30,
                                  2009          2008          2009          2008
Net sales                       $ 105,426     $ 179,162     $ 453,098     $ 538,263
Gross profit (loss)                  (522 )      23,633        48,400        68,714
Income (loss) from operations      (3,775 )      19,465        35,530        57,918

Quarter: Net sales in the agricultural market were $105.4 million for the quarter ended September 30, 2009, down approximately 41%, as compared to $179.2 million in 2008. The lower sales levels resulted from reduced demand for the Company's products, as many of the Company's major customers implemented extended shutdowns during the period as a consequence of the worldwide recession and economic crisis. Titan in turn scheduled extended shutdowns at its production facilities to manage lower demand during the quarter.

Gross loss in the agricultural market was $(0.5) million for the quarter ended September 30, 2009, as compared to gross profit of $23.6 million in 2008. Loss from operations in the agricultural market was $(3.8) million for the quarter ended September 30, 2009, as compared to income from operations of $19.5 million in 2008. The reduction in gross profit and income from operations in the agricultural market was primarily attributed to lower farm equipment sales and the corresponding reduction in manufacturing efficiencies.

Year-to-date: Net sales in the agricultural market were $453.1 million for the nine months ended September 30, 2009, down approximately 16%, as compared to $538.3 million in 2008. The lower sales levels resulted from reduced demand for the Company's products, as many of the Company's major customers implemented extended shutdowns during the third quarter of 2009 as a consequence of the worldwide recession and economic crisis. Titan in turn scheduled extended shutdowns at its production facilities to manage lower demand during the third quarter.

Gross profit in the agricultural market was $48.4 million for the nine months . . .