A Review of Securities & Exchange Commission's Comments regarding Titan Machinery Disclosure

• On April 10,2013, Titan Machinery Inc (NASDAQ: TITN) filed its Fiscal 2013 year end financials (10K) for the 12 month period ending January 31,2013 with the SEC. 
• On April 25,2013, Titan Machinery Inc filed its Proxy Statement for its Annual Shareholder meeting (DEF 14A) with the SEC.

This Thursday, April 10th, before the market opens, Titan will disclose Fiscal Year 2014 financials for the 12 month period ending January 31,2014.

Securities & Exchange Commission Division of Corporate Finance Comments December 9,2013

•  Titan Machinery Inc.
  Form 10-K for the Fiscal Year Ended January
  31, 2013 Filed April 10, 2013
  Definitive Proxy Statement on Schedule 14A
  Filed April 24, 2013
  File No. 001-33866
  
  
  Titan Machinery Responds to SEC Comments December 20,2013

  ◦ Filed with SEC 

  •  

  •  Securities & Exchange Commission Review of Comments on December 30,2013 

  
  

  Auditors

  •  Securities & Exchange Commission Comment Letter to Titan Machinery Regarding Dismissal of Auditor on July 8,2013

  • SEC response to amended 8-K regarding Auditor change 

  
  

  
  

  Prior to the 4th of July holiday (market closing), on July 2,2013 @ 16:56:12 est., Titan Machinery filed an 8-K with Securities & Exchange Commission announcing the dismissal of their auditor Eide Bailly LLP and replacing them with Deloitte & Touche LLP.

  The 8-K stated the dismissal took place on June 27,2013 but the disclosure wasn't made till July 2,2013. 

  The unusual volume on the morning of June 28,2013 looks like somebody saw this 8-K coming in my opinion.  

  
  

  
  

  
  

  This Thursday's 10-K will be 1st audit done by new auditor Deloitte & Touche LLP.

  
  

 Equities Research:
 It will be interesting to see if the new auditor allows the company to recognize revenue in Fiscal 2014 in this same manner as Fiscal 2013: (from Fiscal 2013 10K):
 " However, in certain circumstances, and upon the customer's written request, equipment revenue is recognized before delivery occurs"


I was very critical of the financials disclosed by in both filings and analyzed both documents in my blog post : "The Most Overpriced Stock in the Market Files Proxy Statement".
                                         My reports raised many red flags :

•  Following key words are what caught my eye, especially since these hats are worn by 4 or 5 execs:
  3 Brothers, A Son, A Brother-In-Law, COO, Chairman, Founder, Commission, Managing Director of Underwriter, Owner of Construction Company, Unsecured loans, LEASE Arrangements with Top 3 Execs outside Entities, Real Estate Sale between TITN and Top two Execs Outside Entity, Private Jet, Consulting fees, underwriting fees....(oh yeah, the time Chairman went on Mad Money and then sold shares ) 
•  
•  A. 10 K Highlights of Weak Fundamentals
  B. Roddy Boyd / Herb Greenberg Recognizes my Work
  C.Certain Related Party Transactions
  D.Insider Selling after Making Hyped Up Projections (missed by a mile)
  E.Increase Of Authorized Shares
  F.CNH AMERICA Floor Debt Plan
  G.Property sold to Entity owned by Top 2 Execs.without disclosure
  H.Property Ownership Company owned by Top 2 Execs outside entity.
  I.Brother-in-law Construction Company building multi-million dollars worth of buildings.
  J.OLD INVENTORY list (108 page document), not sure how if its obsolete yet.
  K.History of Negative Operational Cash Flow
  L.Private Jet
  M.$150 million convertible note disclosure. (using best scenario vs. worse scenario in disclosure)
  N.Immediate Family Members: commissions, raises, fees, consulting agreements
  O.Cash Advance Business offering loans to Bad Credit/No Credit borrowers
  P.Variable Interest on Debt
  Q.Interest Expense
  R.disclosure of former CFO, now Treasurer)
  S.Auditor's History
  T. CEO & chairman both increased salaries 48% in cash 

On Titan's last conference call in December 2013 the company lowered their year end guidance: 
For fiscal 2014 revenue range of $2.15billion to $2.35 billion and expect annual net income in the range of $11.6million to$15.8million.  Fiscal Year 2013 net income was $42 million. That is a 65% decline year over year decline. Note with shares trading at $15, the PE ratio is nearly 30.


Complaint 

Mueller Water's Holiday Weekend 8K

The Stock Market is always shortened the week of Thanksgiving. Thursday the market is always closed and Friday the market closes at 1pm. What's always interesting is the disclosure made with the Securities & Exchange Commission after the close on Friday.

At 3:15pm est. after the market closed on Friday, Mueller Water Products, Inc.(NYSE:MWA) filed an 8-K with the SEC disclosing the following:

• Item 4.02.

  Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

  On November 19, 2012, the Audit Committee of the board of directors of Mueller Water Products, Inc. (the “Company”), upon the recommendation of management, concluded that the Company's previously filed unaudited condensed consolidated statement of cash flows for the six months ended March 31, 2011 and nine months ended June 30, 2011 included in the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012 and June 30, 2012, respectively, should no longer be relied upon because of errors in the classification of cash flows as between those from continuing operations and those from discontinued operations. These errors had no impact on any consolidated balance sheet, consolidated statement of operations, consolidated statement of changes in stockholders' equity, debt compliance covenant or employee compensation metric for any period. These errors also had no impact on any consolidated statement of cash flows for any period other than the six months ended March 31, 2011 and the nine months ended June 30, 2011.
  
  
  These errors related to the classification of deferred income taxes and retirement plans adjustments in determining cash flows from operating activities due to designating the Company's U.S. Pipe business segment as discontinued operations in the Company's consolidated financial statements during the quarter ended March 31, 2012. Cash flows from continuing operations were understated by $8.0 million and $10.0 million for the six months ended March 31, 2011 and nine months ended June 30, 2011, respectively. Cash flows from discontinued operations were overstated during these periods by these same amounts. Corrected unaudited condensed consolidated statements of cash flows for these periods are included as Exhibit 99.1. This information will also be presented in Note 22 of the notes to consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended September 30, 2012, which is expected to be filed on or before November 29, 2012.
  
  
  The Audit Committee discussed these matters with Ernst & Young LLP, the Company's independent registered public accounting firm.