On April 10,2013 TITN filed an annual report (10K).
click to enlarge
Statistics:
TITAN's formula for increasing GROSS PROFIT by approximately
$64 million year over year (23% increase.) was by:
- allowing SG&A to increase by $53 million, ($247 million for year)
- RECEIVABLES to increase by $39 million,
- Interest Expenses to increase by $14 million,
- and debt increasing by $267 million.
(
above statistics may explain why company increased authorized shares outstanding from 30 million to 50 million shares.)
My work is recognized
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 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.The Mystery of brother Ted Christianson disclosure (former CFO, now Treasurer)
S.Auditor's History
Titan Machinery (NASDAQ: TITN $21.78) filed a Schedule 14A (Definitive proxy statement) last night with the Securities & Exchange Commission.
-
Certain Transactions
Described below are
transactions and series of similar transactions that have occurred
during fiscal 2013 to which we were a party or
are a party in which:
- •
- the amounts involved exceeded or will exceed $120,000; and
- •
- a director, executive officer, beneficial owner of more than five percent of any class of our voting securities or any
member of their immediate family had or will have a direct or indirect material interest.
As of January 31,
2013, we leased real estate for 48 of our 120 stores from Dealer Sites,
LLC, ("Dealer Sites") an entity in
which a minority position was owned by an entity affiliated with David
Meyer, our Chairman and Chief Executive Officer, an entity affiliated
with Tony
Christianson, one of our directors, and Peter Christianson, our
President and Chief Operating Officer, and certain of their immediate
family members (collectively the "Related Persons"). The
collective equity ownership of the Related Persons in Dealer Sites was
approximately 30% during the first 11 months of fiscal 2013. Effective
December 31, 2012, the collective ownership
of the Related Persons was reduced to approximately 9%, due to a
purchase and sale of equity interests between certain of the Related
Persons and other unaffiliated owners of Dealer Sites. The Company
also entered into sale-leaseback agreements with Dealer Sites from which
the Company received $1.3 million for the year ended January 31, 2013.
We
also lease one dealership site from C.I. Farm Power Inc., an entity owned by Mr. Peter Christianson.
The
table below states for fiscal 2013 through the end of the respective
lease terms, the aggregate amount of all periodic minimum lease payments
or installments made or due, including
any required or optional payments due at the conclusion of the
respective leases, are as follows:
|
|
|
|
|
|
|
Lessor
|
|
Period |
|
Aggregate
Payments Made
or Due |
|
Dealer Sites, LLC
|
|
Fiscal 2013 |
|
$ |
6,899,000 |
|
|
|
Fiscal 2014, through
January 2028
|
|
$ |
103,047,000 |
|
C.I. Farm Power, Inc.
|
|
Fiscal 2013
|
|
$ |
144,000 |
|
|
|
Fiscal 2014, through
July 2013
|
|
$ |
72,000 |
|
We
believe the terms of the leases to be commercially reasonable, and are
not any less favorable to us than could be obtained in an arm's length
transaction with an unrelated party.
During fiscal 2013,
Ted Christianson served as our Vice President, Finance and Treasurer
and received total cash compensation of
approximately $333,000 and a restricted stock award of 1,012 shares of
our common stock, with a grant-date fair value of $29,986. Ted
Christianson is the brother of Peter Christianson, our President and
Chief Operating Officer, and of Tony Christianson, a member of our Board
of Directors.
35
During
fiscal 2013, Sam Christianson, the son of Peter Christianson, was an
employee of the Company and received total cash compensation of
approximately $190,000 pursuant to a standard
commission-based plan of compensation that is subject to annual
variation.
Both
of the above identified employees participated in employee benefits
plans and programs available to our other full time employees.
C.I. Construction,
LLC, ("CI") performs construction management services for certain of the
Company's new store construction
projects, shop additions, and existing facilities remodel projects. CI
is owned by Rob Thompson, who is the brother-in-law of Tony
Christianson, a member of our Board of
Directors, and Peter Christianson, a member of our Board of Directors
and our President and Chief Operating Officer. CI is responsible for
developing designs/specifications, drawings, bid packages,
advising on the selection of suppliers and contractors, and overseeing
the construction process. CI is also an authorized reseller of certain
building materials that the Company generally incorporates
into its new construction and certain remodeling projects.
CI
receives a fee equal to 4.5% of the construction costs, excluding
expenditures for certain fixtures and fixed assets that the Company
originates. CI is also reimbursed for the labor
costs of CI's site supervisors and on-site staff, and utilities,
equipment rental, travel, and other direct costs incurred by CI in
performing the services. CI also receives payment as a
reseller of certain building materials used in its construction
projects.
During
fiscal 2013, CI received an aggregate amount of $6.7 million in direct
or indirect payments from the Company for the above construction-related
services and product
resales, as well as reimbursement for other construction-related costs.
We do not believe the terms of any of the transactions and agreements
described above are any less favorable to us than could be
obtained in an arm's length transaction with an unrelated party.
During fiscal 2013,
Cherry Tree Companies, LLC, an entity controlled by Tony Christianson, a
member of our Board of Directors, received
aggregate compensation of $173,000, consisting of a one-time payment of
$113,000 pursuant to compensation paid to the underwriters in our April
2012 convertible note offering and a $5,000
per month payment for consulting services rendered to the Company. We do
not believe the terms of our consulting or underwriter compensation
arrangements with Cherry Tree Companies, LLC were any less
favorable to us than could be obtained in an arm's length transaction
with an unrelated party.
*******If you look below at the
April 2012 DEF Proxy Disclosure and compare it to the 2013 proxy
disclosure above, you'll notice that TITN entered into an additional
$50million worth of lease contracts (bringing total to over $100million)
with the entity Dealer Sites LLC which is an entity that is owned in
part to the top 2 Execs at TITN. What really raises an even bigger Red Flag is that TITN only increased locations owned by Dealer Sites by 2, 46 to 48 locations, but added over $50 million in leases agreements! there was no disclosure of the additional lease arrangements in the 10K filed less than 3 weeks ago. did all these lease agreements get done over the last 3 weeks?
A close
look at C&I Farm Power lease looks fuzzy too. The dates (time
frames) don't add up and the payment has been reduced from (changed) to $216,000 (below '12) down to $72,000 (above '13). Was $144,000 paid to C&I?
2012 DEF14 Proxy Statement
- The
table below states for fiscal 2012 through the end of the respective
lease terms, the aggregate amount of all periodic payments or
installments made or due, including any required or
optional payments due at the conclusion of the respective leases, are
as follows:
|
|
|
|
|
|
|
Lessor
|
|
Period
|
|
Aggregate
Payments
Made or Due
|
|
Dealer Sites, LLC
|
|
Fiscal 2012
|
|
$
|
6,196,986
|
|
|
|
Fiscal 2013, through
January 2027
|
|
$
|
51,424,827
|
|
C.I. Farm Power, Inc.
|
|
Fiscal 2012
|
|
$
|
144,000
|
|
|
|
Fiscal 2013, through
July 2013
|
|
$
|
216,000
|
|
TITAN SELLS PROPERTY TO DEALER SITES (but there is no SEC disclosure)
Mr. Tony Christianson has been a director since January 2003 and was a founder of Titan Machinery LLC. Since 1981, Mr. Christianson has been the Chairman of Cherry Tree Companies...
Considering Cherry Tree did underwriting for the $150 million Convertible Note in 2012.
http://www.cherrytree.com/news/releasearchive/titan_0412.htm
Capital Resources (from 10K)
Our ability to service our debt will depend upon our ability to generate the necessary cash. This will depend on our future acquisition activity, operating performance, general economic conditions, and financial, competitive, business and other factors, some of which are beyond our immediate control. Based on our current operational performance, we believe our cash flow from operations, available cash and available borrowings under the existing credit facilities will adequately provide our liquidity needs for, at a minimum, the next 12 months.
We cannot assure you, however, that our business will generate sufficient cash flow from operations or that future borrowings will be available under the credit facilities with the Wells Fargo Bank Syndicate and CNH Capital in amounts sufficient to allow us to service our indebtedness and to meet our other commitments. If we are unable to generate sufficient cash flow from operations or to obtain sufficient future borrowings, we may be required to seek one or more alternatives such as refinancing or restructuring our indebtedness, selling material assets or operations or seeking to raise additional debt or equity capital. We cannot assure you that we will be able to succeed with one of these alternatives on commercially reasonable terms, if at all. In addition, if we pursue strategic acquisitions, we may require additional equity or debt financing to consummate the transactions, and we cannot assure you that we will succeed in obtaining this financing on favorable terms or at all. If we incur additional indebtedness to finance any of these transactions, this may place increased demands on our cash flow from operations to service the resulting increased debt. Our existing debt agreements contain restrictive covenants that may restrict our ability to adopt any of these alternatives. Any non-compliance by us under the terms of our debt agreements could result in an event of default which, if not cured, could result in the acceleration of our debt.
NOTE 13—CAPITAL STRUCTURE
The Company amended its certificate of incorporation on June 1, 2012, providing the Company with the authority to issue 50,000,000 shares of $0.00001 par value stock, consisting of 45,000,000 shares of common stock and 5,000,000 shares classified as undesignated. Prior to June 1, 2012, the Company had the authority to issue 30,000,000 shares of $0.00001 par value stock, consisting of 25,000,000 shares of common stock and 5,000,000 shares classified as undesignated.
PRIVATE JET
A $500 million market cap company with an interest in a private JET
Agreement with Officer:
Your employment will be based at the Company’s headquarters in Fargo, North Dakota. Of course, regular travel will be required in the course of performing your duties and responsibilities as President and Chief Operating Officer. Pursuant to the Company’s applicable policies, this travel may include use of aircraft in which the Company has an ownership interest.
During the year ended January 31, 2013, the Company leased buildings from Dealer Sites, LLC ("Dealer Sites"), an entity in which a minority position was owned by an entity affiliated with David Meyer, the Company's Chairman and Chief Executive Officer, an entity affiliated with Tony Christianson, one of the Company's directors, Peter Christianson, the Company's President and Chief Operating Officer, and other Meyer and Christianson family members. As of January 31, 2013, total related party ownership in Dealer Sites was less than 10%. The Company leased buildings pursuant to 48 different operating lease agreements from Dealer Sites, LLC ("Dealer Sites") and one building pursuant to operating leases from C.I. Farm Power, Inc., a company affiliated with Peter Christianson, as of January 31, 2013. Rent expense for leases with related parties totaled $7.0 million, $6.3 million and $5.3 million for the years ended January 31, 2013, 2012 and 2011, respectively. The leases expire on various dates between July 2013 and January 2028, contain purchase options based on fair values at the time of purchase, and provide that the lessee pay all property taxes, utilities, insurance and all expenses necessary for the general maintenance of the respective buildings. The Company also entered into sale-leaseback agreements with Dealer Sites from which the Company received $1.3 million and $6.8 million for the years ended January 31, 2013 and 2012, respectively.
The Company also leases 84 additional buildings under operating lease agreements with unrelated parties and leases office equipment and vehicles under various operating lease agreements. The leases expire at various dates through January 2028. Rent and lease expense under all operating leases totaled $17.3 million, $13.1 million and $9.8 million during the years ended January 31, 2013, 2012 and 2011, respectively. Certain leases have fluctuating minimum lease payments. The Company recognizes lease expense on a straight-line basis over the expected term of the lease.
Approximate minimum future lease payments are as follows:
Years ending January 31,
Amount
(in thousands)
2014
$ 18,996
2015
17,472
2016
15,388
2017
14,138
2018
13,486
Thereafter
91,312
$ 170,792
The Company utilizes C.I. Construction, an entity owned by the brother-in-law of Peter Christianson and Tony Christianson, to perform construction management services for its building and leasehold improvement projects. Payments to C.I. Construction, which include cost reimbursements of certain building supplies and other construction costs, totaled $6.7 million, $3.2 million and $0.7 million for the years ended January 31, 2013, 2012 and 2011, respectively. During the year ended January 31, 2013, the Company also paid a total of $0.2 million to Cherry Tree & Associates, LLC, an entity affiliated with Tony Christianson, primarily for services related to the Convertible Notes offering.
component for the period ended January 31,
2013 was equal to 7.00%"
TITN had $124 million in cash as of Jan.
31,2013. If they didn't receive the $150 indenture last April from Wells
Fargo, would they even be in business today?
"The
initial conversion rate for the Notes is 23.1626 shares of Company common stock
per $1,000 principal amount of notes, and is subject to certain adjustments as
set forth in the Indenture".
"Pursuant to the Indenture, the Company has agreed not
to make distributions on its common stock or take any other action that would
result in an adjustment to the conversion rate of the Notes if, following such
adjustment, the conversion rate would exceed 27.8980 shares per $1,000
principal amount of Notes"
IMMEDIATE FAMILY MEMBERS
Immediate
Family Members are Employees of the Company
During
fiscal 2013, Ted Christianson served as our Vice President, Finance and
Treasurer and received total cash compensation of approximately $333,000 and a
restricted stock award of 1,012 shares of our common stock, with a
grant-date fair value of $29,986. Ted Christianson is the brother of Peter
Christianson, our President and Chief Operating Officer, and of Tony
Christianson, a member of our Board of Directors.
During
fiscal 2013, Sam Christianson, the son of Peter Christianson, was an employee
of the Company and received total cash compensation of approximately $190,000
pursuant to a standard commission-based plan of compensation that is subject to
annual variation.
Both
of the above identified employees participated in employee benefits plans and
programs available to our other full time employees.
Construction
Management Services
C.I. Construction,
LLC, ("CI") performs construction management services for certain of
the Company's new store construction projects, shop additions, and existing
facilities remodel projects. CI is owned by Rob Thompson, who is the
brother-in-law of Tony Christianson, a member of our Board of Directors, and
Peter Christianson, a member of our Board of Directors and our President and
Chief Operating Officer. CI is responsible for developing
designs/specifications, drawings, bid packages, advising on the selection of
suppliers and contractors, and overseeing the construction process. CI is also
an authorized reseller of certain building materials that the Company generally
incorporates into its new construction and certain remodeling projects.
CI
receives a fee equal to 4.5% of the construction costs, excluding expenditures
for certain fixtures and fixed assets that the Company originates. CI is also
reimbursed for the labor costs of CI's site supervisors and on-site staff, and
utilities, equipment rental, travel, and other direct costs incurred by CI in
performing the services. CI also receives payment as a reseller of certain
building materials used in its construction projects.
During
fiscal 2013, CI received an aggregate amount of $6.7 million in direct or
indirect payments from the Company for the above construction-related services
and product resales, as well as reimbursement for other construction-related
costs. We do not believe the terms of any of the transactions and agreements
described above are any less favorable to us than could be obtained in an arm's
length transaction with an unrelated party.
Consulting
Agreement
During
fiscal 2013, Cherry Tree Companies, LLC, an entity controlled by Tony
Christianson, a member of our Board of Directors, received aggregate
compensation of $173,000, consisting of a one-time payment of $113,000 pursuant
to compensation paid to the underwriters in our April 2012 convertible note
offering and a $5,000 per month payment for consulting services rendered to the
Company. We do not believe the terms of our consulting or underwriter compensation
arrangements with Cherry Tree Companies, LLC were any less favorable to us than
could be obtained in an arm's length transaction with an unrelated party.
Titan Machinery (the credit card company?)
"Titan Machinery Inc West Fargo N D Metal Construction News", $200-$1000
Payday advances throughout Quick Moment.
Zero Fax required & Bad
Credit Fine.
Instant Authorization.
Easy Cash Right now.
Titan Machinery Inc West Fargo N D Metal Construction News.
- CEO Peter Christianson sold
200,000 shares $27.80 for proceeds of $5.56 million. Weeks later Dealer
Sites LLC, an entity owned by Meyer and the Christianson brothers would
purchase $2.4 million property from Titan Machinery. (and then Titan
would begin to lease that property from Dealer Sites LLC.) There is no
SEC disclosure regarding this transaction that took place 2 days before
the 2nd quarter 2011 closed, I was able to find it in property records
(see link further down).
" We expect our annual net income attributable to common stockholders to
be in the range of $44.1 million to $48.3 million resulting in an
earnings per diluted share range of $2.10 to $2.30.." Three weeks later Peter Christianson sold 50,000 shares of TITN @ $24.52 and received proceeds of $1.2 million.
CFO (Brother 3) turned Treasurer No Longer in Disclosure
Ted Christianson, there is too much to type about the third brother Ted Christianson. TITAN disclosed he was CFO and then approximately April 11,2011 he was no longer CFO. (NO 8-K filed)
In April 2012 he was disclosed as the treasurer of the company in the Indenture disclosure.
Titan from time to time discloses his holdings, salaries, fees and relationship to the company since April 2011.
Auditor:
Eide Bailly LLP . following link I found on internet about Eide Bailly, it does not name an issuer.
Another link to a February 2013 Securities & Exchange Commission charge against a partner of EB with issuer Life Partners (ticker:LPHI.)
A link to a July 2012 Suit of Racketeer Influenced and Corrupt Organizations.
E&B is also the auditor for High Plains Gas, Inc. (ticker: HPGS)
http://www.courthousenews.com/2012/04/04/45311.htm
Summary: What is TITAN MACHINERY business?
Selling & General Administrative Expenses for FY2013 was $247,000,000.00
Titan leases property from the top executive's (outside entity) properties. CNH Machinery loads up the property with inventory and charges Titan interest on the inventory, called Floor Plan debt (approximately $1 billion). Titan salesman are paid commissions for selling inventory. Law firm and CPA firm needs to get paid to maintain listing as a public company. What is really left for the shareholder? Right now there is about $120 million in cash and approximately $1 billion in debt.
- A January 2008 IPO raising approx $60 million.
- A Spring 2011 Underwriting approx $60 million.
- A Spring 2012 $150 million Indenture.
- Company recently approved increasing authorized shares outstanding from 30 million to 50 million.
Management (& Family) Outside Entities make all the money:
- on leasing property to TITN.
- sales commissions
- underwriting fees
- selling stock annually
- having expenses, maintenance and fees on their outside entities properties paid by TITAN.
- Brother-in-law generating millions of dollars worth of construction fees (questionable if its even needed).
(highlighted red boldface italics were done by me for purposes of this post to add emphasis to risks)
.....................................................................................................................
