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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
_________ to _________
Commission file number 1-6615
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
California 95-2594729
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7800 Woodley Avenue
Van Nuys, California 91406
(Address of principal executive offices) (Zip Code)
</TABLE>
(818) 781-4973
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if change since last report)
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 and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.
<TABLE>
<S> <C>
Outstanding at
Class of Common Stock August 1, 1994
--------------------- -----------------
$.50 Par Value 29,814,135 Shares
</TABLE>
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PART 1 FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
-------- ------------
<S> <C> <C>
Assets
CURRENT ASSETS:
Cash and equivalents $ 7,096 $ 8,274
Marketable securities, at the lower of
cost or market 21,253 28,314
Receivables, net 80,044 65,279
Inventories
Raw materials 12,879 10,391
Work in process 4,670 6,277
Finished goods 11,933 9,966
-------- --------
29,482 26,634
Other current assets 12,312 12,718
-------- --------
Total current assets 150,187 141,219
PROPERTY, PLANT AND EQUIPMENT, net 181,413 162,225
OTHER ASSETS 8,540 6,679
-------- --------
$340,140 $310,123
======== ========
Liabilities and Shareholders' Equity
CURRENT LIABILITIES:
Notes payable and current portion
of long-term debt $ 9,701 $ 2,555
Accounts payable 53,830 52,004
Accrued liabilities 21,401 19,957
Income taxes payable 4,448 1,475
-------- --------
Total current liabilities 89,380 75,991
-------- --------
LONG-TERM DEBT, net 33,896 34,004
OTHER LONG-TERM LIABILITIES 11,971 10,982
DEFERRED INCOME TAXES 12,277 12,277
SHAREHOLDERS' EQUITY 192,616 176,869
-------- --------
$340,140 $310,123
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
---------------------------
1994 1993
-------- --------
<S> <C> <C>
Net Sales $120,706 $106,884
Cost of Sales 90,378 80,822
-------- --------
Gross Profit 30,328 26,062
Selling, general and administrative
expenses 5,291 4,482
-------- --------
Income From Operations 25,037 21,580
Other Income (Expense)
Interest expense (565) (1,241)
Miscellaneous, net 362 693
-------- --------
(203) (548)
-------- --------
Income Before Income Taxes 24,834 21,032
Income Taxes 9,437 7,782
-------- --------
Net Income $ 15,397 $ 13,250
======== ========
Earnings Per Share $ 0.51 $ 0.43
======== ========
Weighted Average and Equivalent Shares
Outstanding 30,428,000 30,678,000
========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1994 1993
-------- --------
<S> <C> <C>
Net Sales $226,644 $205,003
Cost of Sales 171,742 157,877
-------- --------
Gross Profit 54,902 47,126
Selling, general and administrative
expenses 9,505 9,281
-------- --------
Income From Operations 45,397 37,845
Other Income (Expense)
Interest expense (1,243) (2,492)
Miscellaneous, net 866 1,657
-------- --------
(377) (835)
-------- --------
Income Before Income Taxes 45,020 37,010
Income Taxes 17,108 13,694
-------- --------
Net Income $ 27,912 $ 23,316
======== ========
Earnings Per Share $ 0.91 $ 0.76
======== ========
Weighted Average and Equivalent Shares
Outstanding 30,555,000 30,564,000
========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------
1994 1993
-------- ---------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 28,724 $ 41,647
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of common stock (9,760) -
Short-term borrowings 7,125 -
Cash dividends (2,245) (1,603)
Stock options exercised 1,448 1,286
Payments of long-term debt (87) (137)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (3,519) (454)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment, net (33,152) (11,531)
Proceeds from sales of marketable securities 30,044 11,418
Purchases of marketable securities (23,275) (47,093)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (26,383) (47,206)
Net Decrease in Cash and Equivalents (1,178) (6,013)
Cash and Equivalents at Beginning of Period 8,274 11,789
-------- --------
Cash and Equivalents at End of Period $ 7,096 $ 5,776
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Common Stock Unrealized
-------------------- Additional Cumulative Loss on
Number of Paid-In Translation Marketable Retained
Shares Amount Capital Adjustment Securities Earnings Total
---------- ------- ---------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1993 30,061,414 $15,031 $70,789 $(442) $ - $ 91,491 $176,869
Net income - - - - - 27,912 27,912
Foreign currency
translation - - - (8) - - (8)
Cash dividends
($.075/share) - - - - - (2,245) (2,245)
Repurchases of
common stock (286,800) (144) (9,616) - - - (9,760)
Stock options
exercised, including
related tax
benefit 84,076 42 1,406 - - - 1,448
Unrealized Loss on
marketable securities - - - - (1,600) - (1,600)
---------- ------- ------- ----- ------- -------- --------
Balances at
June 30, 1994 29,858,690 $14,929 $62,579 $(450) $(1,600) $117,158 $192,616
========== ======= ======= ===== ======= ======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. During interim periods, the Company follows the accounting policies
set forth in its Annual Report to Stockholders and applies appropriate
interim financial reporting standards, including the use of estimated
annual effective tax rates. Users of financial information produced
for interim periods are encouraged to refer to the notes contained in
the Annual Report to Stockholders when reviewing interim financial
results.
In the opinion of Management, the accompanying unaudited consolidated
condensed financial statements of Superior Industries International,
Inc. and subsidiaries (the "Company") contain all the adjustments
necessary to present fairly the financial position of the Company as
of June 30, 1994, and the results of its operations and cash flows for
the three-month and six-month periods ended June 30, 1994 and 1993.
2. Per share amounts are based on the weighted average number of shares
of common stock outstanding and common stock equivalents, when
dilutive, during the period.
3. Interest paid, net of amounts capitalized, and taxes paid were
$1,243,000 and $13,106,000, respectively, for the six months ended
June 30, 1994.
4. During 1994 the Company adopted Statement of Financial Accounting
Standard No. 115, Accounting for Certain Investments in Debt and
Equity Securities (SFAS 115). Under the provisions of SFAS 115 the
Company is required to adjust the carrying value of its investment
portfolio to fair market value. Such adjustment, which resulted from
market fluctuations related to U. S. government agency securities,
amounted to $1.6 million and was recorded as a reduction to
shareholder's equity.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY OF SALES BY PRODUCT LINE
<TABLE>
<CAPTION>
(000's) Increase
(Decrease)
For The Three Months Ended June 30, 1994 1993 Over 1993
- - ----------------------------------- -------- -------- ----------
<S> <C> <C> <C>
OEM Cast Aluminum Road Wheels $109,329 $ 96,171 13.7%
Aftermarket 11,377 10,713 6.2%
-------- --------
$120,706 $106,884 12.9%
======== ========
For The Six Months Ended June 30,
- - ---------------------------------
OEM Cast Aluminum Road Wheels $207,108 $184,446 12.3%
Aftermarket 19,536 20,557 (5.0)%
-------- --------
$226,644 $205,003 10.6%
======== ========
</TABLE>
RESULTS OF OPERATIONS
Net sales were a record $120.7 million and $226.6 million for the quarter and
six months ended June 30, 1994, or 12.9 percent and 10.6 percent, respectively,
above comparable periods in 1993. Increased shipments of wheels in both the
OEM and aftermarket businesses contributed to this strong performance. OEM
aluminum road wheel shipments increased 15.9 percent and 15.3 percent for the
quarter and six months ended June 30, 1994, respectively. Customer order
levels remained strong, reflecting increases in North American auto production
of approximately 11.9 percent for the first half of 1994 and the Company's
attainment of a greater share in the expanding cast aluminum wheel market. Net
sales in the aftermarket, without the impact of the August 1993 sale of the
Do-Ray mirror and light business, increased 33.6 percent and 18.0 percent for
the quarter and six months ended June 30, 1994, respectively, above comparable
periods in 1993. Increases were achieved predominantly in the roadwheel
division as strong customer demand for the Streetwear product line continues to
fuel sales.
Gross margins were 25.1 and 24.2 percent for the quarter and six months ended
June 30, 1994 versus 24.4 percent and 23.0 percent, respectively, in 1993.
Continued increasing customer order levels translated into greater production
requirements and more efficient plant utilization resulting in incrementally
higher margins.
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Selling, general and administrative expenses, in absolute dollars, increased
for the quarter and six months ended June 30, 1994. This increase reflects
higher compensation and information services costs associated with increased
business levels, somewhat offset by the elimination of administrative costs,
related to the divestiture of the Do-Ray operations.
Interest expense decreased $676,000 and $1,249,000 for the quarter and six
months ended June 30, 1994, respectively, from comparable periods in 1993
reflecting payments and prepayments against the Senior notes in 1993, as well
as interest capitalized in 1994 related to OEM plant expansion activities.
Miscellaneous, net decreased $331,000 and $791,000 for the quarter and six
months ended June 30, 1994, respectively, from similar levels in 1993,
reflecting lower interest income as the Company converted investment positions
to fund plant expansion activities.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities in the first six months of 1994 was
$28.7 million versus $41.6 million in 1993. Strong earnings and effective cash
management accounted for the positive cash flow.
In 1994, cash was utilized to fund $33.2 million in capital expenditures
relating primarily to the new Chihuahua, Mexico OEM facility, the ongoing
Fayetteville expansion and the new OEM chrome-plating plant. Cash was also
utilized to repurchase 286,800 shares of the Company's common stock pursuant to
the previously announced stock repurchase program. Supplementing operating cash
flow was the utilization of $7.1 million from short-term lines of credit and a
net $6.8 million liquidation of the investment portfolio.
Subsequent to quarter end, the Company's Chihuahua plant commenced shipping
wheels and the Company announced the acceleration of the second phase of
construction, six months ahead of schedule, to meet customer demand. When
completed, in early 1995, the Chihuahua facility will have capacity of over one
million wheels annually. The second phase of the Fayetteville expansion and
the new chrome-plating facility continue on schedule and will be completed
during the second half of 1994. The Company anticipates funding these
expansion activities from cash flow provided by existing working capital,
ongoing operations and from funds available under its lines of credit
facilities.
Working capital and current ratio were $60.8 million and 1.7:1 versus $65.2
million and 1.9:1, at June 30, 1994 and December 31, 1993, respectively.
Decrease in working capital and current ratio primarily reflects the purchase
of fixed assets related to plant expansion activities. As expansion activity
continues the current ratio will be negatively impacted as short-term
investments are converted to long-term productive assets. The long-term debt
to total capitalization ratio improved to 15.0 percent at the end of the
quarter from 16.1 percent at the end of 1993.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 29, 1994, the Company prevailed in a civil action filed against the
Company by Motor Wheel Corporation for alleged infringement of two Motor Wheel
patents directed towards wheel making technology. In the United States
District Court for the Eastern District of Michigan, a jury of six found that
the Company had not infringed on either of Motor Wheel's patents, and
therefore, Motor Wheel was not entitled to damages. The action was served
against Superior by Motor Wheel on February 4, 1993.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - There were no reports filed during the quarter
ended June 30, 1994.
(This space intentionally left blank.)
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SIGNATURES
Pursuant to the requirements 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.
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
---------------------------------------
(Registrant)
Date 08/12/94 /s/ Louis L. Borick
---------------------------------------
Louis L. Borick
President and Chairman of the Board
Date 08/12/94 /s/ R. Jeffrey Ornstein
---------------------------------------
R. Jeffrey Ornstein
Vice President and CFO
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