<PAGE> 1
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, 1995
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)
California 95-2594729
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7800 Woodley Avenue 91406
Van Nuys, California (Zip Code)
(Address of principal executive offices)
(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>
Outstanding at
Class of Common Stock July 21, 1995
--------------------- -----------------
<S> <C>
$.50 Par Value 29,706,719 Shares
</TABLE>
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<PAGE> 2
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,
1995 1994
-------- ------------
<S> <C> <C>
Assets
CURRENT ASSETS:
Cash and equivalents $ 2,546 $ 5,884
Marketable securities, at the lower of
cost or market 15,380 21,158
Receivables, net 108,045 81,323
Inventories
Raw materials 18,286 18,210
Work in process 13,372 8,965
Finished goods 24,921 17,571
-------- --------
56,579 44,746
Other current assets 6,653 7,660
-------- --------
Total current assets 189,203 160,771
-------- --------
PROPERTY, PLANT AND EQUIPMENT, net 185,817 185,853
OTHER ASSETS 10,482 11,059
-------- --------
$385,502 $357,683
======== ========
Liabilities and Shareholders' Equity
CURRENT LIABILITIES:
Notes payable and current portion
of long-term debt $ 29,644 $ 39,201
Accounts payable 53,226 46,135
Accrued liabilities 20,310 21,587
-------- --------
Total current liabilities 103,180 106,923
-------- --------
LONG-TERM DEBT, net 22,919 23,075
OTHER LONG-TERM LIABILITIES 16,786 16,897
DEFERRED INCOME TAXES 10,606 10,606
SHAREHOLDERS' EQUITY 232,011 200,182
-------- --------
$385,502 $357,683
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
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<PAGE> 3
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,
1995 1994
----------- -----------
<S> <C> <C>
NET SALES $ 142,761 $ 120,706
Cost of Sales 108,561 90,378
----------- -----------
Gross Profit 34,200 30,328
Selling, general and administrative
expenses 5,575 5,291
----------- -----------
INCOME FROM OPERATIONS 28,625 25,037
Other Income (Expense):
Interest expense (972) (565)
Miscellaneous, net (720) 362
----------- -----------
(1,692) (203)
----------- -----------
INCOME BEFORE INCOME TAXES 26,933 24,834
Income Taxes 10,234 9,437
----------- -----------
Net Income $ 16,699 $ 15,397
=========== ===========
EARNINGS PER SHARE $ 0.56 $ 0.51
=========== ===========
Weighted Average and Equivalent Shares
Outstanding 29,984,000 30,428,000
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
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<PAGE> 4
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,
1995 1994
----------- -----------
<S> <C> <C>
NET SALES $ 277,121 $ 226,644
Cost of Sales 211,502 171,742
----------- -----------
Gross Profit 65,619 54,902
Selling, general and administrative
expenses 10,696 9,505
----------- -----------
INCOME FROM OPERATIONS 54,923 45,397
Other Income (Expense):
Interest expense (1,570) (1,243)
Miscellaneous, net (1,089) 866
----------- -----------
(2,659) (377)
----------- -----------
INCOME BEFORE INCOME TAXES 52,264 45,020
Income Taxes 19,840 17,108
----------- -----------
Net Income $ 32,424 $ 27,912
=========== ===========
EARNINGS PER SHARE $ 1.08 $ 0.91
=========== ===========
Weighted Average and Equivalent Shares
Outstanding 29,949,000 30,555,000
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
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<PAGE> 5
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
---------- ----------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 14,824 $ 28,724
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings (9,557) 7,125
Stock options exercised 1,161 1,448
Payments of long-term debt (156) (87)
Cash dividends (2,815) (2,245)
Repurchases of common stock (754) (9,760)
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (12,121) (3,519)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment, net (13,790) (33,152)
Proceeds from sales of marketable securities 7,749 30,044
Purchases of marketable securities - (23,275)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (6,041) (26,383)
Net Decrease in Cash and Equivalents (3,338) (1,178)
Cash and Equivalents at Beginning of Period 5,884 8,274
---------- ----------
Cash and Equivalents at End of Period $ 2,546 $ 7,096
========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
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<PAGE> 6
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Valuation
Common Stock Adjustment
----------------------- Additional Cumulative to
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, 1994 29,611,635 $ 14,806 $ 55,555 $ (10,572) $ (2,500) $ 142,893 $ 200,182
Net income - - - - - 32,424 32,424
Foreign currency
translation, net of
related deferred
income taxes - - - 170 - - 170
Cash dividends
($.095/share) - - - - - (2,815) (2,815)
Repurchases of
common stock (29,500) (15) (739) - - - (754)
Stock options
exercised, including
related tax
benefit 67,224 34 1,127 - - - 1,161
Valuation adjustment to
marketable securities - - - - 1,643 - 1,643
---------- -------- -------- --------- -------- --------- ---------
Balances at
June 30, 1995 29,649,359 $ 14,825 $ 55,943 $ (10,402) $ (857) $ 172,502 $ 232,011
========== ======== ======== ========= ======== ========= =========
</TABLE>
See notes to consolidated condensed financial statements.
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<PAGE> 7
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,
which are of a normal and recurring nature, to present fairly the
financial position of the Company as of June 30, 1995, and the results
of its operations and cash flows for the three month and six month
periods ended June 30, 1995 and 1994.
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, was $1,669,000 and taxes paid
was $18,212,000, for the six months ended June 30, 1995.
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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
For the Three Months Ended June 30, 1995 1994 Over 1994
- ----------------------------------- -------- -------- ---------
<S> <C> <C> <C>
OEM CAST ALUMINUM ROAD WHEELS $132,338 $109,329 21.0%
AFTERMARKET 10,423 11,377 (8.4)%
-------- --------
$142,761 $120,706 18.3%
======== ========
For the Six Months Ended June 30,
- ---------------------------------
OEM CAST ALUMINUM ROAD WHEELS $256,881 $207,108 24.0%
AFTERMARKET 20,240 19,536 3.6%
-------- --------
$277,121 $226,644 22.3%
======== ========
</TABLE>
RESULTS OF OPERATIONS
OEM net sales were $132.3 million and $256.9 million for the quarter and six
months ended June 30, 1995 or 21.0 percent and 24.0 percent, respectively, above
comparable periods in 1994. Higher net sales resulted primarily from the
adjustment of the aluminum content of selling prices to reflect current market
conditions and, to a lesser extent, increased OEM wheel shipments. OEM cast
aluminum road wheel shipments increased 2.1 percent and 3.4 percent for the
quarter and six months ended June 30, 1995, respectively, compared to a North
American auto production decrease of 0.6 percent and an increase of 1.8 percent,
respectively, for the comparable periods.
Net sales in the aftermarket business decreased 8.4 percent to $10.4 million for
the quarter ended June 30, 1995 and increased 3.6 percent to $20.2 million for
the first six months of 1995 versus comparable periods in 1994. Sales for the
quarter were impacted by "soft" market conditions and lower roadwheel refill
shipments when compared to large second quarter 1994 initial orders for new
roadwheel models.
Gross margins were 24.0 percent and 23.7 percent for the quarter and six months
ended June 30, 1995 versus 25.1 percent and 24.2 percent, respectively, in 1994.
Lower gross margins percentages primarily reflect the impact that higher
aluminum costs bear on selling prices, but which do not adversely impact the
Company's profitability in absolute dollars. The Company expects gross margins
will be at lower rates in the third quarter as all facilities will experience
shutdowns for normal customer model year changeovers and inventory balancing.
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<PAGE> 9
Selling, general and administrative expenses, as a percentage of net sales,
decreased to 3.9 percent for the quarter and six months ended June 30, 1995,
respectively, versus 4.4 percent and 4.2 percent, respectively, for the
comparable periods in 1994, but increased in absolute dollars. This increase
reflects greater commission payments commensurate with higher sales levels and
additional resources required to manage the Company's expanding business
activities.
Interest expense increased $407,000 and $327,000 for the quarter and six months
ended June 30, 1995, respectively, from comparable periods in 1994. Increased
interest costs resulted from reduced capitalized interest in 1995 compared to
1994 as plant construction in Fayetteville, Arkansas and Chihuahua, Mexico
approached completion. Additionally, the Company experienced greater short-term
borrowings required to manage increased working capital requirements.
Miscellaneous, net decreased $1,082,000 and $1,955,000 for the quarter and six
months ended June 30, 1995, respectively, from comparable periods in 1994. This
increase is a result of $1,000,000 and $1,600,000 of pre-production costs
related to the new Fayetteville chrome plating plant for the second quarter and
six months ended June 30, 1995, respectively. Management believes that this
facility will be in a start-up mode through the end of the year. Miscellaneous,
net was additionally impacted by lower levels of interest income as the Company
liquidated short-term investments to fund OEM plant expansion activities and
on-going working capital requirements.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities in the first six months of 1995 was
$14.8 million versus $28.7 million in 1994. Supplementing cash flows were the
liquidation of $7.7 million of marketable securities. Despite stronger
earnings, cash flows were impacted by increases to receivables and inventories
offset somewhat by the timing of payments on trade payables.
In 1995, cash was utilized to fund $13.8 million in capital expenditures
relating primarily to the new chrome plating plant, the second phase of
construction at the Chihuahua OEM facility and on-going plant enhancements.
Additionally, cash was utilized early in the year to repurchase 29,500 shares of
the Company's common stock pursuant to the 1994 stock repurchase program and to
reduce outstanding lines of credit.
Working capital and current ratio were $86.0 million and 1.8:1 versus $53.8
million and 1.5:1, at June 30, 1995 and December 31, 1994, respectively. The
long-term debt to total capitalization ratio improved to 9.0 percent at the end
of the quarter from 10.3 percent at the end of 1994.
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<PAGE> 10
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - Exhibit 27, Financial Data Schedule
(b) Reports on Form 8-K - There were no reports filed during the quarter
ended June 30, 1995.
(This space intentionally left blank.)
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<PAGE> 11
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 08/11/95 /s/ Louis L. Borick
-------------------------------------------------------
Louis L. Borick
President and Chairman of the Board
Date 08/11/95 /s/ R. Jeffrey Ornstein
-------------------------------------------------------
R. Jeffrey Ornstein
Vice President and CFO
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED, CONSOLIDATED CONDENSED BALANCE SHEETS AS OF JUNE 30, 1995 AND THE
UNAUDITED, CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS
THEN ENDED. THIS SCHEDULE IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
UNAUDITED, CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,546
<SECURITIES> 15,380
<RECEIVABLES> 84,804
<ALLOWANCES> 767
<INVENTORY> 56,579
<CURRENT-ASSETS> 189,203
<PP&E> 305,668
<DEPRECIATION> 119,851
<TOTAL-ASSETS> 385,502
<CURRENT-LIABILITIES> 103,180
<BONDS> 3,267
<COMMON> 14,825
0
0
<OTHER-SE> 217,186
<TOTAL-LIABILITY-AND-EQUITY> 385,502
<SALES> 277,121
<TOTAL-REVENUES> 277,837
<CGS> 211,502
<TOTAL-COSTS> 222,198
<OTHER-EXPENSES> 1,805<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,570
<INCOME-PRETAX> 52,264
<INCOME-TAX> 19,840
<INCOME-CONTINUING> 32,424
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,424
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 0
<FN>
<F1>OTHER EXPENSES INCLUDE MISCELLANEOUS EXPENSE.
</FN>
</TABLE>
