<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 September 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.
Outstanding at
Class of Common Stock November 3, 1995
--------------------- --------------------
$.50 Par Value 29,352,857 Shares
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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>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
<S> <C> <C>
Assets
CURRENT ASSETS:
Cash and equivalents $ 3,277 $ 5,884
Marketable securities, at the lower of
cost or market 7,935 21,158
Receivables, net 94,449 81,323
Inventories
Raw materials 18,606 18,210
Work in process 13,400 8,965
Finished goods 23,062 17,571
-------- --------
55,068 44,746
Other current assets 8,133 7,660
-------- --------
Total current assets 168,862 160,771
-------- --------
PROPERTY, PLANT AND EQUIPMENT, net 183,975 185,853
OTHER ASSETS 16,768 11,059
-------- --------
$369,605 $357,683
======== ========
Liabilities and Shareholders' Equity
CURRENT LIABILITIES:
Notes payable and current portion
of long-term debt $ 20,617 $ 39,201
Accounts payable 46,560 46,135
Accrued liabilities 17,029 21,587
-------- --------
Total current liabilities 84,206 106,923
-------- --------
LONG-TERM DEBT, net 19,444 23,075
OTHER LONG-TERM LIABILITIES 16,447 16,897
DEFERRED INCOME TAXES 11,365 10,606
SHAREHOLDERS' EQUITY 238,143 200,182
-------- --------
$369,605 $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
September 30,
1995 1994
------------ ------------
<S> <C> <C>
Net Sales $ 113,176 $ 107,384
Cost of Sales 92,286 81,246
------------ ------------
Gross Profit 20,890 26,138
Selling, general and administrative
expenses 4,507 4,843
------------ ------------
Income From Operations 16,383 21,295
Other Expense:
Interest expense (959) (949)
Miscellaneous, net (2,384) (360)
------------ ------------
(3,343) (1,309)
------------ ------------
Income Before Income Taxes 13,040 19,986
Income Taxes 4,755 7,344
------------ ------------
Net Income $ 8,285 $ 12,642
============ ============
Earnings Per Share $ 0.28 $ 0.42
============ ============
Weighted Average and Equivalent Shares
Outstanding 30,123,000 30,220,000
============ ============
</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>
Nine Months Ended
September 30,
1995 1994
------------ ------------
<S> <C> <C>
Net Sales $ 390,297 $ 334,028
Cost of Sales 303,788 252,988
------------ ------------
Gross Profit 86,509 81,040
Selling, general and administrative
expenses 15,203 14,348
------------ ------------
Income From Operations 71,306 66,692
Other Income (Expense):
Interest expense (2,529) (2,192)
Miscellaneous, net (3,473) 506
------------ ------------
(6,002) (1,686)
------------ ------------
Income Before Income Taxes 65,304 65,006
Income Taxes 24,595 24,452
------------ ------------
Net Income $ 40,709 $ 40,554
============ ============
Earnings Per Share $ 1.36 $ 1.33
============ ============
Weighted Average and Equivalent Shares
Outstanding 30,007,000 30,428,000
============ ============
</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>
Nine Months Ended
September 30,
1995 1994
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 31,889 $ 37,426
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings (16,442) 26,400
Stock options exercised 2,756 1,482
Payments of long-term debt (5,773) (2,277)
Cash dividends (4,298) (3,580)
Repurchases of common stock (2,534) (15,537)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (26,291) 6,488
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment, net (18,501) (50,586)
Proceeds from sales of marketable securities 15,071 29,007
Investment in Hungarian joint venture (4,775) --
Purchases of marketable securities -- (24,998)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (8,205) (46,577)
-------- --------
Net Decrease in Cash and Equivalents (2,607) (2,663)
Cash and Equivalents at Beginning of Period 5,884 8,274
-------- --------
Cash and Equivalents at End of Period $ 3,277 $ 5,611
======== ========
</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>
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 -- -- -- -- -- 40,709 40,709
Foreign currency
translation, net of
related deferred
income taxes -- -- -- (183) -- -- (183)
Cash dividends
($.14/share) -- -- -- -- -- (4,298) (4,298)
Repurchases of
common stock (95,600) (48) (2,486) -- -- -- (2,534)
Stock options
exercised, including
related tax
benefit 148,597 74 2,682 -- -- -- 2,756
Valuation adjustment to
marketable securities -- -- -- -- 1,511 -- 1,511
---------- -------- -------- -------- ------- --------- ---------
Balances at
September 30, 1995 29,664,632 $ 14,832 $ 55,751 $(10,755) $ (989) $ 179,304 $ 238,143
========== ======== ======== ======== ======= ========= =========
</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 adjustments
necessary, which are of a normal and recurring nature, to present
fairly the financial position of the Company as of September 30, 1995,
and the results of its operations and cash flows for the three month
and nine month periods ended September 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 $2,529,000 and taxes
paid were $23,297,000, for the nine months ended September 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
(Decrease)
For the Three Months Ended September 30, 1995 1994 Over 1994
- ---------------------------------------- -------- -------- ---------
<S> <C> <C> <C>
OEM CAST ALUMINUM ROAD WHEELS $105,457 $ 97,982 7.6%
AFTERMARKET 7,719 9,402 (17.9)%
-------- --------
$113,176 $107,384 5.4%
======== ========
For the Nine Months Ended September 30,
- ---------------------------------------
OEM CAST ALUMINUM ROAD WHEELS $362,308 $305,090 18.8%
AFTERMARKET 27,959 28,938 (3.4)%
-------- --------
$390,297 $334,028 16.8%
======== ========
</TABLE>
RESULTS OF OPERATIONS
Net sales were $113.2 million and $390.3 million for the quarter and nine months
ended September 30, 1995 representing increases of 5.4 percent and 16.8 percent,
respectively, over comparable periods in 1994. Higher net sales resulted from
the adjustment of the aluminum content of selling prices to OEM customers
reflecting current market conditions. Unit shipments of OEM cast aluminum wheels
decreased 3.8 percent for the quarter but increased 1.1 percent for first three
quarters compared to prior year levels. However, for the quarter, production of
automobiles by Ford and GM that utilize the Company's cast aluminum wheels
decreased by an estimated 9 percent, while total automobile production by Ford
and GM decreased by 7 percent, compared to the comparable period in 1994. Wheel
shipments to customers were impacted by traditional third quarter assembly plant
shutdowns for model-year changeovers and further hampered by sluggish automotive
sales which resulted in customer assembly plant shutdowns to balance dealer
inventory levels. Moreover, order levels were further reduced by critical
supplier part shortages by non wheel suppliers, causing assembly plant
shutdowns.
Net sales in the aftermarket business decreased 17.9 percent and 3.4 percent for
the quarter and nine months ended September 30, 1995, respectively, below
comparable periods in 1994. Sales in both the road wheel and accessory product
lines decreased at an equivalent rate and were impacted by "soft" market
conditions.
-8-
<PAGE> 9
Gross margins were 18.5 percent and 22.2 percent for the quarter and nine months
ended September 30, 1995, respectively, versus 24.3 percent for the comparable
periods in 1994. Reduced gross profit margins reflect a number of factors.
First, all the Company's OEM wheel facilities, with the exception of the
Chihuahua wheel plant, were shutdown for two full weeks due to customers
retooling for 1996 model-year changeovers. This compares to a one week shutdown
at only two of the Company's facilities in 1994, resulting in a 13 percent
production decrease over the prior year third quarter. Secondly, the impact of
reduced plant production levels was accentuated by additional wheel making
capacity added as the result of plant expansion activities in Fayetteville,
Arkansas and Chihuahua, Mexico. Finally, lower margin percentages reflect the
impact that higher aluminum costs bear on selling prices, but which do not
adversely impact the Company's profitability in absolute dollars.
Selling, general and administrative expenses, as a percentage of net sales,
decreased to 4.0 percent and 3.9 percent for the three and nine month periods of
1995 versus 4.5 percent and 4.3 percent in the comparable periods of 1994. For
the quarter, selling, general and administrative expenses, measured in absolute
dollars, decreased $336,000. This dollar decrease reflect reduced incentive
compensation costs associated with lower earnings levels and lower professional
services fees.
Interest expense for the third quarter was consistent with prior year levels and
increased $590,000 for the nine months compared to the comparable year-to-date
period in 1994. The increase for the nine month period reflects 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 increased $2.0 million and $4.1 million for the quarter and
nine months ended September 30, 1995, respectively, over similar levels in 1994.
Increased miscellaneous expenses include $2.4 million and $4.0 million of
pre-production costs related to the new Fayetteville chrome plating plant in the
third quarter and nine month periods ended September 30, 1995, respectively.
Higher levels of pre-production costs reflect continuing technical problems at
the chrome plant. 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.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $31.9 million for the nine months
ended September 30, 1995. Supplementing cash flows was the liquidation of $15.1
million in marketable securities. Cash flows were impacted by the build-up of
receivables and inventories. Increased receivables reflect the impact that
higher aluminum commodity prices bear on selling prices and delayed payments on
scheduled aluminum price
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<PAGE> 10
increases from an OEM customer, which was resolved subsequent to quarter end.
Higher inventory levels also reflect higher priced aluminum and base stock
requirements at the new Chihuahua, Mexico OEM wheel facility.
Cash was utilized to fund $18.5 million of capital expenditures for plant
expansion activities relating to the Fayetteville chrome-plating facility, the
Chihuahua, Mexico second phase plant expansion, and on-going facility
enhancements. Additionally, the Company advanced $4.8 million for initial
construction and equipment deposits for its joint venture with German-based Otto
Fuchs Metallwerke, in Tatabanya, Hungary. The joint-venture, which will operate
under the name Suoftec Light Metal Products KFT will produce both light weight
forged and cast aluminum wheels to the European automotive industry. During the
third quarter, the joint venture broke ground on the future plant site and
received a five-year contract from a major European automaker for 700,000
lightweight forged wheels per year. Cash was also employed to reduce outstanding
lines of credit and repurchase the Company's common stock, pursuant to its 1995
stock repurchase program. Additionally, cash was used to retire the outstanding
balance of $5.5 million on the Company's 10.22% Senior notes, three years ahead
of the stated maturity.
Working capital and current ratio were $84.7 million and 2.0:1 versus $53.8
million and 1.5:1 at September 30, 1995 and December 31, 1994, respectively.
Long-term debt to total capitalization ratio improved to 7.5 percent at quarter
end versus 10.3 percent at year end.
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<PAGE> 11
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 September 30, 1995.
(This space intentionally left blank.)
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<PAGE> 12
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 11/10/95 /s/ Louis L. Borick
-------- -------------------------------------------
Louis L. Borick
President and Chairman of the Board
Date 11/10/95 /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 SEPTEMBER 30, 1995 AND
THE UNAUDITED, CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS FOR THE NINE
MONTHS THEN ENDED. THIS SCHEDULE IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH UNAUDITED, CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 3,277
<SECURITIES> 7,935
<RECEIVABLES> 94,449
<ALLOWANCES> 1,319
<INVENTORY> 55,068
<CURRENT-ASSETS> 168,862
<PP&E> 183,975
<DEPRECIATION> 126,330
<TOTAL-ASSETS> 369,605
<CURRENT-LIABILITIES> 84,206
<BONDS> 3,221
<COMMON> 14,832
0
0
<OTHER-SE> 223,311
<TOTAL-LIABILITY-AND-EQUITY> 369,605
<SALES> 390,297
<TOTAL-REVENUES> 391,290
<CGS> 303,788
<TOTAL-COSTS> 318,991
<OTHER-EXPENSES> 4,466<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,529
<INCOME-PRETAX> 65,304
<INCOME-TAX> 24,595
<INCOME-CONTINUING> 40,709
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,709
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 0
<FN>
<F1>OTHER EXPENSES INCLUDE MISCELLANEOUS EXPENSE.
</FN>
</TABLE>
