<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, 1996
[ ] 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 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 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>
<CAPTION>
Outstanding at
Class of Common Stock August 5, 1996
<S> <C>
$.50 Par Value 28,432,156 Shares
</TABLE>
1
<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,
1996 1995
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 17,968 $ 3,366
Short-term investments, at the lower of
cost or market 7,240 7,813
Receivables, net 76,040 70,889
Inventories
Raw materials 14,819 18,485
Work in process 13,183 12,815
Finished goods 15,704 22,523
------------ -----------
43,706 53,823
Other current assets 6,137 6,768
------------ -----------
Total current assets 151,091 142,659
------------ -----------
PROPERTY, PLANT AND EQUIPMENT, net 170,798 177,538
OTHER ASSETS 31,777 21,573
------------ -----------
$ 353,666 $ 341,770
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion
of long-term debt $ 8,824 $ 13,628
Accounts payable 46,245 46,920
Accrued liabilities 25,499 18,981
Income taxes payable 6,821 2,217
------------ -----------
Total current liabilities 87,389 81,746
------------ -----------
LONG-TERM DEBT, net 5,711 5,814
OTHER LONG-TERM LIABILITIES 16,668 17,207
DEFERRED INCOME TAXES 7,850 7,850
SHAREHOLDERS' EQUITY 236,048 229,153
------------ -----------
$ 353,666 $ 341,770
============ ===========
</TABLE>
See notes to consolidated condensed financial statements.
2
<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,
1996 1995
----------- -----------
<S> <C> <C>
NET SALES $ 137,554 $ 142,761
Cost of Sales 107,198 108,561
----------- -------------
Gross Profit 30,356 34,200
Selling, general and administrative
expenses 5,529 5,575
----------- -------------
INCOME FROM OPERATIONS 24,827 28,625
Other Income (Expense):
Interest expense (422) (972)
Interest income 186 329
Miscellaneous, net (2,655) (1,049)
----------- -------------
(2,891) (1,692)
----------- -------------
INCOME BEFORE INCOME TAXES 21,936 26,933
Income Taxes 8,027 10,234
----------- -------------
Net Income $ 13,909 $ 16,699
=========== =============
EARNINGS PER SHARE $ 0.48 $ 0.56
=========== =============
Weighted Average and Equivalent Shares
Outstanding 28,998,000 29,984,000
=========== =============
</TABLE>
See notes to consolidated condensed financial statements.
3
<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,
1996 1995
----------- -----------
<S> <C> <C>
NET SALES $ 259,015 $ 277,121
Cost of Sales 206,935 211,502
----------- -------------
Gross Profit 52,080 65,619
Selling, general and administrative
expenses 10,361 10,696
----------- -------------
INCOME FROM OPERATIONS 41,719 54,923
Other Income (Expense):
Interest expense (903) (1,570)
Interest income 360 716
Miscellaneous, net (5,543) (1,805)
----------- -------------
(6,086) (2,659)
----------- -------------
INCOME BEFORE INCOME TAXES 35,633 52,264
Income Taxes 13,095 19,840
----------- -------------
Net Income $ 22,538 $ 32,424
=========== =============
EARNINGS PER SHARE $ 0.78 $ 1.08
=========== =============
Weighted Average and Equivalent Shares
Outstanding 29,023,000 29,949,000
=========== =============
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE> 5
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
----------- ---------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 51,923 $ 14,824
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings (4,800) (9,557)
Stock options exercised 525 1,161
Payments of long-term debt (107) (156)
Cash dividends (3,223) (2,815)
Repurchases of common stock (13,117) (754)
----------- ---------
NET CASH USED IN FINANCING ACTIVITIES (20,722) (12,121)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment, net (6,327) (13,790)
Investment in Unconsolidated 50/50 Joint Venture (10,651) -
Proceeds from sales of short-term investments 379 7,749
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (16,599) (6,041)
----------- -----------
Net Increase (Decrease) in Cash and Equivalents 14,602 (3,338)
Cash and Equivalents at Beginning of Period 3,366 5,884
----------- -----------
Cash and Equivalents at End of Period $ 17,968 $ 2,546
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
5
<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 Short-term Retained
Shares Amount Capital Adjustment Investments Earnings Total
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1995 29,029,007 $ 14,514 $ 38,911 $ (13,828) $ (652) $ 190,208 $ 229,153
Net income - - - - - 22,538 22,538
Foreign currency
translation, net of
related deferred
income taxes - - - 366 - - 366
Cash dividends
($.11/share) - - - - - (3,223) (3,223)
Repurchases of
common stock (499,600) (250) (12,868) - - - (13,118)
Stock options
exercised, including
related tax
benefit 30,549 15 511 - - - 526
Valuation adjustment to
short-term investments - - - - (194) - (194)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balances at
June 30, 1996 28,559,956 $ 14,280 $ 26,554 $(13,462) $ (846) $ 209,522 $ 236,048
========== ========== ========== ========== ========== ========== ==========
</TABLE>
See notes to consolidated condensed financial statements.
6
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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 June 30, 1996, and
the results of its operations and cash flows for the three month and
six month periods ended June 30, 1996 and 1995.
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. Interim financial reporting standards require management to make
estimates that are based on assumptions regarding the outcome of
future events and circumstances not known at the present time.
Inevitably, some assumptions may not materialize and unanticipated
events and circumstances may occur which vary from those estimates and
such variations may significantly affect the Company's future results.
4. Interest paid, net of amounts capitalized , was $903,000 and
$1,669,000 for the six months ended June 30, 1996, and June 30, 1995,
respectively. Interest amounts capitalized were $0 and $541,000 for
the six months ended June 30, 1996 and June 30, 1995, respectively.
Taxes paid were $7,641,000 and $18,212,000 for the six months ended
June 30, 1996 and June 30, 1995, respectively.
7
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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, 1996 1995 Over 1995
- ----------------------------------- -------------- --------------- --------------
<S> <C> <C> <C>
OEM CAST ALUMINUM ROAD WHEELS $ 128,703 $ 132,338 (2.8)%
AFTERMARKET 8,851 10,423 (15.1)%
-------------- ---------------
$ 137,554 $ 142,761 (3.7)%
============= ===============
For the Six Months Ended June 30,
- ---------------------------------
OEM CAST ALUMINUM ROAD WHEELS $ 241,349 $ 256,881 (6.0)%
AFTERMARKET 17,666 20,240 (12.7)%
-------------- ---------------
$ 259,015 $ 277,121 (6.5)%
============= ===============
</TABLE>
RESULTS OF OPERATIONS
Net sales were $137.6 million and $259.0 for the quarter and six months ended
June 30, 1996, representing a decrease of 3.7 and 6.5 percent, respectively,
from comparable periods in 1995. Lower net sales resulted from the aluminum
content of selling prices to OEM customers reflecting lower prices and costs.
For the quarter and six months, OEM unit shipments to customers increased 6.6
percent and 2.6 percent, respectively, over comparable periods in 1995.
Production of vehicles by Ford and GM that utilize the Company's cast aluminum
wheels increased by an estimated 4.5 percent for the quarter and decreased 7.1
percent for the six months over comparable periods in 1995. Compared against
the Company's increased shipments, this shows a continued trend toward greater
installation of aluminum wheels on vehicles that are being produced. Although
still a relatively small portion of our business, shipments to our Japanese and
European customers are up almost 100 percent over last year and now represent
4.5 percent of OEM units shipped.
Net sales in the aftermarket business decreased 15.1 percent and 12.7 percent
for the quarter and six months ended June 30, 1996, as compared to the same
periods in 1995. Sales in the aftermarket reflect competitive market pressure.
8
<PAGE> 9
The gross margin was 22.1 percent and 20.1 percent for the quarter and six
months versus 24.0 percent and 23.7 percent for the comparable periods in 1995.
Reduced gross profit margins result from the lower plant utilization at certain
plants and continued pricing pressure by our OEM customers.
Selling, general and administrative expenses, were relatively flat as a
percentage of net sales for the related quarter and six months, at 4.0 percent
compared to 3.9 percent in the same period last year.
Interest expense for the second quarter and six months in 1996 was down
$550,000 and 667,000 respectively compared to 1995. This is a decrease of 56.6
percent and 42.5 percent, respectively, and reflects planned prepayments of
senior debt at the end of 1995.
Interest income was down $143,000 and $356,000 for the quarter and six months
ended June 30, 1996 compared to 1995. The Company liquidated short-term
investments to meet daily cash requirements thereby causing lower interest
income.
Miscellaneous expense increased $1.6 million and $3.8 million for the quarter
and six months ended June 30, 1996, over the same period in 1995. These
increases are principally a result of $2.8 million and $5.7 million,
respectively, of pre-production costs related to the new Fayetteville chrome
plating plant. Higher pre-production costs reflect continuing technical
problems at the chrome plant. The company has instituted major improvements in
the chrome plant which are now expected to result in decreases in our operating
costs.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $29.4 million and $51.9 million
for the three months and six months ended June 30, 1996.
Cash was utilized to fund $4.6 million of capital expenditures for plant
improvements and equipment replacement during the quarter ended June 30, 1996.
Additionally, during the same period, the Company advanced $7.8 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. Cash was also used to reduce outstanding lines of credit and
repurchase the Company's common stock, pursuant to its 1995 stock repurchase
program.
Working capital and current ratio were $63.7 million and 1.7:1 versus $86.0
million and 1.8:1 at June 30, 1996 and 1995, respectively. Long-term debt to
total capitalization ratio improved to 2.4 percent at quarter end versus 2.5
percent at year end. Cash and short term investments as of June 30, 1996 were
$25.2 million. The Company's cash position is sufficient to liquidate all
remaining debt.
9
<PAGE> 10
USE OF FORWARD LOOKING STATEMENTS
Certain statements included in this report which are not historical in nature
are forward looking statements within the meaning of the Private Securities
Legislation Act of 1995. Forward looking statements regarding the Company's
future performance and financial results are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
set forth in forward looking statements due to a variety of factors. Factors
that may impact such forward looking statements include, among others, changes
in the condition of the industry, changes in general economic conditions and
the success of the Company's strategic and operating plans.
10
<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 June 30, 1996.
(This space intentionally left blank.)
-11-
<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 08/12/96 /s/ Louis L. Borick
-------- ---------------------------------------
Louis L. Borick
President and Chairman of the Board
Date 08/12/96 /s/ R. Jeffrey Ornstein
-------- ----------------------------------------
R. Jeffrey Ornstein
Vice President and CFO
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED, CONSOLIDATED CONDENSED BALANCE SHEETS AS OF JUNE 30, 1996 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>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 17,968
<SECURITIES> 7,240
<RECEIVABLES> 77,318
<ALLOWANCES> 1,278
<INVENTORY> 43,706
<CURRENT-ASSETS> 151,091
<PP&E> 315,477
<DEPRECIATION> 144,679
<TOTAL-ASSETS> 353,666
<CURRENT-LIABILITIES> 87,389
<BONDS> 2,858
0
0
<COMMON> 14,280
<OTHER-SE> 221,768
<TOTAL-LIABILITY-AND-EQUITY> 353,666
<SALES> 259,015
<TOTAL-REVENUES> 259,375
<CGS> 206,935
<TOTAL-COSTS> 217,296
<OTHER-EXPENSES> 5,543<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 903
<INCOME-PRETAX> 35,633
<INCOME-TAX> 13,095
<INCOME-CONTINUING> 22,538
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,538
<EPS-PRIMARY> .78
<EPS-DILUTED> 0
<FN>
<F1>OTHER EXPENSES INCLUDE MISCELLANEOUS EXPENSE.
</FN>
</TABLE>
