<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, 1996
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 October 28, 1996
$.50 Par Value 28,382,216 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,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 27,440 $ 3,366
Short-term investments, at the lower of
cost or market 5,062 7,813
Receivables, net 70,349 70,889
Inventories
Raw materials 15,200 18,485
Work in process 11,685 12,815
Finished goods 15,503 22,523
-------- --------
42,388 53,823
Other current assets 7,003 6,768
-------- --------
Total current assets 152,242 142,659
-------- --------
PROPERTY, PLANT AND EQUIPMENT, net 164,472 177,538
OTHER ASSETS 32,001 21,573
-------- --------
$348,715 $341,770
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion
of long-term debt $ 8,824 $ 13,628
Accounts payable 36,720 46,920
Accrued liabilities 30,249 21,198
-------- --------
Total current liabilities 75,793 81,746
-------- --------
LONG-TERM DEBT, net 5,657 5,814
OTHER LONG-TERM LIABILITIES 17,350 17,207
DEFERRED INCOME TAXES 8,050 7,850
SHAREHOLDERS' EQUITY 241,865 229,153
-------- --------
$348,715 $341,770
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
2
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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
September 30,
1996 1995
----------- -----------
<S> <C> <C>
NET SALES $ 120,447 $ 113,176
Cost of Sales 96,038 92,286
----------- -----------
Gross Profit 24,409 20,890
Selling, general and administrative
expenses 4,587 4,507
----------- -----------
INCOME FROM OPERATIONS 19,822 16,383
Other Expense:
Interest expense (236) (959)
Interest income 232 277
Miscellaneous, net (1,750) (2,661)
----------- -----------
(1,754) (3,343)
----------- -----------
INCOME BEFORE INCOME TAXES 18,068 13,040
Income Taxes 6,640 4,755
----------- -----------
NET INCOME $ 11,428 $ 8,285
=========== ===========
EARNINGS PER SHARE $ 0.40 $ 0.28
=========== ===========
Weighted Average and Equivalent Shares
Outstanding 28,605,000 30,123,000
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
3
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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>
Nine Months Ended
September 30,
1996 1995
---------- ----------
<S> <C> <C>
NET SALES $ 379,462 $ 390,297
Cost of Sales 302,973 303,788
---------- ----------
Gross Profit 76,489 86,509
Selling, general and administrative
expenses 14,948 15,203
---------- ----------
INCOME FROM OPERATIONS 61,541 71,306
Other Income (Expense):
Interest expense (1,139) (2,529)
Interest income 592 993
Miscellaneous, net (7,293) (4,466)
---------- ----------
(7,840) (6,002)
---------- ----------
INCOME BEFORE INCOME TAXES 53,701 65,304
Income Taxes 19,735 24,595
---------- ----------
NET INCOME $ 33,966 $ 40,709
========== ==========
EARNINGS PER SHARE $ 1.18 $ 1.36
========== ==========
Weighted Average and Equivalent Shares
Outstanding 28,882,000 30,007,000
========== ==========
</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>
Nine Months Ended
September 30,
1996 1995
-------- --------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 68,947 $ 31,889
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings (4,800) (16,442)
Stock options exercised 533 2,756
Payments of long-term debt (161) (5,773)
Cash dividends (4,872) (4,298)
Repurchases of common stock (17,197) (2,534)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (26,497) (26,291)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment, net (7,490) (18,501)
Proceeds from sales of marketable securities 364 15,071
Investment in Hungarian joint venture (11,250) (4,775)
Purchases of marketable securities - -
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (18,376) (8,205)
-------- --------
Net Increase/(Decrease) in Cash and Equivalents 24,074 (2,607)
Cash and Equivalents at Beginning of Period 3,366 5,884
-------- --------
Cash and Equivalents at End of Period $ 27,440 $ 3,277
======== ========
</TABLE>
See notes to consolidated condensed financial statements.
5
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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, 1995 29,029,007 $14,514 $38,911 $(13,828) $(652) $190,208 $229,153
Net income - - - - - 33,966 33,966
Foreign currency
translation, net of
related deferred
income taxes - - - 380 - - 380
Cash dividends
($.17/share) - - - - - (4,872) (4,872)
Repurchases of
common stock (665,600) (332) (16,865) - - - (17,197)
Stock options
exercised, including
related tax
benefit 31,809 16 517 - - - 533
Valuation adjustment to
marketable securities - - - - (98) - (98)
---------- ------- -------- -------- ----- -------- --------
Balances at
September 30, 1996 28,395,216 $14,198 $ 22,563 $(13,448) $(750) $219,302 $241,865
========== ======= ======== ======== ===== ======== ========
</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, 1996,
and the results of its operations and cash flows for the three month
and nine month periods ended September 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 $844,000 and $2,529,000
for the nine months ended September 30, 1996, and September 30, 1995,
respectively. Interest amounts capitalized were $0 and $739,000 for
the nine months ended September 30, 1996 and September 30, 1995,
respectively. Taxes paid were $16,402,000 and $23,297,000 for the
nine months ended September 30, 1996 and September 30, 1995,
respectively.
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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, 1996 1995 Over 1995
- ---------------------------------------- -------------- --------------- --------------
<S> <C> <C> <C>
OEM CAST ALUMINUM ROAD WHEELS $ 113,130 $ 105,457 7.3%
AFTERMARKET 7.317 7,719 (5.2)%
-------------- ---------------
$ 120,447 $ 113,176 6.4%
============== ===============
For the Nine Months Ended September 30,
- ---------------------------------------
OEM CAST ALUMINUM ROAD WHEELS $ 354,479 $ 362,338 (2.2)%
AFTERMARKET 24,983 27,959 (10.6)%
-------------- ---------------
$ 379,462 $ 390,297 (2.8)%
============== ===============
</TABLE>
RESULTS OF OPERATIONS
OEM net sales were $113.1 million for the quarter ended September 30, 1996
representing an increase of 7.3 percent over the comparable period in 1995.
Higher net sales resulted from higher unit shipments. OEM net sales declined
2.2 percent to $354.5 million for the nine months compared to 1995. The
decline in year to date net sales from the comparable period in 1995 reflect
reduced prices due to lower aluminum costs which flow through to our major OEM
customers. Unit shipments of OEM cast aluminum wheels increased 16.4 percent
for the quarter and increased 6.7 percent for the nine months compared to prior
year levels. Installation of aluminum wheels on domestic automobiles and light
trucks increased as overall production of these vehicles increased 6.9 percent
for the quarter but decreased 1.7 percent for the nine months ended September
1996 compared to the same period last year. Wheel shipments to customers other
than Ford and GM were also up compared to the related period last year. The
result of this increase brings the international portion of our business to
nearly 6 percent of our total OEM business.
Net sales in the aftermarket business decreased 5.2 percent and 10.6 percent
for the quarter and nine months ended September 30, 1996, respectively, from
comparable periods in 1995. This is attributable to a general slowdown in the
entire automotive aftermarket accessory business.
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Gross margins were 20.3 percent and 20.2 percent for the quarter and nine
months ended September 30, 1996, respectively, versus 18.5 and 22.2 percent for
the comparable periods in 1995. Increased gross profit margins reflect the
increase in our plant utilization rate over the same quarter last year.
Selling, general and administrative expenses, as a percentage of net sales, are
about flat with last year's three and nine month periods at approximately 3.9
percent. For the nine months ended September 30, 1996, selling, general and
administrative expenses, have declined $255,000 as a result of the company's
continued cost controls.
Interest expense for the third quarter and nine months ended September 1996
were $236,000 and $1,139,000 respectively. This is a decrease of $723,000 and
$1,390,000 respectively, from the same periods last year due to payments of
senior debt bearing interest rates of 10.22 percent and 9.31 percent. Also
contributing to the decline in interest expense is the ability to generate
sufficient cash to manage working capital requirements without short-term
borrowing.
Interest income for the quarter ended September 30, 1996 was flat with last
year. For the nine months ended September 30, 1996 interest income is down
$0.4 million reflecting the working capital needs earlier in the year to fund
our joint venture in Hungary and repurchases of common stock.
Miscellaneous expense, net decreased $911,000 reflecting lower pre-production
costs in the chrome plating plant for the quarter. The nine month period ended
September 30, 1996 shows an increase of $2.8 million over the same period in
1995. This reflects the major efforts earlier in this year to achieve
commercial viability in the chrome plant. These efforts are now yielding
increased production.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $68.9 million for the nine months
ended September 30, 1996. Cash flows were favorably impacted by reducing
receivables and inventory.
Cash was utilized to fund $11.3 million of capital contributions to 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 employed to reduce outstanding
lines of credit of approximately $4.8 million and repurchase $17.2 million of
the Company's common stock, pursuant to its 1996 stock repurchase program.
Working capital and current ratio were $76.4 million and 2.1:1 versus $60.9
million and 1.8:1 at September 30, 1996 and December 31, 1995 respectively.
Long-term debt to total capitalization ratio improved to 2.3 percent at quarter
end versus 2.5 percent at year end.
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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 general economic conditions and the success of the Company's strategic and
operating plans.
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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, 1996.
(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 11/01/96 /s/ Louis L. Borick
------------------------------------
Louis L. Borick
President and Chairman of the Board
Date 11/01/96 /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 SEPTEMBER 30, 1996 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> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 27,440
<SECURITIES> 5,062
<RECEIVABLES> 70,349
<ALLOWANCES> 1,236
<INVENTORY> 42,388
<CURRENT-ASSETS> 152,242
<PP&E> 164,472
<DEPRECIATION> 151,408
<TOTAL-ASSETS> 384,715
<CURRENT-LIABILITIES> 75,793
<BONDS> 2,806
0
0
<COMMON> 14,198
<OTHER-SE> 227,667
<TOTAL-LIABILITY-AND-EQUITY> 348,715
<SALES> 379,462
<TOTAL-REVENUES> 380,054
<CGS> 302,973
<TOTAL-COSTS> 317,921
<OTHER-EXPENSES> 7,293
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,139
<INCOME-PRETAX> 53,701
<INCOME-TAX> 19,735
<INCOME-CONTINUING> 33,966
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,966
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 0
</TABLE>
