<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 March 31, 1998
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
Van Nuys, California 91406
(Address of principal executive offices) (Zip Code)
(818) 781-4973
(Registrant's telephone number, including area code)
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>
<CAPTION>
Class of Common Stock Outstanding at April 30, 1998
--------------------- -----------------------------
<S> <C>
$.50 Par Value 27,849,678
</TABLE>
<PAGE> 2
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Cover Page............................................................................. 1
Table of Contents...................................................................... 2
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Condensed Statements of Income ..................................... 3
Consolidated Condensed Statements of Comprehensive Income ....................... 4
Consolidated Condensed Balance Sheets............................................ 5
Consolidated Condensed Statements of Cash Flows.................................. 6
Consolidated Condensed Statements of Shareholders' Equity........................ 7
Notes to Consolidated Condensed Financial Statements................................... 8
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................. 10
Part II - Other Information
Signatures............................................................................. 11
Exhibit 27 - Financial Data Schedule
</TABLE>
2
<PAGE> 3
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Net Sales ........................................... $ 136,371 $ 125,893
Cost of Sales ....................................... 111,534 103,496
--------- ---------
Gross Profit ........................................ 24,837 22,397
Selling, General and Administrative Expenses ........ 5,383 4,774
--------- ---------
Income From Operations .............................. 19,454 17,623
Non-Operating Income (Expense):
Interest income, net ............................. 890 438
Miscellaneous expense, net ....................... (590) 54
--------- ---------
300 492
Income Before Provision for Income Taxes ............ 19,754 18,115
Provision for Income Taxes .......................... 6,963 6,567
--------- ---------
Net Income .......................................... $ 12,791 $ 11,548
========= =========
Earnings Per Share - Basic .......................... $ 0.46 $ 0.41
========= =========
Earnings Per Share - Diluted ........................ $ 0.46 $ 0.41
========= =========
Dividends Declared Per Share ........................ $ 0.07 $ 0.06
========= =========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements
3
<PAGE> 4
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE QUARTERS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Net Income ......................................... $ 12,791 $ 11,548
Other Comprehensive Income, net of tax:
Foreign Currency Translation Adjustments ........ (250) (9)
Unrealized Loss on Marketable Securities ........ -- (22)
-------- --------
Total Other Comprehensive Income ................... (250) (31)
Comprehensive Income ............................... $ 12,541 $ 11,517
======== ========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements
4
<PAGE> 5
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31 December 31
ASSETS 1998 1997
--------- ---------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents ............................................ $ 88,210 $ 73,693
Accounts receivable, net ............................................. 77,588 78,543
Inventories
Raw materials ..................................................... 21,443 14,039
Work in process ................................................... 12,127 12,642
Finished goods .................................................... 17,407 15,706
--------- ---------
50,977 42,387
Other current assets ................................................. 6,771 5,223
--------- ---------
Total current assets ........................................... 223,546 199,846
Property, Plant and Equipment ........................................... 337,604 331,279
Less: Accumulated Depreciation ......................................... 189,808 183,290
--------- ---------
Net property, plant and equipment .................................... 147,796 147,989
Other Assets ............................................................ 35,843 34,844
--------- ---------
Total Assets ............................................................ $ 407,185 $ 382,679
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable ..................................................... $ 43,066 $ 34,251
Accrued liabilities .................................................. 38,634 30,575
Current portion of long-term debt .................................... 588 589
--------- ---------
Total current liabilities ...................................... 82,288 65,415
Long-term Debt .......................................................... 1,272 1,344
Other Long-term Liabilities ............................................. 16,019 16,377
Deferred Income Taxes ................................................... 11,727 12,127
Shareholders' Equity
Common stock ......................................................... 21,129 23,257
Accumulated other comprehensive income ............................... (14,406) (14,156)
Retained earnings .................................................... 289,156 278,315
--------- ---------
Total shareholders' equity ..................................... 295,879 287,416
Total Liabilities and Shareholders' Equity .............................. $ 407,185 $ 382,679
========= =========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements
5
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Net Cash Provided by Operating Activities ............ $ 26,802 $ 12,887
Cash Flows from Financing Activities:
Repurchases of common stock ....................... (4,374) (3,033)
Stock options exercised ........................... 2,246 388
Cash dividends paid ............................... (1,953) (1,698)
Payments of long-term debt ........................ (72) (57)
-------- --------
Net Cash Used in Financing Activities .......... (4,153) (4,400)
-------- --------
Cash Flows from Investing Activities:
Additions to property, plant and equipment ........ (6,223) (4,453)
Investment in and advances to joint ventures ...... (1,909) (750)
-------- --------
Net Cash Used in Investing Activities .......... (8,132) (5,203)
-------- --------
Net Increase in Cash and Cash Equivalents ............ 14,517 3,284
Cash and Cash Equivalents at Beginning of Period ..... 73,693 36,815
-------- --------
Cash and Cash Equivalents at End of Period ........... $ 88,210 $ 40,099
======== ========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements
6
<PAGE> 7
SUPERIOR INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
(Dollars in thousand, except share data)
<TABLE>
<CAPTION>
Common Stock Accumulated
--------------------------- Additional Other
Number of Paid-In Comprehensive Retained
Shares Amount Capital Income Earnings Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1997 27,902,387 $ 13,951 $ 9,306 $ (14,156) $ 278,315 $ 287,416
Net income .............. -- -- -- -- 12,791 12,791
Foreign currency
translation ..... -- -- -- (250) -- (250)
Cash dividends declared
($.07/share) .... -- -- -- -- (1,950) (1,950)
Repurchases of
common stock .... (155,300) (78) (4,296) -- -- (4,374)
Stock options
exercised ....... 141,291 71 2,175 -- -- 2,246
----------- ----------- ----------- ----------- ----------- -----------
Balances at
March 31, 1998 .. 27,888,378 $ 13,944 $ 7,185 $ (14,406) $ 289,156 $ 295,879
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements
7
<PAGE> 8
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Basis of Presentation
During interim periods, Superior Industries International, Inc. and its
subsidiaries (the "Company") follow the accounting policies set forth in its
Annual Report to Shareholders and applies appropriate interim financial
reporting standards, as indicated below. Users of financial information produced
for interim periods are encouraged to refer to the notes contained in the Annual
Report to Shareholders when reviewing interim financial results.
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, including the use of estimated
effective tax rates. 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.
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements of the Company have been prepared in accordance with the
Securities and Exchange Commission's requirements of form 10-Q and contain all
adjustments, of a normal and recurring nature, which are necessary to present
fairly the financial position of the Company as of March 31, 1998, and the
results of its operations and cash flows for the three month periods ended March
31, 1998 and 1997.
Contingencies
The Company is party to various legal and environmental proceedings incidental
to its business. Certain claims, suits and complaints arising in the ordinary
course of business have been filed or are pending against the Company. Based on
facts now known to the Company, management believes all such matters are
adequately provided for, covered by insurance or, if not so covered or provided
for, are without merit, or involve such amounts that would not materially
adversely affect the consolidated results of operations and cash flows or
financial position of the Company.
Segment Reporting
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 131, "Disclosures about Segments of an
Enterprise and Related Information". This Statement, which is effective for all
reporting periods beginning in 1998, redefines the way publicly held companies
report information about segments. Based upon the Company's assessment of this
pronouncement, it has determined that the automotive aftermarket portion of the
Company's business is not a "Reportable Segment" and, therefore, the Company
will continue to report on an integrated one segment basis.
8
<PAGE> 9
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Earnings per Share
Earnings per share calculations for all periods are in accordance with the
provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per
Share". Accordingly, "basic" earnings per share is calculated by dividing net
income by the weighted average shares outstanding for the period, or 27,906,000
in 1998 and 28,125,000 in 1997. For purposes of calculating "diluted" earnings
per share, net income is divided by the total of the weighted averaged shares
outstanding plus the dilutive effect of the Company's outstanding stock options
("common stock equivalents"), or 28,102,000 in 1998 and 28,267,000 in 1997.
Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 130, "Reporting Comprehensive Income". This
Statement, which is effective for all reporting periods beginning in 1998,
requires the prominent disclosure of all components of Comprehensive Income, as
defined - see the Consolidated Condensed Statements of Comprehensive Income and
Shareholders' Equity. Accumulated Other Comprehensive Income as reflected in the
Statement of Shareholders' Equity represents the cumulative foreign currency
translation adjustments through December 31, 1997 and March 31, 1998.
Forward Looking Statements
Some statements included in this filing 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 the 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.
9
<PAGE> 10
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net sales were $136.4 million for the quarter ended March 31, 1998, compared to
$125.9 million for the same period in 1997. OEM net sales increased $9.3
million, or 7.9 percent, to $126.9 million from $117.6 million in 1997, as OEM
unit shipments increased 4.7 percent and chrome-plating revenues increased $3.0
million over the same period a year ago. North American production of passenger
cars and light trucks was virtually flat for the current quarter, indicating a
continued trend toward greater installation of aluminum wheels on North American
light vehicles. Net sales of automotive aftermarket products increased $1.2
million, or 14.4 percent, to $9.5 million from $8.3 million a year ago. Road
wheel sales increased $837,000, or 18.1 percent, to $5.5 million and other
accessories increased $357,000, or 9.8 percent, to $4.0 million.
The gross margin was 18.2 percent for the quarter, versus 17.8 percent for the
comparable period in 1997. The increased margin was due principally to the
improved utilization rates at the Company's OEM wheel plants versus the prior
year and to the improvement in performance of the chrome-plating facility.
Selling, general and administrative expenses were 3.9 percent of net sales in
1998 compared to 3.8 percent of net sales a year ago. Interest income for the
current period increased to $931,000 as cash available for investing during the
period increased by approximately $40 million over the same period a year ago.
Interest expense decreased to $41,000 from $143,000 a year ago. Miscellaneous
expense for 1998 includes a pre-tax equity loss of $350,000 related to the
Company's fifty percent owned joint venture operations in Hungary.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $26.8 million for the quarter
ended March 31, 1998, an increase of $13.9 million as the change in working
capital improved by $12.5 million, due principally to a higher level of accounts
payable outstanding at the end of the current period.
Cash utilized to fund financing activities included $4.4 million for the
repurchase of 155,300 shares of common stock, pursuant to a 2.0 million share
repurchase plan and $1.9 million for cash dividends on the Company's common
stock. These expenditures were partially offset by proceeds of $2.2 million
related to the exercise of 141,291 stock options. Cash utilized to fund
investing activities included $6.2 million for capital expenditures and $1.9
million of additional investment in and advances to the Company's joint
ventures.
Working capital and current ratio were $141.3 million and 2.7:1 versus $134.4
million and 3.1:1 at December 31, 1997, respectively, and $96.4 million and
2.3:1 at March 31, 1997, respectively. Cash and short-term investments as of
March 31, 1998 were $88.2 million compared to $73.7 million at December 31, 1997
and $45.4 million a year ago. The Company's current cash position, along with
its unused credit facilities, is sufficient to fund working capital and capital
investment requirements for 1998.
10
<PAGE> 11
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
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 on Form 8-K filed during
the three months ended March 31, 1998.
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 5/15/98 /s/ Louis L. Borick
----------------------------------------
Louis L. Borick
President and Chairman of the Board
Date 5/15/98 /s/ R. Jeffrey Ornstein
----------------------------------------
R. Jeffrey Ornstein
Vice President and CFO
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited, consolidated financial statements and is qualified in its entirety by
reference to such unaudited consolidated financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 88,210
<SECURITIES> 0
<RECEIVABLES> 77,588 <F1>
<ALLOWANCES> 0 <F1>
<INVENTORY> 50,977
<CURRENT-ASSETS> 223,546
<PP&E> 337,604
<DEPRECIATION> (189,808)
<TOTAL-ASSETS> 407,185
<CURRENT-LIABILITIES> 82,288
<BONDS> 0
0
0
<COMMON> 21,129 <F2>
<OTHER-SE> 274,750
<TOTAL-LIABILITY-AND-EQUITY> 407,185
<SALES> 136,371
<TOTAL-REVENUES> 136,371
<CGS> 111,534
<TOTAL-COSTS> 116,917
<OTHER-EXPENSES> 590
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (890)
<INCOME-PRETAX> 19,754
<INCOME-TAX> 6,963
<INCOME-CONTINUING> 12,791
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,791
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
<FN>
<F1> NOTES AND ACCOUNTS RECEIVABLE - TRADE ARE REPORTED
NET OF ALLOWANCES FOR DOUBTFUL ACCOUNTS IN THE
CONSOLIDATED BALANCE SHEET.
<F2> COMMON STOCK AND ADDITIONAL PAID-IN-CAPITAL ARE
COMBINED IN THE CONSOLIDATED CONDENSED BALANCE
SHEET.
</FN>
</TABLE>
