-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WM1tCKyvl+kEd1AGrHUMkRj8wj2FwbIoD63yVmm72K/32E5FuPCTVRZgXdMkqEXm kDBoh+kCcE+bUIqAmcDUUQ== 0000950148-96-000464.txt : 19960401 0000950148-96-000464.hdr.sgml : 19960401 ACCESSION NUMBER: 0000950148-96-000464 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUPERIOR INDUSTRIES INTERNATIONAL INC CENTRAL INDEX KEY: 0000095552 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 952594729 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06615 FILM NUMBER: 96541189 BUSINESS ADDRESS: STREET 1: 7800 WOODLEY AVE CITY: VAN NUYS STATE: CA ZIP: 91406 BUSINESS PHONE: 8187814973 MAIL ADDRESS: STREET 1: 7800 WOODLEY AVENUE CITY: VAN NUYS STATE: CA ZIP: 91406 10-K 1 FORM 10-K FOR FISCAL YEAR ENDED 12/31/95 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the Fiscal Year Ended December 31, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ___________ to ___________ COMMISSION FILE NO. 1-6615 SUPERIOR INDUSTRIES INTERNATIONAL, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CALIFORNIA 95-2594729 ---------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 7800 WOODLEY AVENUE, VAN NUYS, CALIFORNIA 91406 - ----------------------------------------- ----- (Address of Principal Executive Offices) Zip Code) Registrant's telephone number, including area code (818) 781-4973 Securities registered pursuant to Section 12(b) of the Act: COMMON STOCK, PAR VALUE $0.50 REGISTERED ON THE NEW YORK STOCK EXCHANGE Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this form 10-K or any amendment to this Form 10-K. / / 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- 28,886,029 shares of common stock were outstanding as of March 18, 1996. Aggregate market value of voting stock held by nonaffiliates of registrant was $538,228,465 on March 18, 1996. The following documents are incorporated by reference and made a part of the Form 10-K: 1. Registrant's 1995 Annual Report to Shareholders (Parts I, II and IV) 2. Registrant's Proxy Statement for its Annual Meeting of Stockholders to be held May 17, 1996 (Part III) Listing of Exhibits - Pages 20-22 Page 1 2 PART I ITEM 1. BUSINESS GENERAL DEVELOPMENT OF BUSINESS Superior Industries International, Inc.'s (the "Company" or the "Registrant") principal business is the design and manufacture of cast aluminum road wheels for original equipment manufacturers (OEMs). It also designs and distributes a variety of products for the automotive aftermarket, including custom road wheels and accessories. The Registrant was initially incorporated in Delaware in 1969 and reincorporated in California in 1994 as the successor to three businesses founded by Louis L. Borick, which had been engaged in the design, manufacture and sale of automotive accessories and related products since 1957. Recent developments in the Company's business are described in the Company's 1995 Annual Report to Shareholders ("Annual Report") which is incorporated herein by reference. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS The Company manages its business on an integrated one-segment basis. Information relating thereto has been included in Note 8 of "Notes to Consolidated Financial Statements" in the Annual Report which is incorporated herein by reference. NARRATIVE DESCRIPTION OF BUSINESS Principal Products The Registrant's products are divided into two categories: 1. OEM - Cast Aluminum Road Wheels (93.1 percent of net sales) 2. Aftermarket - Custom Road Wheels and Automotive Accessories (6.9 percent of net sales) The Company's net sales for these product lines for 1995, 1994 and 1993 are included in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the Annual Report which is incorporated herein by reference. OEM - Cast Aluminum Road Wheels The Company's entry into the OEM road wheel business in 1973 resulted from its successful development of manufacturing technology, quality control and quality assurance techniques which enabled it to satisfy the quality and volume requirements of the OEM market. The Company's OEM cast aluminum road wheels are sold to The Ford Motor Company ("Ford"), General Motors Corporation ("General Motors"), Chrysler de Mexico, several Japanese manufacturers, including Toyota Motor Corporation ("Toyota"), Mazda Motor Corporation ("Mazda"), Nissan Motor Corporation Ltd. ("Nissan"), Fuji Heavy Industries, Ltd. ("Subaru"), and Isuzu Motors Limited ("Isuzu"), and two European automotive manufacturers, Bayerische Motoren Werke ("BMW") and Jaguar Cars Ltd. ("Jaguar") for factory Page 2 3 installation as optional or standard equipment on selected vehicle models. As discussed below, there are several advantages to manufacturers, dealers and consumers by installing cast aluminum wheels which help promote this product's success. Consolidated net sales in 1995, 1994, and 1993 were to principally two major automotive manufacturers, Ford and General Motors. During the past twenty-two years the Company has provided cast aluminum road wheels to Ford, General Motors, Chrysler and, beginning in 1989, Japanese auto manufacturers for an increasing number of vehicle models, from eight models in 1980 to 156 currently. It has been the Company's experience that once the manufacturer has ordered the Company's cast aluminum wheels for use on a particular year's model, the Company's wheel will be included in that model's production in later years as well. In addition, the number of vehicle models on which the Company's aluminum wheels are standard equipment has increased from none in 1980 to 48 in 1995. Demand for OEM cast aluminum wheels such as those manufactured by the Company has been increasing. Ward's Automotive, an industry publication, reports that the installation rate of such wheels for domestic cars rose from approximately 4 percent in 1980 to 31 percent for the 1990 model year then to almost 44 percent for the 1995 model year. Aluminum road wheel installation rates for domestic light trucks and utility vehicles jumped from approximately 24 percent for the 1990 model year to almost 43 percent for the 1995 model year. This growth in aluminum wheel installation rates has taken place while the automotive market has been cyclical. The Company believes that the increased use of cast aluminum wheels on domestic vehicles is due to several factors. The aesthetic appeal of cast aluminum wheels has fueled customer demand. Aluminum wheels typically weigh less than conventional steel wheels and this weight savings contributes to increasing the vehicle's fuel efficiency. Because the federal government requires each domestic manufacturer's total annual production to meet certain minimum fuel efficiency levels referred to as "CAFE" (Corporate Average Fuel Economy), the Company's customers have sought to meet these levels in part by reducing the weight of their vehicles. The installation of cast aluminum wheels achieves this objective. Manufacturers and dealers also benefit from the installation of aluminum wheels on their models because of higher profit margins. Aluminum wheels contribute to the road handling ability and ride of a vehicle because of the weight savings to critical suspension areas and because of the greater precision achieved in manufacturing aluminum wheels over conventional steel wheels. With approximately 89 percent of the Company's 1995 sales made to Ford and General Motors, the Company is dependent on these two significant customers. The Company does not believe this represents a material risk due to the following factors. First, in 1993 the Company was awarded a new five-year contract with Ford. The contract, which expires in 1998, replaces previous long term contracts and covers passenger cars, light trucks and utility vehicles. This relationship should result in the Company continuing to be Ford's primary aluminum wheel supplier. Second, in 1995, the Company signed a "lifetime" contract with General Motors which extends from January 1, 1996 through December 31, 2000 and pertains to the "lifetime" of all current models. In addition to securing all current models the contract also appoints the Company to be the chosen supplier for all replacement wheels. Accordingly, the Company should be awarded a significant portion of General Motors overall aluminum requirements. Additionally, the Company has proven its ability to be a consistently low-cost producer of quality aluminum wheels with the capability of quickly expanding production capacity to meet increasing customer sales demands. This has been evidenced not only through the Company's rapid plant expansion program, but also through the Page 3 4 Company's demonstrated ability to meet frequent customer requests to absorb additional capacity requirements. The Company strives to continually enhance its relationships with its customers through continuous improvement programs. These factors have resulted in the Company's market share expanding to approximately 40 percent of the domestic aluminum road wheel market. Moreover, the Company ships over 150 different wheel models to Ford and General Motors indicating the broad usage of the Company's wheels throughout both OEM customers' product lines. Finally, both Ford and General Motors continue to rank the Company as their highest rated supplier of cast aluminum road wheels. The Company's long-term strategy involves broadening both its domestic and international OEM customer base and expanding its product lines into complementary areas which will utilize the Company's manufacturing expertise. The Company has embarked on a strategy to develop and penetrate three new international markets: Japan, Europe and Latin America as well as related foreign OEMs with manufacturing facilities in the United States. The Company's first step towards achieving this goal was to explore and develop relationships with Japanese OEMs. In pursuit of this objective, during 1989 the Company announced it had, in conjunction with Topy Industries, Limited ("Topy"), Japan's largest wheel manufacturer, obtained its first order with a Japanese OEM from Mazda. In 1990, the Company further penetrated this market by receiving a contract from Toyota. Also in 1990, the Company increased its marketing efforts into this area by forming a sales and marketing joint-venture with Topy. The joint-venture, named Topy-Superior Limited ("TSL"), markets and sells wheels made by the Company to Japanese OEM customers both in Japan and the United States. Since inception, the Company, through TSL, has received many new contracts to manufacture wheels for domestic Japanese OEMs as well as for three of their U.S. operations. In total, TSL has contracts with five Japanese OEM customers. This venture is one key step forward in the Company's international marketing efforts and the Company expects continued sales growth from this venture. A second step in the Company's international marketing efforts was achieved in 1994 as the Company successfully entered the European marketplace by obtaining two new customers. The Company was awarded a contract by Jaguar to supply wheels. The wheels are manufactured in the United States and exported to the United Kingdom. In addition, the Company received a contract with European based BMW, to supply wheels for the new BMW roadster convertible. Shipments began in 1995 to BMW's new plant in Spartanburg, South Carolina. Moreover, in 1995, validating BMW's high regard for its quality and production capabilities, the Company was awarded five additional wheel programs by BMW for shipment to the Spartanburg plant as well as export to Germany. Further in pursuit of developing its ties to the European market, the Company in 1995 entered into a 50-50 joint venture with German based Otto Fuchs Metallwerke ("Otto Fuchs") to establish a European manufacturing presence. The joint venture, known as Suoftec Light Metal Products, KFT ("Suoftec") will produce both light weight forged and cast aluminum wheels for sale to European OEMs. Construction of the building began in the fourth quarter of 1995 and initial shipments are slated to begin in January 1997. The facility, located in Tatabanya, Hungary, a country with low labor and production costs and available labor force, establishes the Company's commitment toward entering the European market. The facility is located in close proximity to large European OEMs and will bring new wheel making technology to the Company for use in European and U.S. markets. Page 4 5 Demonstrating OEMs' interest in this new light weight forging technology, Suoftec received a long term contract from a major European OEM calling for 700,000 wheels per year. The contract represents over $30 million per year in revenues and represents almost half of first phase capacity of 1.5 million wheels per year. The Company anticipates receiving additional orders in 1996. Development of the Company's initial Latin American program commenced during 1994 with the first shipments from the Company's Chihuahua, Mexico plant. Relative to this market, the Company received orders from Ford and GM and renewed its relationship with Chrysler by receiving orders to produce two wheel models from Chrysler de Mexico for the 1995 and 1996 model years. The wheels are produced at the Chihuahua, Mexico facility for installation on Mexican-manufactured cars built for the Mexican market and for direct export back to the U.S. Prior to the devaluation of the Mexican Peso (see "Management's Discussion and Analysis of Financial Conditions and Results of Operations" section of the Annual Report which is incorporated herein by reference) the Mexican market was growing rapidly and major automotive manufacturers were increasing production and adding capacity. Subsequent to the devaluation, this expansion activity in the domestic Mexican automotive industry has slowed. However, management still views the long-term prospects of this market positively and, moreover, has held discussions with OEMs regarding new and expanded export activities from this facility. While non-domestic contracts are small in relation to domestic original equipment contracts, they are nonetheless significant for the growth of the Company by geographically diversifying and expanding its global presence. The Company will continue to focus its efforts on new global markets as they become the fastest growing segments of its business. In 1994, in response to the steadily growing popularity of chrome-plated cast aluminum wheels and to provide capacity for several new customer orders, the Company completed construction of a new chrome-plating wheel facility. The Company is the only OEM aluminum wheel manufacturer to develop this in-house capability and the plant is the largest of its kind in the world. This facility was, as of December 31, 1995, in a start-up mode. The plant represents the Company's commitment toward diversifying into new product lines complementary to its core business (See also "Manufacturing"). Aftermarket The automotive aftermarket consists of products sold to vehicle owners as replacements for, or additions to, OEM equipment to enhance the comfort, safety, style, design and performance of vehicles such as passenger cars, pick-up trucks, vans, recreational and off-road vehicles, light motor homes and boat trailers. The Company designs, manufactures and distributes 61 different product lines including 3,200 part numbers of custom steel, aluminum and chrome-plated steel and aluminum road wheels and accessories, including steering wheel covers, lighting products, suspension and other accessories for this market. The Company's Sport Grip(R) steering wheel covers have been highly successful over the years and have achieved national recognition. Since 1991, aftermarket net sales, excluding the impact of the August, 1993 divestiture of the Canadian aftermarket mirror and light business, which marketed products under the trade name "Do-Ray", have experienced a compounded 5.1 percent growth rate. This rate of growth was diminished in 1995 as sales declined as soft economic conditions reduced customer order levels. The Company has experienced growth in the roadwheel product lines, specifically, stylized aluminum and chrome-plated aluminum wheels Page 5 6 sold under the "Streetwear" trade name. The success of the "Streetwear" line of wheels reflects the Company's strategy with regard to growing this product line. Generally, this approach entails the identification of strategic geographic markets throughout the United States and the development of key alliances with distributors who maintain extensive lines of distribution within those markets. Simultaneously, new styles of aluminum and chrome-plated aluminum wheels with mass market appeal were successfully developed and introduced to the product line. Strong consumer response to new wheel styles has spurred further development of new wheel programs. The Company expects continued growth in this product line as new wheels are developed and introduced to our existing distributor base. In 1993 and 1994 the general line of aftermarket accessories has experienced modest sales increases as a result of a stronger economy and new product introductions. This trend was broken in 1995 as high customer inventory levels accentuated by a soft economic environment reduced orders. The aftermarket general accessories line continues to be negatively impacted by ongoing retail market contraction and intensive market competition. The trend of manufacturers to incorporate more accessories as original equipment when vehicles are sold has also impacted this business. The Company is a major aftermarket road wheel and accessory supplier to companies with multiple retail outlets such as Autozone, Pep Boys, Canadian Tire, Wal-Mart, Northern Automotive (Schuck's, Checker, Kragen), Western Auto, Paccar Automotive Inc. (formerly General Automotive/Grand Auto), NAPA and Discount Auto Parts. The Company also supplies major tire distributors such as Les Schwab, Interstate Tire Corp.(ITCO), Belle Tire, and other wheel and performance distributors. Manufacturing The Company believes that its ability to efficiently process raw materials into finished goods has enhanced its competitive position as a manufacturer of OEM products. The Company's manufacturing capabilities also enable it to manufacture and assemble many of the products it sells in the aftermarket. The manufacture of cast aluminum wheels, in which aluminum ingot is melted, cast, de-sprued, heat treated, painted or chrome-plated, machined, clearcoated and packaged, is performed entirely at the Company's facilities. The Company employs low-pressure casting, a process which the Company believes is the most efficient process for high volume, high quality aluminum wheels. The Company operates six OEM aluminum wheel manufacturing facilities. The facilities, located in Fayetteville and Rogers, Arkansas, Van Nuys, California, Pittsburg, Kansas, Johnson City, Tennessee and Chihuahua, Chihuahua, Mexico are recognized by the Company's customers as "world class" manufacturing plants utilizing state-of-the-art processes and equipment. Five of the facilities have been constructed and brought on-line over the past nine years beginning with Fayetteville in 1986 (with subsequent expansion in 1993 and 1994), Rogers in 1988, Pittsburg in 1991, Johnson City in 1992 and Chihuahua in 1994. Chihuahua began shipping wheels in the beginning of the third quarter of 1994. Implementing the Company's long-term strategy of penetrating the Latin American market, the Company is expanding its OEM wheel facility in Chihuahua, Mexico during 1996. The plant will ultimately have the capacity to ship 1.2 million wheels per year. Page 6 7 Entry into the European market, through the joint-venture with Otto Fuchs, will be facilitated through the construction of an aluminum wheel facility located in Tatabanya, Hungary capable of two million wheels per year. The manufacturing process will take advantage of a new forging technology developed by Otto Fuchs to forge lighter weight aluminum wheels, supplemented with Superior's own light weight low pressure process. The joint-venture expects to begin shipping wheels sometime in January 1997. The cost of the facility, currently estimated at $70 million, will be funded through capital contributions by each partner and long-term project financing. As the expansion programs came to completion during 1995 two events transpired which resulted in excess manufacturing capacity. First, the value of the Mexican peso experienced a precipitous decline in value relative to the U.S. dollar and the local Mexican economy entered into a severe recession. This, in turn, precipitated two further significant events. Immediately, the domestic Mexican automotive market evaporated, along with the market for the Company's product in Mexico. At the same time, however, the Company's Chihuahua, Mexico facility continued to ramp-up and ultimately became the Company's lowest cost based manufacturing facility. The second event was the softening of the domestic U.S. automotive market which was accentuated by harsh winter weather conditions in 1995 and in to 1996. Taken together, the slow-down of these two critical automotive markets have reduced the Company's production requirements thereby creating excess manufacturing capacity. Absent some improvements in one or both of the U.S. and Mexican automotive markets this excess capacity will adversely impact operating margins in 1996. Management is currently evaluating additional strategies to minimize the impact of this situation including further expansion of the Chihuahua, Mexico plant. Combined with existing production capabilities, these new and expanded facilities will bring Company-wide North American production capacity to over 12 million wheels annually. In response to the growing popularity of chrome-plated cast aluminum wheels, and as a result of the Company's successful development of the chrome-plating process, the Company in 1994 completed construction of a new state-of-the-art chrome-plating facility primarily to service the OEM market. The facility is located adjacent to the Company's Fayetteville, Arkansas wheel plant and shipments commenced in 1995. However, continuing technical problems at the chrome-plating facility may impact the results of operations in 1996. The Company is the only world-wide manufacturer of OEM cast aluminum wheels that is developing chrome-plating capability. The Company maintains a high level of quality assurance in the manufacture of its products and has built and maintained a reputation as a supplier of high quality aluminum road wheels. This reputation is maintained by day-to-day product, process and systems audits. In addition, Company-wide continuous improvement programs are employed to ensure competitive leadership in all facets of the Company's business. The Company's facilities and processes are subject to continual technical and quality review by the OEM engineering, quality and purchasing departments. To maintain its position as a "world class" OEM supplier and ensure all products and underlying services meet and exceed customer expectations the Company utilizes a Total Quality Management ("TQM") system. Optimal process performance at the lowest cost is significantly enhanced by the use of advanced statistical analysis, such as design of experiments and loss function analysis. Quality Functional Deployment ("QFD") and Quality Operating Page 7 8 Systems ("QOS") are elements in place that provide management with a summary of key measurables to monitor operations and to identify and promote continuous improvement throughout the organization. As a result of the Company's quality, management and employee efforts, the Company was the first and one of only two wheel suppliers in the world to earn General Motors' highest quality "Mark of Excellence" award for excellence in all five categories (Quality, Cost, Delivery, Technology and Management). Ford has awarded all of the Company's domestic OEM facilities producing Ford wheels with the prestigious "Q1" quality rating. In 1995, Ford awarded the Company the highly coveted "Full Service Supplier" award in recognition of its advanced design, engineering and program management capabilities. Superior is the only OEM wheel supplier in the world to achieve this status. In 1994 the Company was named by General Motors as one of the elite 171 suppliers selected from a total of 30,000 companies recognized as Worldwide Suppliers of the Year 1993. The award reflects the Company's ability to exceed specific performance standards established by GM relative to quality, service and price. Marketing Commencing January 1, 1996 the Company established a technical sales center in Detroit and terminated its relationship with a third party representative. The office will provide technical engineering and sales staff in closer proximity to the Company's major customers and will enhance the Company's already strong sales and technical resources to meet the ever demanding requirements of its OEM customers. Sales activities in Europe are supported by sales representative organizations. Sales activities for Mexico are managed internally. In addition, the Company's sales and marketing joint-venture with Topy maintains an office in Japan which adds local support to the Company's Japanese customers. The Company believes that it has maintained its long-standing relationships with OEMs on the basis of quality production with timely deliveries in accordance with OEM requirements, timely response to customer needs and competitive pricing. A large proportion of the Company's aftermarket sales are made through eighteen independent manufacturers' representative organizations throughout North America. These representative organizations solicit orders from catalog houses, department and auto accessory stores and chain stores. These manufacturers' representatives are also supported by the Company's internal marketing and sales organization. In 1995, the Company had approximately 425 aftermarket accounts operating through thousands of retail outlets. The Company's ten largest customers in 1995 accounted for approximately 72 percent of aftermarket sales. Net Sales Backlog The Company receives OEM tooling purchase orders to produce multi-year requirements for cast aluminum road wheels. These purchase orders are for vehicle model programs that can last three to five Page 8 9 years. The Company manufactures and ships based on customer firm releases, normally provided on a weekly basis, which can vary due to cyclical automobile production. Customer orders for aftermarket products are normally shipped within ten days of receipt. As of December 31, 1995 and 1994, the Company had no significant backlog of such orders. Seasonal Variations The automotive industry is cyclical and varies based on the timing of consumer purchases of vehicles and general economic conditions. Production schedules can vary significantly from quarter to quarter to meet customer scheduling demands. During the past few years, there has been no significant consistent seasonal variation. Suppliers The Company purchases substantial quantities of aluminum ingot for the manufacture of its cast aluminum road wheels. These purchases accounted for approximately 80 percent of the Company's total material requirements during 1995. The majority of the Company's requirements are met through purchase orders with several major domestic aluminum producers. Generally, the orders are fixed as to minimum and maximum quantities of aluminum which the producers must supply during the term of the orders, which is typically one-to-two years. The Company was able to successfully secure aluminum commitments from its primary suppliers at the beginning of 1995 to meet its production requirements. For 1996, the Company has procured contracts to meet the majority of its estimated aluminum ingot requirements. The aluminum market over the past several years has been extremely volatile. During 1994 worldwide production of aluminum was curtailed which resulted in increased aluminum prices throughout 1994 and 1995. Selling prices are adjusted for these raw material increases. The Company obtains its requirements for other materials through numerous suppliers with whom it has established trade relations. In instances where outside suppliers produce components for the Company's products, the Company normally owns the tools and dies located in the supplier's facilities, or has the right to purchase such items. Patents And Licensing Agreements The Company currently holds patents for 20 of its inventions and has six other patents pending. While the Company has a policy of applying for patents if and when it develops new products or processes, it believes that its success is dependent upon its manufacturing and engineering skills and the quality and market acceptance of its products, rather than upon its ability to obtain and defend patents. The Company is currently licensed to use five patents owned by other persons. Most of these licenses are for the duration of the patent and are exclusive for the United States. Page 9 10 Research And Development The Company's policy is to continuously review, improve and develop engineering capabilities so that advance compliance with customer requirements are met in the most efficient and cost effective manner available. The Company strives to achieve this objective by attracting and retaining top engineering talent and by maintaining the latest state-of-the-art computer technology to support engineering development. Further in pursuit of this objective and to enhance customer relationships, the Company opened, in 1996, a technical center in Detroit which maintains a compliment of engineering staff centrally located near the Company's largest customers. The Company utilizes computer-aided design, computer-aided engineering and computer-aided manufacturing (CAD/CAE/CAM) in the design of a wheel, finite element analysis to identify potential design problems prior to manufacturing and three dimensional prototyping for styling evaluation. Additionally, in 1994 the Company added fluid flow and thermal analysis capabilities to aid in molds and casting cycles at both its engineering centers in Van Nuys, California and Fayetteville, Arkansas. By continuously improving its engineering capabilities, the Company is able to reduce the time required to develop a wheel and identify cost saving technologies which can be shared with customers. As part of the Company's on-going continuous improvement programs, manufacturing technologies and processes are continually challenged, refined, and enhanced to ensure the Company maintains its position as the low cost and highest quality manufacturer of cast aluminum wheels. Development of the Company's patented helium leak testing device for aluminum wheels has been a breakthrough in the Company's ongoing effort to provide the most efficient manufacturing processes and methods. These machines, which detect microscopic leaks at a rapid rate, are currently utilized in several of the Company's facilities. The Company is continuing to develop new and more advanced technologies in this field. In this regard, the Company has recently released the newest and most advanced model of the helium leak test machines to date, the HLT- 4000. Through its wholly-owned subsidiary, Superior Engineered Technologies, Inc., the Company has begun to market this technology and has made limited shipments of helium leak test machines to other companies since 1993. Further evidencing the Company's commitment towards diversifying its product lines and maintaining a leadership position in new technologies, shortly after year end 1995, the Company consumated a joint venture agreement with Aluminum Company of America ("Alcoa") to manufacture and sell a new line of cast aluminum wheels for commercial trucks and buses in the class 3 through 8 range. Class 3 through 8 vehicles include small or medium size wholesale and retail delivery trucks, airport-type courtesy vans, motor homes, buses and heavy duty over-the-road tractor trailer rigs. During 1995, the Company developed a cast aluminum wheel for this market and will manufacture wheels at its Van Nuys facility marketed under the Alcoa name through Alcoa's existing Wheel Division sales organization. The joint venture could serve as a basis for the Company to expand its technology to develop other cast aluminum parts. Through joint-ventures and development projects, technological advances, new processes and expanded engineering capabilities, the Company is positioning itself to become a full spectrum manufacturer of aluminum wheels as well as other aluminum products. Page 10 11 The Company is currently engaged in 37 engineering programs for the development of OEM wheels for future model years, including several wheel models for Japanese, Latin American and European OEM manufacturers, including 5 engineering programs for the development of chrome-plated aluminum wheels. Reference is made to Note 1 of "Notes to Consolidated Financial Statements" in the Annual Report which is incorporated herein by reference for a summary of research and development costs over the past three years. Government Regulation Safety standards in the manufacture of vehicles and automotive equipment have been established under the National Traffic and Motor Vehicle Safety Act of 1966. The Company believes that it is in compliance with all federal standards currently applicable to OEM suppliers and to automotive aftermarket manufacturers and products. Environmental Controls The Company's manufacturing facilities are subject to solid waste, water and air pollution control standards mandated by federal, state and local laws. Violators of these laws are subject to fines and in extreme cases plant closure. Although from time to time the Company has paid fines arising out of asserted violations of these standards, no such fines have been material in nature. The Company believes it is substantially in compliance with all standards presently applicable. Compliance with environmental regulations has necessitated changes in processes and equipment upgrades and may in certain instances require the acquisition of "trading credits". The 1995 annual cost of environmental compliance is approximately $1,200,000 and the Company anticipates spending no more than $1,000,000 relating to domestic capital expenditures for environmental equipment over the next two years. The Company will continue on an on-going basis to modify its processes in order to maintain compliance with federal, state and local laws. See Item 3. "Legal Proceedings" for information concerning the Company's involvement with certain United States Environmental Protection Agency activities. Liability Insurance The Company maintains liability insurance including product liability, for limits it believes are appropriate to match the risks and exposures inherent to the Company's business. Over the past five years, the Company has never settled claims in excess of the coverage then in effect. Competition The business sectors in each of the Company's product areas are highly competitive. The Company is the world's largest supplier of cast aluminum road wheels for OEM installations and the Company believes it holds approximately 40 percent of the domestic market for cast aluminum road wheels for automotive installation. Since 1980 the demand for OEM cast aluminum road wheels has grown from approximately four percent of vehicle installations to almost 44 percent. The Company anticipated this eventuality and developed new state-of-the-art "world class" manufacturing facilities located closer to OEM final assembly plants. The Company believes that as a result it has become very competitive both in Page 11 12 terms of cost and quality. The Company's primary competitor in the North American market is Hayes Wheels International, Inc. In the aftermarket business intense market competition has been heightened by ongoing market contraction of major retailers and the presence of more products manufactured outside the United States. In order to retain valued customers, the Company has had to provide greater sales allowances to its customers and has been generally unable to pass along timely and matching selling price increases. These factors in the past have contributed to diminished margins in the aftermarket business. Employees As of December 31, 1995, the Company had approximately 4,500 full-time employees. At the present time approximately 80 employees at the Company's Tijuana, Mexico maquiladora, which polishes wheels for aftermarket applications, are covered by collective bargaining agreements. In March 1995 the International Union, United Automotive, Aerospace & Agricultural Implement Workers of American (the "UAW") filed a representation petition with the National Labor Relations Board ("NLRB") seeking an election among the production, maintenance and warehouse workers at the Company's Johnson City, Tennessee production facility. On May 26, 1995, a secret ballot election was conducted by the National Labor Relations Board at the Johnson City plant to determine if employees wished to be represented by the UAW. Employees voted 239 to 145 against representation by the UAW. In 1994, the employees of the Johnson City plant had already voted against representation by the same union. ITEM 2. PROPERTIES The Company maintains and operates 10 facilities (including an idle facility in Oskaloosa, Iowa) located in Arkansas, California, Iowa, Kansas, Tennessee, Puerto Rico, and Baja and Chihuahua, Mexico. The facilities encompass manufacturing, warehouse and office space in 15 buildings with approximately 2.2 million square feet. Six of the buildings are owned by the Company, with the remainder operated under lease agreements expiring at various dates through 2063. The Company's corporate offices, manufacturing and warehousing facilities located in Van Nuys, California are subleased from Louis L. Borick, its President and Chairman of the Board, and Juanita A. Borick. The Company also leases additional plant and warehousing facilities in Van Nuys, California from Keswick Properties, owned jointly by Steven J. Borick, a director of the Company, and two other of Mr. Louis L. Borick's children and the Borick Building Corporation, a company wholly-owned by Louis L. Borick and Juanita A. Borick. The Company believes that the terms of the aforementioned leases are no less favorable than those which it could obtain from an unaffiliated party on similar property with comparable facilities in the vicinity. In general, the facilities are in good operating condition, have been designed and constructed for their specific use, and are adequate to meet the productive capacity requirements of each plant. Page 12 13 Additionally, reference is made to Notes 3 and 10 of the "Consolidated Financial Statements" and "Notes to Consolidated Financial Statements" section of the Annual Report which are incorporated herein by reference. ITEM 3. LEGAL PROCEEDINGS In 1988, the Company was notified by the United States Environmental Protection Agency (EPA), that the Company is considered a potentially responsible party (PRP) for costs to clean up the Operating Industries, Inc. (OII) site because of deposits, which were permitted and approved by appropriate regulatory agencies when made, at the site located in Monterey Park, California. The total costs to clean up the site cannot be determined but the EPA has informed all PRP's that such costs may exceed $500 million. The PRP's are jointly and severally liable although it is possible that the EPA will accept contribution according to the severity of the deposits made. The Company's insurance carriers have been placed on notice and their insurance policies are currently under review to determine whether the Company's liability is covered by insurance. To date, by private agreement with the other settling defendants, the Company has paid $461,816, net of settlements from other parties, to settle its liability under the first three phases of clean-up. Based on facts now known to the Company, including the low level of participation claimed against the Company by the EPA and based on the number and financial strength of Companies with greater participation in the cleanup activities, management believes sufficient reserves have been established to cover the Company's ultimate financial exposure. On December 5, 1995, a class action complaint was filed in the United States District Court - Central District of California against the Company and certain of its officers and directors. The complaint is on behalf of all purchasers of the Company's common stock during the period from March 31, 1995 through September 7, 1995. The Complaint seeks unspecified damages, interest, attorney's fees and other costs and extraordinary equitable and/or injunctive relief. Management of the Company believes the action is without merit and intends to vigorously defend against the allegations in the Complaint. (This space intentionally left blank) Page 13 14 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted during the fourth quarter of 1995 to a vote of security holders through the solicitation of proxies or otherwise. EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below is information regarding executive officers of the Company who are not directors. Information regarding executive officers who are directors is contained in the Company's Proxy Statement issued in connection with its Annual Meeting of Stockholders scheduled to be held on May 17, 1996 which is incorporated herein by reference (1996 Proxy Statement). All executive officers are appointed annually by the Board of Directors and serve one-year terms. Also see "Employment Agreements" in the Company's 1996 Proxy Statement.
Name Age Position ---- --- -------- Joseph T. D'Amico 66 Vice President, Materiel Michael D. Dryden 58 Vice President, International Business Development Ronald F. Escue 50 Vice President, General Manager - Aftermarket Wheel Division James M. Ferguson 47 Vice President, OEM Marketing Group Morris Herstein 68 Vice President, Services John Knott 55 Vice President, Manufacturing Daniel L. Levine 37 Corporate Secretary and Assistant Treasurer Henry C. Maldini 61 Vice President, Engineering Michael J. O'Rourke 34 Vice President, Program Administration Delbert J. Schmitz 63 Vice President, Aftermarket Marketing
Joseph T. D'Amico Mr. D'Amico joined Superior in 1981 as Director of Materiel. In 1984, he was promoted to Vice President, Materiel. He is responsible for domestic and international purchasing, raw materials and finished goods inventories, warehousing, receiving, distribution, traffic and material control. Michael D. Dryden Mr. Dryden joined Superior in March 1990 as Vice President, International Business Development to assist Mr. Ferguson in the sales and marketing of products to international original equipment manufacturers. For the prior five years, he served as the Director of Business Development, Asia-Pacific for Kelsey Hayes Company, Aluminum Wheel Group. Page 14 15 Ronald F. Escue Mr. Escue became Vice President, Aftermarket Sales in January 1987 and he was promoted to Vice President, General Manager - Aftermarket Wheel division in January 1995. He is responsible for the Company's aftermarket wheel division including, nationwide sales, marketing and manufacturing activities. He joined Superior in September 1975. James M. Ferguson Mr. Ferguson joined Superior in 1977 as an OEM Sales Engineer and became an officer in 1984 and was promoted in 1990 to Vice President, OEM Marketing Group. He is responsible for assisting Mr. Raymond C. Brown, Senior Vice President, in directing the sales and marketing of products for national and international original equipment manufacturers. Morris Herstein Mr. Herstein, Vice President, Services, has held this position since 1957, and is responsible for Superior's industrial relations and safety programs. His brother-in-law, Louis L. Borick, is Superior's President and Chairman of the Board of Directors. John L. Knott Mr. Knott joined Superior in 1995 as Vice President, Manufacturing. Before coming to Superior, Mr. Knott was Vice President and General Manager of the Norris Defense Unit of NI Industries. Daniel L. Levine Mr. Levine became Corporate Secretary in March 1996. He is also responsible for overseeing the Company's taxes and assisting in the administration of corporate treasury activities, including risk management and credit. He joined Superior in 1990. Henry C. Maldini Mr. Maldini was appointed Vice President, Engineering in June 1986. Previously he was Assistant Vice President, Engineering for the Company. He joined the Company in 1975. Michael J. O'Rourke Mr. O'Rourke was appointed Vice President, Program Administration in July 1995. He is responsible to assist in the administration of OEM sales and marketing programs of the Company including executive oversight of the Company's Detroit technical sales center. Mr. O'Rourke joined Superior in 1987. Prior to his promotion he held various managerial positions in the marketing department. Page 15 16 Delbert J. Schmitz Mr. Schmitz was appointed Vice President, Aftermarket Marketing in January 1987 and is responsible for the marketing and sales of the Company's entire line of aftermarket accessories. Mr. Schmitz was employed as Vice President, Sales from 1972 until January 1987. (This space intentionally left blank) Page 16 17 PART II ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED STOCKHOLDER MATTERS Reference is made to the "Quarterly Common Stock Price Information," "Financial Highlights", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 15 to "Notes to Consolidated Financial Statements" sections of the Annual Report which are incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA Reference is made to the "Financial Highlights" section of the Annual Report which is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for the historical information contained herein, the matters addressed in this item 7 constitute "forward-looking statements". Such forward-looking statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated by the Company's management. Reference is made to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the Annual Report which is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Reference is made to the "Consolidated Financial Statements" and "Notes to Consolidated Financial Statements" sections of the Annual Report which is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None (This space intentionally left blank) Page 17 18 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Reference is made to Item 4. "Executive Officers of the Registrant" and the Company's 1996 Proxy Statement which is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION Reference is made to the Company's 1996 Proxy Statement which is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Reference is made to the Company's 1996 Proxy Statement which is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Reference is made to the Company's 1996 Proxy Statement which is incorporated herein by reference. (This space intentionally left blank) Page 18 19 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K The following documents are filed as a part of this report: (a)1. Financial Statements The following financial statements of the Registrant, together with the Report of Independent Public Accountants, are included in the Annual Report, which is incorporated herein by reference, and filed herewith as part of this report: (1) Report of Independent Public Accountants (2) Consolidated Statements of Income for each of the three years in the period ended December 31, 1995 (3) Consolidated Balance Sheets as of December 31, 1995 and 1994 (4) Consolidated Statements of Shareholders' Equity for each of the three years in the period ended December 31, 1995 (5) Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1995 (6) Notes to Consolidated Financial Statements 2. Supplemental Financial Statement Schedules The following report and schedule appear on pages 24 and 26 of this report: (1) Report of Independent Public Accountants on Supplemental Schedule (2) Schedule II, Valuation and Qualifying Accounts Schedules other than those listed above have been omitted because the required information is shown in the consolidated financial statements or in the notes thereto, or the amounts involved are not significant or the required matter is not applicable. (This space intentionally left blank) Page 19 20 3. Exhibits 3.1 Articles of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994.) 3.2 By-Laws of the Registrant (Incorporated by reference to Exhibit 3.2 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994.) 9.1 Voting Trust Agreement (Incorporated by reference to Exhibit 9.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1985.) 9.2 First Amendment to the Voting Trust Agreement (Incorporated by reference to Exhibit 9.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1989.) 9.3 Second Amendment to the Voting Trust Agreement (Incorporated by reference to Exhibit 9.1 to Registrant's Quarterly Report on Form 10-Q for the Quarter ended September 30, 1992.) 9.4 Third Amendment to the Voting Trust Agreement. 10.2 Lease dated March 2, 1976 between the Registrant and Louis L. Borick filed on Form 8-K dated May, 1976 (Incorporated by reference to Exhibit 10.2 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1983.) 10.9 Incentive Stock Option Plan and Third Amendment of Non-Qualified Stock Option Plan of the Registrant (Incorporated by reference to the Registrant's 1984 Proxy Statement.) 10.11 Lease Agreement dated December 18, 1970 and amendments dated November 30, 1974 and April 20, 1981 between Borick Building Corporation and Registrant (Incorporated by reference to Exhibit 10.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1983.) 10.15 Employment Agreement dated January 1, 1992 between Louis L. Borick and the Registrant (Incorporated by reference to Exhibit 10.15 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1991.) 10.16 Employment Agreement dated January 1, 1987 between Raymond C. Brown and the Registrant (Incorporated by reference to Exhibit 10.16 to Registrant's Quarterly Report on Form 10-Q for the quarter ended December 31, 1986.) 10.17 Employment Agreement dated January 1, 1987 between R. Jeffrey Ornstein and the Registrant (Incorporated by reference to Exhibit 10.17 to Registrant's Quarterly Report on Form 10-Q for the quarter ended December 31, 1986.) 10.19 Lease and Addenda thereto dated December 19, 1987 between Steven J. Borick, Linda S. Borick and Robert A. Borick as tenants in common, d.b.a. Keswick Properties, and the Registrant (Incorporated by reference to Exhibit 10.19 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1987.)
Page 20 21 10.20 Supplemental Executive Retirement Plan of the Registrant (Incorporated by reference to Exhibit 10.20 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1987.) 10.24 1988 Stock Option Plan of the Registrant (Incorporated by Reference to Exhibit 10.24 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1988.) 10.26 $25 million Note Agreement dated as of September 15, 1989 between Aetna Life Insurance Company, Teachers Insurance Annuity Association of America and the Registrant (Incorporated by Reference to Exhibit 10.25 to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1989.) 10.27 Stock Option Agreement dated February 24, 1989 between the Registrant and Louis L. Borick (Incorporated by reference to Exhibit 28.2 to Registrant's Form S-8 dated November, 1989.) 10.30 Amendment dated January 1, 1991 to Employment agreements between the Registrant and each of Raymond C. Brown and R. Jeffrey Ornstein (Incorporated by Reference to Exhibit 10.29 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1990.) 10.32 Employment Agreement dated January 1, 1994 between Louis L. Borick and the Registrant (Incorporated by reference to Exhibit 10.32 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.) 10.33 1993 Stock Option Plan of the Registrant (Incorporated by reference to Exhibit 28.1 to Registrant's Form S-8 filed June 10, 1993.) 10.34 Amendment to the 1988 Stock Option Plan of the Registrant (Incorporated by reference to Exhibit 10.34 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1991.) 10.35 1991 Non-Employee Director Stock Option Plan (Incorporated by reference to Exhibit 28.1 to Registrant's Form S-8 dated June, 1992.) 10.36 Stock Option Agreement dated March 9, 1993 between Louis L. Borick and the Registrant (Incorporated by Reference to Exhibit 28.2 to Registrant's Form S-8 filed June 10, 1993.) 10.38 Stock Option Agreement dated January 4, 1993 between Robert F. Sloane and the Registrant (Incorporated by Reference to Exhibit 28.3 to Registrant's Form S-8 filed June 10, 1993.) 10.39 Chief Executive Officer Annual Incentive Program dated May 9, 1994 between Louis L. Borick and the Registrant (Incorporated by reference to Exhibit 10.39 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994.)
Page 21 22 10.40 Letter dated February 15, 1995 between Iftikhar H. Kazmi and the Registrant (Incorporated by reference to Exhibit 10.40 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994.) 10.41 Amendment dated December 15, 1995 to Employment agreements between Registrant and Raymond C. Brown and R. Jeffrey Ornstein. 11.1 Computation of earnings per share (see Note 7 of "Notes to Consolidated Financial Statements" in the Annual Report to Shareholders which is incorporated herein by reference.) 13.1 1995 Annual Report to Shareholders 21.1 List of Subsidiaries of the Company 23.1 Consent of Arthur Andersen LLP, Independent Public Accountants for the Registrant 27.1 1995 Financial Data Schedule
1996 Proxy Statement (b) Reports of Form 8-K No reports on Form 8-K have been filed during the fourth quarter of 1995. (This space intentionally left blank) Page 22 23 (This page intentionally left blank) Page 23 24 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL SCHEDULE To Superior Industries International, Inc.: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in Superior Industries International, Inc.'s annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated February 13, 1996. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the index above is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Los Angeles, California February 13, 1996 Page 24 25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. March 22, 1996 SUPERIOR INDUSTRIES INTERNATIONAL, INC. By /s/ Louis L. Borick ----------------------------------------- LOUIS L. BORICK President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Louis L. Borick President, March 22, 1996 - ----------------------- Chairman of the Board Louis L. Borick and Director (Principal Executive Officer) /s/ R. Jeffrey Ornstein Vice President & CFO March 22, 1996 - ----------------------- and Director R. Jeffrey Ornstein (Principal Financial Officer) /s/ Raymond C. Brown Senior Vice President March 22, 1996 - ----------------------- and Director Raymond C. Brown /s/ Sheldon I. Ausman Director March 22, 1996 - ----------------------- Sheldon I. Ausman /s/ Steven J. Borick Director March 22, 1996 - ----------------------- Steven J. Borick /s/ Philip W. Colburn Director March 22, 1996 - ----------------------- Philip W. Colburn /s/ V. Bond Evans Director March 22, 1996 - ----------------------- V. Bond Evans /s/ Jack H. Parkinson Director March 22, 1996 - ----------------------- Jack H. Parkinson
Page 25 26 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. March 22, 1996 SUPERIOR INDUSTRIES INTERNATIONAL, INC. By ------------------------------------- LOUIS L. BORICK President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. President, March 22, 1996 - --------------------------- Chairman of the Board Louis L. Borick and Director (Principal Executive Officer) Vice President & CFO March 22, 1996 - --------------------------- and Director R. Jeffrey Ornstein (Principal Financial Officer) Senior Vice President March 22, 1996 - --------------------------- and Director Raymond C. Brown Director March 22, 1996 - --------------------------- Sheldon I. Ausman Director March 22, 1996 - --------------------------- Steven J. Borick Director March 22, 1996 - --------------------------- Philip W. Colburn Director March 22, 1996 - --------------------------- V. Bond Evans Director March 22, 1996 - --------------------------- Jack H. Parkinson
Page 25 27 SUPERIOR INDUSTRIES INTERNATIONAL, INC. AND SUBSIDIARIES SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 ALLOWANCE FOR DOUBTFUL ACCOUNTS BALANCE AT DECEMBER 31, 1992 $ 832,000 ADD (DEDUCT): PROVISION - RECOVERIES 13,000 ACCOUNTS WRITTEN OFF (276,000) --------- BALANCE AT DECEMBER 31, 1993 569,000 ADD (DEDUCT): PROVISION - RECOVERIES 1,000 ACCOUNTS WRITTEN OFF (29,000) --------- BALANCE AT DECEMBER 31, 1994 541,000 --------- ADD (DEDUCT): PROVISION 244,000 RECOVERIES 20,000 ACCOUNTS WRITTEN OFF (83,000) --------- BALANCE AT DECEMBER 31, 1995 $ 722,000 =========
EX-9.4 2 THIRD AMENDMENT TO VOTING TRUST AGREEMENT 1 EXHIBIT 9.4 THIRD AMENDMENT TO VOTING TRUST AGREEMENT THIS THIRD AMENDMENT TO VOTING TRUST AGREEMENT (the "Third Amendment") is entered into as of the 1st day of August 1995, by and between Juanita A. Borick and Louis L. Borick, individually and as Trustee (as such term is defined in that certain Voting Trust Agreement (the "Agreement") entered into as of January 1, 1985, as amended by the First Amendment dated as of October 13, 1989 (the "First Amendment") and the Second Amendment dated as of October 15, 1992 (the "Second Amendment") and is made with reference to the following facts: A. The Agreement provides for the establishment of a Voting Trust with respect to certain shares of common stock of Superior Industries International, Inc., a California corporation (formerly a Delaware corporation), owned by Juanita A. Borick and Louis L. Borick and the depositing of those shares with Mr. Borick, as Trustee under the Agreement. B. The Agreement had an initial term of five years, through December 31, 1989. The First Amendment extended the term of the Agreement through December 31, 1992, and the Second Amendment extended the term through December 31, 1995. C. Juanita A. Borick and Louis L. Borick now desire to further extend the term of the Agreement for an additional two years through December 31, 1997. 2 NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Juanita A. Borick and Louis L. Borick, individually and as Trustee, hereby agree as follows: 1. The term of the Agreement is hereby extended for an additional two years, through and until 11:59 P.M. on December 31, 1997, during which time the Agreement shall continue in full force and effect unless terminated prior thereto in accordance with its terms. 2. Except as expressly amended hereby, all of the other provisions of the Agreement shall remain in full force and effect as written. This Third Amendment is signed and delivered as of the 1st day of August, 1995 in Los Angeles, California. /s/ JUANITA A. BORICK ----------------------------------- (Juanita A. Borick) /s/ LOUIS L. BORICK ----------------------------------- (Louis L. Borick, individually and as Trustee) SUPERIOR INDUSTRIES INTERNATIONAL, INC. By /s/ R. JEFFREY ORNSTEIN -------------------------------- (R. Jeffrey Ornstein Vice President) 3 SUPERIOR (Logo) SUPERIOR INDUSTRIES INTERNATIONAL, INC. 7800 Woodley Avenue - Van Nuys, CA 91406-1788 (818) 781-4973 - Telex: 65-1454 - Fax: (818) 780-5631 December 15, 1995 Mr. Raymond C. Brown 4952 Vanalden Avenue Tarzana, California 91356 Re: EMPLOYMENT AGREEMENT Dear Ray: As you know, you currently serve as Senior Vice President of Superior Industries International, Inc. (the "Company") pursuant to that certain Employment Agreement entered into as of January 1, 1987 (the "Agreement") and amended on December 12, 1988, on December 17, 1990 and on December 18, 1993 which, by its terms, will expire on December 31, 1995. Since your continued employment with the Company is extremely valuable and desirable to the Company, and since it is in the best interests of the Company and its stockholders to maintain and secure your continued employment by the Company, and, in consideration for the extension of the term of the Agreement and the other benefits accorded to you thereunder, you are willing to continue your employment with the Company, the Company and you hereby agree as follows: 1. EXTENSION OF TERM Section 6(a)(1) of the Agreement is hereby amended so that the Term of the Agreement be extended until December 31, 1997. Accordingly, all references in the Agreement to December 31, 1995 as to the termination date of the Agreement or the date for terminating any benefits, rights, privileges, obligations or undertakings by or for either you or the Company pursuant to the Agreement, as hereby amended by substituting December 31, 1997, therefore and all dates or periods of time in the Agreement are hereby changed or extended, as the cause may be, to a period of time subsequent to December 31, 1995. 2. OTHER TERMS AND PROVISIONS Except as specifically changed by this letter, all other provisions of the Agreement are and shall remain in full force and effect. Unless otherwise or further defined in this letter, all terms defined in the Agreement and used herein shall have the same meanings herein as specified in the Agreement. 4 Mr. Raymond C. Brown December 15, 1995 Page 2 3. EFFECTIVE DATE The effective date of this letter and the terms contained herein shall be the date hereof. Please acknowledge your approval and agreement to the above terms by countersigning the enclosed copy of this letter where indicated, and returning the signed copy to the Company. "Company": SUPERIOR INDUSTRIES INTERNATIONAL, INC. By: /s/ LOUIS L. BORICK ------------------------------------ Louis L. Borick, President THE ABOVE TERMS ARE HEREBY APPROVED AND December 15, 1995 /s/ RAYMOND C. BROWN - -------------------------- Raymond C. Brown EX-10.41 3 AMENDED EMPLOYEE AGREEMENTS 1 EXHIBIT 10.41 SUPERIOR (Logo) SUPERIOR INDUSTRIES INTERNATIONAL, INC. 7800 Woodley Avenue - Van Nuys, CA 91406-1788 (818) 781-4973 - Telex: 65-1454 - Fax: (818) 780-5631 December 15, 1995 Mr. R. Jeffrey Ornstein 144 Waterview Street Playa del Rey, CA 90293 Re: EMPLOYMENT AGREEMENT Dear Jeff: As you know, you currently serve as Vice President & CFO of Superior Industries International, Inc. (the "Company") pursuant to that certain Employment Agreement entered into as of January 1, 1987 (the "Agreement") and amended on December 12, 1988, on December 17, 1990 and on December 18, 1993 which, by its terms, will expire on December 31, 1995. Since your continued employment with the Company is extremely valuable and desirable to the Company, and since it is in the best interests of the Company and its stockholders to maintain and secure your continued employment by the Company, and, in consideration for the extension of the term of the Agreement and the other benefits accorded to you thereunder, you are willing to continue your employment with the Company, the Company and you hereby agree as follows: 1. EXTENSION OF TERM Section 6(a)(1) of the Agreement is hereby amended so that the Term of the Agreement be extended until December 31, 1997. Accordingly, all references in the Agreement to December 31, 1995 as to the termination date of the Agreement or the date for terminating any benefits, rights, privileges, obligations or undertakings by or for either you or the Company pursuant to the Agreement, as hereby amended by substituting December 31, 1997, therefore and all dates or periods of time in the Agreement are hereby changed or extended, as the cause may be, to a period of time subsequent to December 31, 1995. 2. OTHER TERMS AND PROVISIONS Except as specifically changed by this letter, all other provisions of the Agreement are and shall remain in full force and effect. Unless otherwise or further defined in this letter, all terms defined in the Agreement and used herein shall have the same meanings herein as specified in the Agreement. 2 Mr. R. Jeffrey Ornstein December 15, 1995 Page 2 3. EFFECTIVE DATE The effective date of this letter and the terms contained herein shall be the date hereof. Please acknowledge your approval and agreement to the above terms by countersigning the enclosed copy of this letter where indicated, and returning the signed copy to the Company. "Company": SUPERIOR INDUSTRIES INTERNATIONAL, INC. By: /s/ LOUIS L. BORICK ------------------------------------ Louis L. Borick, President THE ABOVE TERMS ARE HEREBY APPROVED AND December 15, 1995 /s/ R. JEFFREY ORNSTEIN - -------------------------- R. Jeffrey Ornstein EX-13.1 4 1995 ANNUAL REPORT TO SHAREHOLDERS 1 EXHIBIT 13.1 FRONT COVER [PHOTO] 1995 Annual Report Superior Industries International, Inc. BACK COVER [PHOTO] 7800 Woodley Avenue Van Nuys, CA 91406 818.781.4973 Fax 818.780.3500 Superior Industries International, Inc. SUP Listed NYSE THE NEW YORK STOCK EXCHANGE Front & Back Covers Global Expansion Established in 1957, Superior Industries International, Inc. is the world's largest manufacturer of cast aluminum wheels and a leading manufacturer of automotive accessory products for the aftermarket. Superior manufactures wheels for approximately 40 percent of all cars produced with aluminum wheels in North America, enjoying long term relationships with Ford and General Motors as their largest and highest-rated supplier. On the international front, Superior has expanded its business with Japanese original equipment manufacturers (OEMs), is growing its business in Latin America through its newly completed plant in Mexico, and has established a significant presence in the European market with its most recent joint venture and future plant in Hungary. The Company will continue to look at other parts of the globe for geographic expansion and joint venture opportunities. By forming and strengthening its alliances with other international industry leaders today, Superior is setting the groundwork for tomorrow's globalization. Quarterly Common Stock Price Information
1995 1994 1993 High Low High Low High Low First Quarter $29 $23 7/8 $46 1/4 $31 3/8 $29 1/8 $18 5/8 Second Quarter 32 1/8 24 3/4 37 30 38 28 1/8 Third Quarter 35 3/4 25 3/4 34 28 39 1/4 37 Fourth Quarter 29 24 1/2 30 1/4 24 1/4 49 3/8 34 5/8
The common stock of Superior Industries International, Inc. is traded on the New York Stock Exchange (symbol: SUP). The Company had approximately 1,500 stockholders of record and 28.9 million shares outstanding as of January 31, 1996. 2 Corporate Information DIRECTORS Louis L. Borick President and Chairman of the Board Raymond C. Brown Senior Vice President R. Jeffrey Ornstein Vice President & CFO Sheldon I. Ausman Senior V.P., Johnson & Higgins Retired Managing Partner, Arthur Andersen LLP Steven J. Borick President, Texakota, Inc. Philip W. Colburn Chairman, Allen Group, Inc. V. Bond Evans Retired President and CEO, Alumax Inc. Jack H. Parkinson Retired Executive V.P., Sunroad Enterprises CORPORATE OFFICERS Louis L. Borick President and Chairman of the Board Raymond C. Brown Senior Vice President Joseph T. D'Amico Vice President, Materiel Michael D. Dryden Vice President, International Business Development Ronald F. Escue Vice President, General Manager - Aftermarket Wheel Division James M. Ferguson Vice President, OEM Marketing Group Morris Herstein Vice President, Services John Knott Vice President, Midwest Group Daniel L. Levine Corporate Secretary and Assistant Treasurer Henry C. Maldini Vice President, Engineering R. Jeffrey Ornstein Vice President & CFO Michael J. O'Rourke Vice President, OEM Program Administrator Delbert J. Schmitz Vice President, Aftermarket Marketing COUNSEL AND AUDITORS General Counsel Irell & Manella Auditors Arthur Andersen LLP PLANT AND SUBSIDIARY LOCATIONS Superior Van Nuys Bernard J. O'Neil Plant Manager Fayetteville, Arkansas Peter J. Corio, Plant Manager Rogers, Arkansas David C. Rodgers, Plant Manager Chrome Plating Plant Fayetteville, Arkansas Anthony P. Trama, Plant Manager Pittsburg, Kansas P.S. Reddy, General Manager Johnson City, Tennessee Leon E. Easton, Plant Manager Superior Puerto Rico Pedro Mora, General Manager Superior Industries de Mexico, SA de CV Gabriel Soto, General Manager Superior West Memphis Terrence J. Schultz, General Manager Superior Engineered Technologies, Inc. Joint Ventures Aluminum Company of America (Alcoa) Astechnology, Inc. Superior-Otto Fuchs (Europe) Topy-Superior Limited (Japan) TRANSFER AGENT AND REGISTRAR Chemical Mellon Shareholder Services Los Angeles, California 800.356.2017 ANNUAL MEETING The annual meeting of Superior Industries International, Inc. will be held at 10:00 a.m. on May 17, 1996 at the: Regent Beverly Wilshire Hotel, 9500 Wilshire Blvd., Beverly Hills, California. SHAREHOLDER INFORMATION Form 10K Annual Report to the Securities and Exchange Commission will be sent free of charge to shareholders upon written request to R. Jeffrey Ornstein, Vice President & CFO. CORPORATE OFFICES 7800 Woodley Avenue Van Nuys, California 91406 818.781.4973 Fax 818.780.3500 SHAREHOLDER RELATIONS 818.771.5906 Superior Industries International, Inc. 3 Financial Highlights
(In thousands except share data) Years Ended December 31, 1995 1994 1993 1992 1991 Income Statement Net Sales $521,997 $456,638 $393,033 $325,314 $273,490 Gross Profit 113,797 111,368 91,464 61,942 45,306 Net Income 53,064 56,315 45,177 28,596 18,220 Balance Sheet Current Assets $142,659 $160,771 $141,219 $134,158 $146,603 Current Liabilities 81,746 106,923 75,991 63,296 91,870 Working Capital 60,913 53,848 65,228 70,862 54,733 Total Assets 341,770 357,683 310,123 267,198 271,001 Long-Term Debt, net 5,814 23,075 34,004 44,073 53,320 Shareholders' Equity 229,153 200,182 176,869 136,747 103,992 Financial Ratios Current Ratio 1.7:1 1.5:1 1.9:1 2.1:1 1.6:1 Long-Term Debt/Total Capitalization 2.5% 10.3% 16.1% 24.4% 33.9% Return on Average Shareholders' Equity 24.7% 29.9% 28.8% 23.8% 19.2% Share Data Earnings $ 1.78 $ 1.85 $ 1.47 $ .94 $ .63 Shareholders' Equity at Year-End 7.89 6.76 5.88 4.56 3.59 Dividends .195 .165 .11 .10 .09 Net Sales (in millions) $ 273.5 $ 325.3 $ 393.0 $ 456.6 $ 522.0 91 92 93 94 95 Net Income (in millions) $ 18.2 $ 28.6 $ 45.2 $ 56.3 $ 53.1 91 92 93 94 95 Shareholders Equity (in millions) $ 104.0 $ 136.7 $ 176.9 $ 200.2 $ 229.2 91 92 93 94 95
4 To Our Shareholders [PHOTO] Louis L. Borick, President and Chairman of the Board At Superior, we have always taken on challenges with tenacity and optimism. Back in 1970, we met the challenge of improving our standards to procure our first original equipment manufacturer (OEM) order from Ford and enter into this growing market. Today, we are the world's leading manufacturer of OEM cast aluminum wheels. Superior is now facing a period of new challenges. We are steadfast to our long-term growth and potential by prudently expanding into new geographic markets and seeking new joint-ventures. Superior does not stand still. Continually improving our technology, reducing costs, and developing new markets is embedded in our corporate culture. And just as we were back in 1970, we are now equally optimistic these new challenges will prove as profitable as our OEM cast aluminum wheel business. Global Expansion The theme of globalization was selected for our 1995 annual report since it represents the Company's long-term strategy to ensure continued revenue growth and shareholder value. Last year marked a significant achievement and continued progress in the global market for Superior. We solidified our joint-venture with German-based Otto Fuchs Metallwerke and started construction on our new aluminum wheel manufacturing facility in Hungary. Since announcing our plans for the European plant, we have sold 33 percent of the plant's initial capacity with the joint-venture's first long-term contract from a major European automaker for 700,000 light forged wheels a year. The joint-venture is expected to strengthen our ties with European OEMs, provide substantial annual revenues, and bring a new technology to Superior. We continue to expand our state-of-the-art facility in Mexico, increasing its capacity. As we create more export opportunities for U.S. automakers, our plant in Mexico will be the focus of expansion in years to come. Further-more, our business with Japanese automakers has expanded despite a downturn in Japan's economy and automotive industry. We continue to be optimistic about Japan as a source for future growth potential. Financial Results In 1995, the Company reached a significant milestone in its financial results. For the first time in Superior's history, the Company reached a record of over $500 million in net sales, a total of $522 million, up over 14 percent from 1994. 1995 was also the second best year in profit gains with $53 million in net income and $1.78 in earnings per share. Despite difficulties with our chrome-plating facility in Fayetteville, we reported our second best quarter earnings last year. Consistent order levels and improvements in our OEM cast aluminum manufacturing process more than offset the impact of the start-up of our chrome-plating operations. Producing new products and entering new markets rarely takes place without some pitfalls, but we are continually improving our technology and seeking new market opportunities. We made progress on improving our chrome-plating technology last year which could yield growth in earnings in 1996. The development of our ALCOA truck wheel program is well on its way and we plan to begin production on two new wheels for medium sized trucks this year. Shortly after year end, we signed a definitive joint-venture agreement with ALCOA to produce such wheels. Through the ALCOA joint-venture, we are entering an arena of new business with substantial annual revenue growth. Sales in our aftermarket division decreased reflecting the soft market conditions in this area of the auto-motive industry. We have focused on adding several new aftermarket custom road wheels and continue to evaluate new and existing accessory product lines. Outlook While our outlook for 1996 is subject to change according to overall market conditions, we anticipate a solid year of continuing sales and earnings momentum comparable to 1994's performance. The Company will continue to benefit by the increasing penetration of aluminum wheels, particularly in the light-truck segment, which is currently the highest growth segment of the vehicle market. And through our new Technical Sales Center in Detroit, we will better service and continue to strengthen our existing relationships with our customers. We enter 1996 with outstanding financial strength. Since we internally funded our capital expansion programs over the past three years to build a stronger company with increased production capability, we are now poised to generate significant cash from our operations. Chrome-plating has been a slow, costly progression of steps to correct start-up problems. Waste treatment was a major problem which we have totally re-designed, re-engineered and installed new equipment. We believe that we are very close to resolving the major items of concern in that plant. Our manufacturing processes are world class and we continue to be the lowest cost producer of aluminum wheels. The strength of our financial position will enable the Company to thrive during a growth period and sustain an economic downturn. Regardless of the economic environment, our balance sheets and resources are managed in such a way that allows us to succeed. Last year, the Company increased the regular quarterly cash dividend 11 percent to a rate of $.05 per share, representing the twelfth consecutive year of cash dividend increases for Superior stockholders. We reinstated our stock repurchase program for up to 1 million shares of common stock. Superior's repurchase of 850,000 shares of stock to date - a large investment valued at approximately $23 million - reflects our confidence in the strength and future of the Company. Globalization has made the world our field of opportunity to cultivate and grow. We look to the future with great anticipation for solid growth and thank you for your continued interest and support of our Company. 5 European Plant [PHOTO] Construction already underway at the Tatabanya, Hungary manufacturing facility One of the most significant highlights of 1995 attesting to Superior's long-term global strategy is the signing of its joint-venture with German-based Otto Fuchs Metallwerke and the groundbreaking of its new aluminum wheel manufacturing facility in Tatabanya, Hungary. Designed for a total production capacity of 2.5 million wheels and $125 million in annual revenues, the plant will manufacturer both lightweight forged and low pressure cast aluminum wheels for the European automotive market. The Company plans to complete the facility's initial phase of construction and begin wheel shipments by early 1997. Superior's alliance with Otto Fuchs, a well-known European manufacturer with sales of $1.2 billion, will position the Company as a major player in the European marketplace. First of all, the alliance will be a strong force in the European original equipment manufacturer (OEM) automotive wheel industry since it combines Otto Fuchs' lightweight forging process with Superior's technological expertise, lightweight low pressure casting process, and styling flexibility. Automakers are looking forward to the engineering expertise, and high standards of quality and cost control that Superior will bring to the European OEM market. Secondly, Otto Fuch's established presence in Europe coupled with the lower costs and high skill labor force in Hungary will competitively position Superior in Europe's service and price driven OEM market. Since announcing its plans for the European plant, Superior created significant interest among European OEMs and has gained a new customer base. The joint-venture already received its first long term contract from a major European automaker to supply 700,000 light forged wheels a year, filling over one third of the new Hungarian plant's initial capacity prior to the first year of operation. [PHOTO] Ground breaking celebration attended by from left, Gunter Scheipermeier, General Partner and CEO, Otto Fuchs; Louis L. Borick, President; Wendel Schindele and Tatabanya mayor Janos Bencsik 6 New Detroit Office The complexion of the OEM automotive industry is continually evolving. However, three constants that have become even more critical today in supplying to OEMs remain: pricing, service, and concept to customers. For that reason, the opening of Superior's Technical Sales Center in Detroit last year is so significant. It demonstrates the Company's full service commitment to customers. Superior equipped its new Detroit office with the technology and staff to provide integral engineering support, reduced lead times, and more cost effective customer service. Through the expertise of its program managers, Superior is now taking a larger role in the customer's development process, interfacing with other system-related component suppliers and managing programs from concept to completion. The new Technical Sales Center will not only increase Superior's presence in Detroit but it will enable the Company to maintain its integral relationship as a "full service" wheel supplier, a relationship that is expected to help grow our business. Engineering & Manufacturing Superior's ability to maintain its reputation as the world's leading manufacturer of OEM aluminum wheels is based on the Company's technological leadership, depth of expertise and foresight. Demonstrating the Company's foresight was the decision to establish a corporate-wide systems approach that would serve as a building block for Superior's long-term strategy to expand globally. The project, whereby all plants would be linked and share the same common data base for purchasing, inventory control, and delivery, was initially tested at the Company's Johnson City plant. Last year, the Company focused on implementing this technology throughout all its plants, reorganizing document control into one centralized system and building the basis for a computerized project management system for engineering. This corporate-wide systems approach is critical to Superior's preparation for the QS9000, an independent audit for companies with international operations who must meet specific requirements involving documentation, traceability, and processes and quality control. In addition to expanding and reorganizing its engineering resources with the opening of the new Technical Sales Center in Detroit, Superior continues to research new casting technologies that will improve the performance and cost of aluminum wheels. Currently, the Company is looking at bringing together the lightweight forging technology of its European joint-venture partner, Otto Fuchs, and Superior's styling flexibility to produce a lighter wheel design. 1995 also highlighted the start-up of production at Superior's new OEM aluminum wheel chrome-plating facility, and the completion of the second phase of expansion at its Fayetteville plant, now the largest OEM cast aluminum wheel facility in the world. The groundbreaking of Superior's new plant in Hungary, where both lightweight forged and low pressure cast aluminum wheels will be manufactured for the European automotive market, marked a significant milestone for the Company. Along with the Company's state-of-the art manufacturing facility in Chihuahua, Mexico, the new plant in Hungary reinforces Superior as an internationally recognized corporation. [PHOTO] Production in Superior's fully automated chrome-plating plant 7 Original Equipment Manufacturing [PHOTO] Superior is the exclusive supplier of light alloy wheels for the popular Nissan Primera sold in Japan Superior has continued its leading position as the largest aluminum wheel manufacturer in the world and anticipates exciting prospects ahead as it moves into new products and expands its customer base and geographic reach. Though Superior is positioned to benefit from greater aluminum wheel penetration, the Company has strategically lessened its dependence on North American installation of aluminum wheels through its chrome-plating technology, operations in Mexico, joint-ventures with Aluminum Company of America (ALCOA) and Topy Industries, and most recently, the new venture in Hungary with Otto Fuchs. [PHOTO] BMW Z-3 Roadster with Superior's stylized wheels Expanding Global Reach "Superior's decision to partner with Otto Fuchs made good sense," said James M. Ferguson, Vice President, OEM Marketing Group. "Otto Fuchs' process was competitive and lighter weight, but didn't have the styling flexibility of Superior's cast aluminum wheels. Together, we will be offering our customers the best product mix because we will provide the styling, affordability and mass that people are looking for." The new plant in Hungary will present excellent opportunities for Superior and reinforce its presence in Europe. The joint-venture's first contract from a European OEM for 700,000 forged wheels will fill over one third of the initial capacity of the new plant. Furthermore, Superior is currently looking at several contract possibilities with European OEMs for cast aluminum wheels to be manufactured in Hungary. Over the past three years, Superior has enjoyed strong relationships with several European OEMs including Bayerische Motoren Werke (BMW). Superior increased its BMW business last year with five new contracts and is now supplying wheels for the two-seat roadster, the new Z3, and the 3 and 5 series models. Wheels for the 3 and 5 series models will be manufactured at the Company's Chihuahua plant for export to Germany, demonstrating Superior's quality and cost competitiveness. [PHOTO] Newly designed Ford Explorer with Superior wheels 8 Developing Growth in Mexico and Japan Operations in Mexico through the Company's facility in Chihuahua have been very successful, indicating additional growth opportunities for Superior. Superior has been creating more export opportunities out of its Mexico plant to offset the impact of the devaluation and provide its U.S. customers with additional foreign export credits. As U.S. automakers continue to invest more money in their Mexico operations and export more cars, Superior anticipates as much as 80 percent of the wheels produced in its Mexico plant will be used for export. However, the Company has the capacity to supply the local market in Mexico when the Mexican economy recovers. Despite a downturn in Japan's economy and automotive industry, Superior has maintained its market share and looks to Japan as a good source for future growth. First of all, Superior's established relationship with Japanese OEMs positions the Company for increased business once the economy rebounds. Through the Company's joint-venture partnership with Topy Industries and by continually meeting and exceeding the high standards of Japanese OEMs, Superior has gained the confidence of Japanese manufacturers who have historically been reluctant to do business with U.S. suppliers. Secondly, Superior is ideally positioned to take advantage of the opportunities presented by last year's automotive trade agreement between Japan and the U.S. While the impact of the new trade agreement is not readily visible, the agreement is likely to increase the sale of U.S. automobiles and automotive parts to Japan. Japan is also expected to be an excellent market for Superior's new line of cast aluminum wheels for medium sized commercial trucks and buses to be manufactured under the ALCOA name this year. [PHOTO] Pontiac Firebird with Superior chrome-plated aluminum wheels Developing New Business Opportunities Another growing business opportunity for Superior is its OEM chrome-plated aluminum wheels. Superior experienced some delays in gearing up operations at its chrome-plating facility in Fayetteville last year. However, the Company has been improving the chrome-plating process which could yield substantial financial results this year when it achieves operational goals and consistent week-to-week improvements. Phase I production is expected to run at full capacity to keep up with the pace of demand for chrome-plated aluminum wheels. Strengthening Domestic Customer Base Superior continues to strengthen its relationship as a key supplier to Ford and General Motors. The Company has maintained its status as Ford's only "full service" wheel supplier. In 1995, General Motors solidified its relationship with Superior by signing a "lifetime" contract for the production of cast aluminum wheels. Estimated to exceed $1 billion in GM business over the next five years, the contract pertains to the "lifetime" of all current models extending from 1996 to 2000. Securing Future Opportunities Superior's future in the OEM market is one of growth opportunities with new technology and processes, new products, new customers, and new plant locations. Suppliers willing to make global investments today and support their customers' worldwide operations will secure increased business by OEM manufacturers in the future. Superior has already taken major strides to ensure its global competitive stance by making the financial commitment to meet customers' needs for technological enhancements, reduced costs, and globalization. Aftermarket Superior currently supplies 62 product lines and 3,000 parts for the automotive aftermarket ranging from steering wheels and covers, suspension products, seat belts and license plate holders to chrome-plated steel and aluminum road wheels. The Company's diverse aftermarket products are sold through some of the most prominent wholesalers and retail outlets in the U.S. and Canada including ITCO Tire Company, Les Schwab, Pep Boys, Auto-Zone, Northern Automotive, Belle Tire, Wal-Mart, Western Auto, Canadian Tire, and Paccar. Superior's aftermar-ket business accounted for 6.9 percent of overall revenue in 1995, a total of approximately $36 million. While this area of Superior's business was affected last year by softening aftermarket industry conditions, the Company has focused on developing products and expanding existing product lines with the most profitability and future sales potential. For example, Superior expanded its exhaust extension line with new styles and finishes last year. The Company also introduced a new super wide cover for thicker steering wheels called the Super Sport Grip, and developed a new line of stretch on velour steering wheel covers. In addition, the recent introduction of several new after-market wheels developed last year has already resulted in orders in excess of $1 million with two additional styles to be introduced this year. In 1996, Superior will continue to focus on developing profitable product lines such as interior accessories for the light truck and sport utility market. In addition, many of Superior's distributors are continuing to expand geographically, which should prove beneficial to the Company's after-market business in years to come. [PHOTO] Assortment of aftermarket accessory products Alcoa Joint-Venture In 1993, Superior entered into a joint development project with ALCOA, the world's largest manufacturer of forged aluminum wheels for large trucks and buses, to develop a new line of cast aluminum wheels for medium sized commercial trucks and buses in the Class 3 through 8 range. The Company made substantial progress last year by completing the development of the 19 1/2" cast aluminum wheel for Class 4 through 6 trucks. Superior plans to begin manufacturing wheels under the ALCOA name in 1996. Although the marketing process involves more time to develop, the Company believes the ALCOA truck program will build momentum and open an arena of new business. This is another statement of confidence for the future growth of our Company. [PHOTO] Example of successfully developed 19 1/2" cast aluminum truck wheel for class 4 through 6 trucks 9 Management's Discussion and Analysis of Financial Condition RESULTS OF OPERATIONS 1995 Compared to 1994 Net sales in 1995 increased 14.3 percent to a record $522.0 million compared to $456.6 million in 1994. Higher net sales reflects higher pricing due to increased material costs to original equipment manufacturer (OEM) customers. The Company's OEM business increased $68.5 million, or 16.4 percent over 1994, with unit shipments of cast aluminum road wheels increasing 1.4 percent from 1994, while North American automotive production decreased 1.6 percent. Aluminum wheel installation rates on automobiles and light trucks rose to a record 43.9 percent for the 1995 model year from 41.0 percent for the 1994 model year and 39.5 percent for the 1993 model year. Management believes the trend of higher cast aluminum wheel installation rates will continue. Aftermarket product net sales decreased $3.1 million, or 8.1 percent over 1994 as a sluggish economy impacted the entire aftermarket industry. Gross profit was 21.8 percent of net sales in 1995 compared to 24.4 percent in 1994. Reduced gross profit margins reflect a number of factors. First, lower than expected OEM wheel shipment and production levels were accentuated by additional wheel making capacity added as a result of plant expansion activities in Fayetteville, Arkansas and Chihuahua, Mexico. Secondly, the price of raw material increased throughout the year. The aluminum content of selling prices to OEMs is adjusted to current market conditions which, when the Company, from time to time, enters into fixed purchase contracts, subjects the Company to the risks of market changes. The cost of aluminum is a significant component in the overall cost of a wheel. As the price of aluminum increases the effect is to reduce overall gross margin percentages although gross profit in absolute dollars remains unchanged. Finally, while the Company has ongoing programs to reduce costs to its customers and in the past, has generally been successful in substantially mitigating pricing pressure from its customers, it is becoming increasingly more difficult to do so without impacting margins. The Company will continue to aggressively implement cost savings strategies to meet customer pricing expectations and maintain margins; however, the impact of future customer pricing pressures and increasing industry-wide competition to the Company's financial position and results of operations is not known. Selling, general and administrative expenses, measured as a percentage of net sales, decreased to 3.8 percent in 1995 compared to 4.2 percent in 1994, and increased in absolute dollars. The increase in absolute dollars is a result of higher OEM commissions, which are paid as a percentage of sales dollars, and two aftermarket product liability lawsuit settlements. Interest expense increased $426,000 compared to 1994. The largest component of the change was a reduction of capitalized interest in 1995 reflecting reduced OEM plant construction activities. However, the overall interest cost in 1995 was lower than 1994 due to current and prior year payments and prepayments on Senior notes, including the retirement of the 10.22% Senior notes, offset substantially by increased use of short-term borrowings required to manage working capital requirements. Interest income decreased $734,000 over 1994 as cash and short-term investments were utilized to fund capital expenditures, repurchases of the Company's common stock and on-going working capital requirements. Miscellaneous, net was $6.7 million and increased $5.9 million from 1994. Higher expenses primarily reflect $5.8 million of pre-production costs associated with the Fayetteville chrome-plating facility start-up, compared to $1.8 million of pre-production charges for the Chihuahua, Mexico and Fayetteville chrome-plating facilities in 1994, and investment and foreign exchange losses. The consolidated tax rate in 1995 decreased slightly to 37.5 percent of pre-tax income versus 37.6 percent in 1994. See Note 6 of the consolidated financial statements. 10 1994 Compared to 1993 Net sales in 1994 increased 16.2 percent to $456.6 million compared to $393 million in 1993. The increase was primarily attributable to growth in the Company's original equipment manufacturer (OEM) cast aluminum wheel business. Buoyed by a strong North American automotive market, the Company's OEM business increased $60.4 million, or 16.9 percent over 1993. Unit shipments of cast aluminum road wheels increased 15.5 percent from 1993, while average selling prices, which rose throughout the year, were slightly higher than 1993. Aftermarket product net sales, without the impact of "Do-Ray," a Canadian mirror and light business sold in August, 1993, increased $7.4 million, or 23.5 percent over 1993, and reflected increases in the "Streetwear" product line, including new styles of aluminum and chrome-plated aluminum wheels. Year-to-date net sales in the aftermarket business increased $3.2 million, or 8.9 percent over 1993. Gross profit was 24.4 percent of net sales in 1994 compared to 23.3 percent in 1993. Improved gross profit margins reflected higher customer order levels that translated into greater production requirements and more efficient and high plant utilization resulting in incrementally higher margins. Additionally, the Company's aggressive and ongoing cost containment programs continued to effectively reduce costs. The Company was able to achieve significant margin gains in spite of the January 17, 1994 Northridge earthquake, which resulted in a $1.1 million charge to earnings, and plant expansion activities at the new Chihuahua, Mexico OEM facility and at the Fayetteville, Arkansas OEM facility. Selling, general and administrative expenses, measured as a percentage of net sales, decreased to 4.2 percent in 1994 compared to 4.3 percent in 1993, and increased in absolute dollars. The increase in absolute dollars is a result of the additional resources required to manage the Company's expanding business while the decrease as a percentage of net sales reflects management's successful containment of this required expansion. Interest expense decreased $1.4 million compared to 1993, reflecting current and prior year payments and prepayments of Senior notes. Accentuating this decrease was $1.9 million of interest that was capitalized as a result of the OEM plant expansion activities. Offsetting these decreases were higher interest costs relating to greater short-term borrowings required to manage working capital requirements. Interest income decreased $1.5 million over 1993 as cash and short-term investments were utilized to fund record capital expenditures of $60.2 million, repurchases of the Company's common stock and on-going working capital requirements. Miscellaneous, net was $839,000 and decreased $186,000 from 1993. Included in this category are $1.8 million of pre-production costs relating to the start-up of the Chihuahua, Mexico cast aluminum wheel and Fayetteville, Arkansas chrome-plating facilities. The consolidated tax rate in 1994 decreased slightly to 37.6 percent of pre-tax income versus 37.8 percent in 1993. See note 6 of the consolidated financial statements. 11 Financial Condition, Liquidity and Capital Resources Cash provided by operating activities was $83.7 million in 1995 compared to $50 million in 1994, reflecting strong earnings and high levels of non-cash charges such as depreciation and amortization that were offset somewhat by the build-up of inventories and the reduction of receivables. Higher inventory levels primarily reflect the higher cost of raw materials. Strong cash flows from operating activities were supplemented through the partial liquidation of the Company's investment portfolio which, in turn, was utilized for a number of activities. The Company paid down outstanding short and long-term borrowings by a combined $42.8 million. Such payments included the retirement of the 10.22% Senior notes three years prior to scheduled maturity, and paying the maximum advance principal payments currently available in addition to the required principal payments on its 9.31% Senior notes. After paying the required principal payments on its 9.31% Senior notes in 1996, the Company will have effectively retired all of its long-term debt. The Company also funded OEM plant expansion and enhancements, including both the chrome-plating and cast aluminum wheel expansions in Fayetteville, Arkansas, and the second phase of the Chihuahua, Mexico wheel facility. Cash resources were also utilized for the retirement of 737,000 shares of the Company's common stock. Finally, the Company contributed $9.7 million to its Hungarian joint-venture with German-based Otto Fuchs Metallwerke ("Otto Fuchs"). See discussion below. During 1995, the Company formalized its 50/50 joint-venture agreement with Otto-Fuchs to construct a plant in Tatabanya, Hungary for the production of both lightweight forged and low pressure cast aluminum wheels for the European automotive market. Ground breaking for this facility took place in the fourth quarter of 1995 and initial shipments are slated for the first quarter of 1997. The cost of this facility, currently estimated at $70 million, will be funded through mimimum equal capital contributions of approximately $20 million by each partner and long-term project financing. Since 1990, funding for plant expansion, in excess of $325 million, has come from internally generated cash flow and working capital. The value of the Mexican peso experienced a precipitous decline in value relative to the U.S. dollar and the local Mexican economy entered into a severe recession. This decline in value of the Mexican peso, which began in December 1994 with the Mexican government removing currency controls, continued throughout 1995. The impact of these declines in value relative to the Company's wholly owned subsidiary, Superior Industries de Mexico, SA de CV, has resulted in a cumulative unrealized translation loss of $13.8 million, net of taxes and has been charged directly to shareholders' equity. The Mexican production facility represents less than 10 percent of the Company's total capacity. The softening of the North American automotive market during 1995, accentuated by the harsh winter weather conditions that continued into 1996, has reduced the Company's production requirements thereby creating excess manufacturing capacity. While management believes that 1996 will be a solid year for the Company and is optimistic about its long-term opportunities for growth, current economic conditions may continue and negatively impact customer order levels for aluminum road wheels. In addition, the start-up of the chrome-plating facility in Fayetteville, Arkansas may significantly impact the results of operations in 1996. The Company's financial condition remains strong. In 1995, working capital and current ratio increased to $60.9 million and 1.7:1, versus $53.8 million and 1.5:1 in 1994, respectively,as the Company completed its domestic plant expansion program. The long-term debt to total capitalization ratio improved to 2.5 percent in 1995 from 10.3 percent in 1994. The Company believes it is well positioned to take full advantage of new and complementary business opportunities, expanding international markets and, at the same time, able to withstand downturns in the economy. During 1995, the Board of Directors announced an 11 percent increase in the cash dividend, representing the twelfth consecutive year of dividend payments and increases. Management anticipates continuing its policy of paying dividends; however, this is contingent upon various factors, including economic and market conditions, all of which cannot be accurately predicted. During 1995 the Financial Accounting Standards Board issued Statements of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and SFAS No. 123, "Accounting for Stock-Based Compensation" (See note 4 of the Consolidated Financial Statements), both of which become effective for fiscal years beginning after December 15, 1995. Had the Company elected early adoption of SFAS No. 121, management believes there would not be a material impact to the results of operations or financial position of the Company. Inflation Inflation did not have a material impact on the results of operations or the financial condition of the Company. The Company believes its purchasing and the majority of its customer contracts are structured to minimize the impact of changes caused by inflation. 12 Consolidated Statements of Income
Years Ended December 31, 1995 1994 1993 Net Sales $ 521,997,000 $ 456,638,000 $ 393,033,000 Cost of Sales 408,200,000 345,270,000 301,569,000 Gross Profit 113,797,000 111,368,000 91,464,000 Selling, general and administrative expenses 19,965,000 19,203,000 16,887,000 Income From Operations 93,832,000 92,165,000 74,577,000 Interest expense 3,288,000 2,862,000 4,298,000 Interest income 1,106,000 1,840,000 3,386,000 Miscellaneous expense, net 6,732,000 839,000 1,025,000 (8,914,000) (1,861,000) (1,937,000) Income Before Income Taxes 84,918,000 90,304,000 72,640,000 Income Taxes 31,854,000 33,989,000 27,463,000 Net Income $ 53,064,000 $ 56,315,000 $ 45,177,000 Earnings Per Share $ 1.78 $ 1.85 $ 1.47
See notes to consolidated financial statements. Consolidated Balance Sheets
December 31, 1995 1994 ASSETS CURRENT ASSETS: Cash and equivalents $ 3,366,000 $ 5,884,000 Marketable securities, net 7,813,000 21,158,000 Receivables, net Trade 56,092,000 63,704,000 Other 14,797,000 17,619,000 70,889,000 81,323,000 Inventories 53,823,000 44,746,000 Deferred income taxes 5,382,000 5,899,000 Other current assets 1,386,000 1,761,000 Total current assets 142,659,000 160,771,000 PROPERTY, PLANT AND EQUIPMENT, net 177,538,000 185,853,000 OTHER LONG-TERM ASSETS 21,573,000 11,059,000 $341,770,000 $357,683,000 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable and current portion of long-term debt $ 13,628,000 $ 39,201,000 Accounts payable 46,920,000 46,135,000 Accrued liabilities 21,198,000 21,587,000 Total current liabilities 81,746,000 106,923,000 LONG-TERM DEBT, net 5,814,000 23,075,000 OTHER LONG-TERM LIABILITIES 17,207,000 16,897,000 DEFERRED INCOME TAXES 7,850,000 10,606,000 SHAREHOLDERS' EQUITY 229,153,000 200,182,000 $341,770,000 $357,683,000
See notes to consolidated financial statements. 13 Consolidated Statements of Shareholders' Equity
Unrealized Common Stock Additional Cumulative Loss On Number of Paid-In Translation Marketable Retained Shares Amount Capital Adjustment Securities Earnings Total Balances at December 31, 1992 19,998,460 $ 9,999,000 $ 71,908,000 $ 101,000 $ -- $ 54,739,000 $136,747,000 Net income -- -- -- -- -- 45,177,000 45,177,000 Stock options exercised, including related tax benefit 114,818 58,000 2,080,000 -- -- -- 2,138,000 Stock split 10,031,136 5,016,000 -- -- -- (5,016,000) -- Repurchases of common stock (83,000) (42,000) (3,199,000) -- -- -- (3,241,000) Cash dividends ($.11/share) -- -- -- -- -- (3,409,000) (3,409,000) Foreign currency translation -- -- -- (543,000) -- -- (543,000) Balances at December 31, 1993 30,061,414 15,031,000 70,789,000 (442,000) -- 91,491,000 176,869,000 Net income -- -- -- -- -- 56,315,000 56,315,000 Stock options exercised, including related tax benefit 94,221 47,000 1,585,000 -- -- -- 1,632,000 Repurchases of common stock (544,000) (272,000) (16,819,000) -- -- -- (17,091,000) Cash dividends ($.165/share) -- -- -- -- -- (4,913,000) (4,913,000) Unrealized losses: Foreign currency translation -- -- -- (10,130,000) -- -- (10,130,000) Marketable securities -- -- -- -- (2,500,000) -- (2,500,000) Balances at December 31, 1994 29,611,635 14,806,000 55,555,000 (10,572,000) (2,500,000) 142,893,000 200,182,000 Net income -- -- -- -- -- 53,064,000 53,064,000 Stock options exercised, including related tax benefit 154,372 77,000 2,812,000 -- -- -- 2,889,000 Repurchases of common stock (737,000) (369,000) (19,456,000) -- -- -- (19,825,000) Cash dividends ($.195/share) -- -- -- -- -- (5,749,000) (5,749,000) Unrealized losses: Foreign currency translation -- -- -- (3,256,000) -- -- (3,256,000) Marketable securities -- -- -- -- 1,848,000 -- 1,848,000 Balances at December 31, 1995 29,029,007 $14,514,000 $ 38,911,000 $(13,828,000) $ (652,000) $190,208,000 $229,153,000
See notes to consolidated financial statements. Consolidated Statements of Cash Flows
Years Ended December 31, 1995 1994 1993 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 83,747,000 $ 49,953,000 $ 72,713,000 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (25,903,000) (60,231,000) (53,834,000) Investment in unconsolidated joint-venture (9,664,000) -- -- Proceeds from sales of investments 17,732,000 29,377,000 78,369,000 Purchases of investments (2,911,000) (26,834,000) (82,519,000) NET CASH USED IN INVESTING ACTIVITIES (20,746,000) (57,688,000) (57,984,000) CASH FLOWS FROM FINANCING ACTIVITIES: Short-term borrowings (payments) (23,467,000) 28,267,000 -- Repurchases of common stock (19,825,000) (17,091,000) (3,241,000) Payments of long-term debt (19,367,000) (2,550,000) (13,732,000) Cash dividends (5,749,000) (4,913,000) (3,409,000) Stock options exercised 2,889,000 1,632,000 2,138,000 NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (65,519,000) 5,345,000 (18,244,000) Net Decrease in Cash and Equivalents (2,518,000) (2,390,000) (3,515,000) Cash and Equivalents at Beginning of Year 5,884,000 8,274,000 11,789,000 Cash and Equivalents at End of Year $ 3,366,000 $ 5,884,000 $ 8,274,000
See notes to consolidated financial statements. 14 Reconciliation of Net Income to Net Cash Provided By Operating Activities
Years Ended December 31, 1995 1994 1993 Net Income $ 53,064,000 $ 56,315,000 $ 45,177,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,716,000 26,604,000 21,695,000 Provision for retirement plans 1,169,000 1,108,000 904,000 Other non cash items (1,320,000) 1,043,000 (262,000) Changes in assets and liabilities: (Increase) decrease in: Receivables, net 10,252,000 (16,044,000) (7,042,000) Inventories (9,077,000) (18,112,000) (2,112,000) Other items 3,786,000 3,637,000 422,000 Increase (decrease) in: Accounts payable 785,000 (5,869,000) 15,341,000 Accrued liabilities (389,000) 155,000 2,198,000 Deferred income taxes (2,239,000) 1,116,000 (3,608,000) NET CASH PROVIDED BY OPERATING ACTIVITIES $ 83,747,000 $ 49,953,000 $ 72,713,000
See notes to consolidated financial statements. 15 Notes to Consolidated Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES THE COMPANY The principal business of Superior Industries International, Inc. and its subsidiaries (the Company), is the design and manufacture of cast aluminum road wheels primarily for the domestic original equipment manufacturer (OEM) market. It is also a leading manufacturer of custom road wheel and accessory products for the automotive aftermarket. The Company maintains both domestic and foreign manufacturing facilities, including operations in Mexico and a manufacturing facility currently under construction through a 50 percent owned joint-venture in Hungary. As of December 31, 1995, the carrying amount of these foreign facilities is $29,500,000. PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of the Company, after elimination of all significant intercompany accounts and transactions. Investments in joint-ventures in which the Company has common stock ownership of 50 percent are accounted for on the equity method. These consolidated financial statements have been prepared in accordance with generally accepted accounting principals which require the use of estimates and assumptions by management. FISCAL YEAR END For presentation purposes, the Company denotes December 31 as the fiscal year end. However, the Company's fiscal year ends on the last Sunday of the calendar year. FINANCIAL INSTRUMENTS Financial instruments consist primarily of cash and equivalents, marketable securities, short-term borrowings and Senior notes. The Company generally places these financial instruments with high quality institutions operating in various industries, including government agencies, over a broad geographic area. Cash equivalents consist primarily of certificates of deposit, carried at cost, which approximates market value. Certificates of deposit were $2,880,000 and $5,630,000 at December 31, 1995 and 1994, respectively. Marketable securities, which generally consist of U.S. government agency securities, corporate bonds, money market preferred stock and equities, are all considered "available-for-sale" and are carried at the lower of cost or market on a portfolio basis. The stated maturities of market-able debt securities are generally over ten years. Market value at December 31, 1995, which was determined using quoted prices from national exchanges, resulted in a $652,000 unrealized loss recorded directly to shareholders' equity. The net realized loss from sales of available-for-sale securities utilizing the specific identification method was $709,000 and $99,000 for the years ended December 31, 1995 and 1994, respectively. At December 31, 1995 and 1994, marketable securities of $5,792,000 and $4,960,000, respectively, were pledged as collateral against outstanding letters of credit. RESEARCH AND DEVELOPMENT COSTS Research and development costs of $3,265,000, $5,413,000 and $3,332,000 have been charged against operations during 1995, 1994 and 1993, respectively. 16 FOREIGN CURRENCY TRANSLATION Foreign currency asset and liability accounts are translated at exchange rates in effect at the end of the accounting period. Revenue and expense accounts are translated at a weighted average of exchange rates during the period. The cumulative effect of translation as well as gains and losses on intercompany foreign currency transactions are recorded as a separate component of shareholders' equity. Foreign exchange gains/(losses) of ($287,000), $164,000, and ($70,000) have been recorded as part of operations during 1995, 1994 and 1993, respectively. In December 1994, the Mexican government devalued and then removed currency controls on the New Peso (the "Peso") which caused a decline in the value of the Peso relative to the U.S. dollar that continued throughout 1995. The impact of this decline in value has resulted in a cumulative unrealized translation loss of $13.8 million, net of related tax effects, and has been charged directly to shareholders' equity. STATEMENTS OF CASH FLOWS For purposes of the Consolidated Statements of Cash Flows, the Company considers all certificates of deposit and highly liquid investments with an original maturity of three months or less to be cash equivalents. Purchases and proceeds from investment transactions were all transacted in the Company's available-for-sale portfolio of debt and equity securities. Interest paid, net of amounts capitalized (see note 10), and income taxes paid were $3,540,000 and $25,448,000 for 1995; $2,494,000 and $32,610,000 for 1994; $4,543,000 and $27,779,000 for 1993, respectively. RECLASSIFICATIONS Certain prior year items have been reclassified to conform with current year presentations. 2. BORROWING ARRANGEMENTS The Company maintains a $25,000,000 credit facility on a committed, unsecured basis expiring in May 1997. This facility provides for an interest rate of 40 or 50 basis points above either the Interbank Offered Rate or the Federal Funds rate, respectively. The Company also maintains combined line and letter of credit facilities under which it may borrow up to $30,000,000 on an uncommitted, unsecured basis at rates generally below prime. There were $4,800,000 and $28,267,000 in short-term borrowings outstanding at December 31, 1995 and 1994, respectively. The weighted average interest rates during 1995, 1994 and 1993 were 6.7 percent, 4.8 percent, and 3.9 percent, respectively. The long-term debt of the Company is summarized as follows:
December 31, 1995 1994 9.31% Senior notes due 1997, with annual principal payments of $8,333,000 beginning in 1995 $11,666,000 $25,000,000 Capitalized lease obligations and other debt, substantially all of which is secured by fixed assets, with various maturities and interest rates ranging between 7.3 percent and 11.3 percent 2,976,000 3,438,000 10.22% Senior notes due 1998, with annual principal payments of $2,143,000 was paid in full during 1995 -- 5,571,000 14,642,000 34,009,000 Less - Current portion 8,828,000 10,934,000 $ 5,814,000 $23,075,000
The Senior notes and certain credit facility agreements contain, among other covenants, restrictions with respect to borrowings, dividends, investments, purchases and sales of assets outside the ordinary course of business, and certain guarantees. Also required is the maintenance of a minimum tangible net worth, as defined, of $180,000,000 and certain financial ratios. Included with capitalized lease obligations and other debt is a capital lease of $1,260,000, funded through the proceeds of an industrial development revenue bond, payable in varying annual principal payments through 1999 with remaining interest rates ranging between 7.4 percent and 7.6 percent. The Company has guaranteed the repayment of the underlying bonds. Future maturities of long-term debt are approximately $8,828,000 for 1996, $3,878,000 for 1997, $592,000 for 1998, $645,000 for 1999, $330,000 for 2000 and $369,000 thereafter. 3. LEASES The Company leases its corporate office and certain manufacturing facilities from Louis L. Borick, President, and Juanita A. Borick. The lease expires in the year 2001 and has a current annual payment of $1,140,000 (including rent of $748,000 related to land and escalations which are accounted for as operating leases), exclusive of future escalation payments which are determined every five years. Included in property, plant and equipment at both December 31, 1995 and 1994, are buildings and 17 equipment held under capital leases of $5,590,000 with accumulated amortization of $2,949,000 and $2,738,000, respectively. The Company leases certain land, facilities and equipment under long-term operating leases expiring at various dates through 2063. The terms of certain of these leases require scheduled rent increases at specified intervals which are not dependent on the occurrence of any future events. Additionally, the Company reduced the amortization period of these same operating leases to appropriately match the estimated useful life of the underlying machinery. Total lease expense for all operating leases amounted to $5,040,000 in 1995, $4,183,000 in 1994 and $3,904,000 in 1993. Future minimum payments under all leases are summarized as follows:
Leases Years Ending December 31, Operating Capital 1996 $ 5,165,000 $ 767,000 1997 4,628,000 771,000 1998 4,311,000 768,000 1999 7,684,000 768,000 2000 2,216,000 392,000 Thereafter 371,000 392,000 24,375,000 3,858,000 Amounts representing interest -- 895,000 $24,375,000 $2,963,000
Future minimum payments of $3,803,000 for operating leases, including known rent escalations, and $2,352,000, including interest, for capital leases are payable to Louis L. Borick, President, and Juanita A. Borick. The amounts paid to Louis L. Borick, Juanita A. Borick or a related entity owned by Louis L. Borick's children during 1995, 1994 and 1993, for all leases were $1,583,000, $1,571,000 and $1,542,000, respectively. 4. STOCK OPTIONS At December 31, 1995 and 1994, the Company had reserved 2,243,965 and 2,398,337 shares of its common stock, respectively, for issuance to directors, officers and key employees under Stock Option Plans. Options are generally subject to grant at not less than fair market value on the date of grant and expire no later than ten years after the date of the grant. At December 31, 1995 and 1994, exercisable options to purchase shares of the Company's common stock totaled 844,726 and 616,540, respectively. 18 A summary of changes in outstanding options follows:
Years Ended December 31, 1995 1994 1993 Under Option Under Option Under Option Option Price Option Price Option Price Options outstanding at beginning of year 1,432,223 $ 1.80-$39.88 1,413,944 $ 1.80-$39.88 444,446 $ 2.70-$22.63 Options granted 137,000 24.50- 34.00 119,000 26.25- 31.00 602,500 19.08- 39.88 Stock split -- -- -- -- 485,948 1.80- 29.67 Options exercised (154,372) 3.75- 31.00 (94,221) 5.19- 19.08 (114,818) 3.75- 15.09 Options canceled or expired (113,375) 19.08- 31.00 (6,500) 15.09- 31.00 (4,132) 5.19- 15.09 Options outstanding at end of year 1,301,476 $ 1.80-$39.88 1,432,223 $ 1.80-$39.88 1,413,944 $ 1.80-$39.88
No significant amounts are reflected in the Company's income accounts with respect to these stock options. Proceeds from the sales of stock under option are credited to common stock at par value, with amounts in excess of par value credited to additional paid-in capital. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation". Statement 123 introduces a fair-value based method of accounting for stock-based compensation and encourages, but does not require, companies to recognize compensation expense for grants of stock, stock options and other equity instruments to employees based on this new fair value method. Currently, compensation expense for a stock option is measured on the first date at which both the number of shares and the exercise price are known. Under the Company's stock option plans, this would typically be the date of grant. To the extent the exercise price equals or exceeds the market value of the stock on the grant date, no expense is recognized. The Company will adopt the disclosure requirements of Statement 123 during the year ended December 31, 1996, but, as permitted, does not intend to adopt its accounting rules for the recognition of compensation expense. 5. RETIREMENT PLANS The Company has an unfunded supplemental executive retirement plan covering its directors, officers and other key members of management. The Company has purchased key man life insurance policies on each of the participants to provide for future liabilities. The plan provides for a defined benefit to become payable on the employee's death or upon retirement which is based on final average compensation, subject to certain vesting requirements. The components of cost for this retirement plan are as follows:
Years Ended December 31, 1995 1994 1993 Service cost $315,000 $335,000 $226,000 Interest cost 425,000 360,000 312,000 Net amortization 54,000 55,000 55,000 Other unrecognized loss 17,000 -- -- Net cost $811,000 $750,000 $593,000
A schedule reconciling the projected benefit obligation with recorded plan liability follows:
December 31, 1995 1994 Actuarial present value of benefit obligations: Vested benefit obligation $ 3,690,000 $ 3,230,000 Accumulated benefit obligation $ 5,900,000 $ 4,962,000 Projected benefit obligation $ 6,497,000 $ 5,501,000 Unrecognized prior service cost (329,000) (383,000) Adjustment required to recognize minimum liability 457,000 330,000 Other unrecognized experience losses (725,000) (486,000) Recorded liability $ 5,900,000 $ 4,962,000
19 Actuarial assumptions for the retirement plan include seven percent for the assumed discount rate and five percent for the assumed rate of average future compensation increases for 1995 and 1994. During 1995, the Company recorded an adjustment of $127,000 to recognize the minimum pension liability required by Statement of Financial Accounting Standards No. 87. The adjustment, which had no effect on income, was offset by recording an equal amount as an intangible asset. The Company has contributory employee retirement savings plans in addition to mandatory profit sharing plans covering substantially all of its employees. The employer contribution is determined at the discretion of the Company and totaled $2,605,000, $2,471,000 and $2,401,000 for 1995, 1994 and 1993, respectively. The Company also has a deferred compensation agreement with its President under which the Company has agreed to pay certain amounts annually subsequent to retirement. For accounting purposes, the present value of such payments is being charged ratably to expense over the average estimated remaining years of active employment. These charges totaled $358,000, $358,000 and $300,000 for 1995, 1994 and 1993, respectively. 6. TAXES ON INCOME Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under Statement 109, deferred tax assets and liabilities are determined under the "liability method" based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Prior to the adoption of Statement 109, income tax expense was determined under the "deferred method" based on items of income and expense that were reported in different years in the financial statements and tax returns and were measured at the tax rate in effect in the year the differences originated. As permitted by Statement 109, the Company has elected not to restate the financial statements of any prior years. The cumulative effect of the change in the method of accounting for income taxes for the year ended December 31, 1993 was not material. The provision (credit) for income taxes is comprised of the following components:
Years Ended December 31, 1995 1994 1993 Federal: Current $22,338,000 $26,501,000 $24,836,000 Deferred 1,884,000 2,007,000 (1,421,000) 24,222,000 28,508,000 23,415,000 State: Current 3,891,000 5,527,000 4,160,000 Deferred 208,000 169,000 (306,000) 4,099,000 5,696,000 3,854,000 Foreign: Current 175,000 414,000 95,000 Deferred 3,358,000 (629,000) 99,000 3,533,000 (215,000) 194,000 $31,854,000 $33,989,000 $27,463,000 Total: Current $26,404,000 $32,442,000 $29,091,000 Deferred 5,450,000 1,547,000 (1,628,000) $31,854,000 $33,989,000 $27,463,000
Provision is made for United States income taxes on undistributed earnings of international subsidiaries. Tax credits are accounted for as a reduction of the provision for income taxes in the year in 20 which the credits arise. The reconciliation of the statutory United States federal income tax rate to the Company's effective income tax rate is as follows:
Years Ended December 31, 1995 1994 1993 Statutory amount, computed at 35 percent $29,721,000 $31,606,000 $25,424,000 State tax provisions, net of federal income tax benefit 2,664,000 3,702,000 2,505,000 Foreign income taxed at rates other than the statutory rate (107,000) (592,000) (602,000) Federal tax credits (722,000) (486,000) -- Other, net 298,000 (241,000) 136,000 $31,854,000 $33,989,000 $27,463,000
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:
December 31, 1995 1994 Deferred tax assets Insurance reserves not currently deductible $ (1,166,000) $ (1,297,000) Inventory reserves not currently deductible (569,000) (520,000) Other reserves not currently deductible (4,369,000) (6,509,000) Deferred compensation (3,523,000) (2,844,000) Revenue recognized for tax purposes (597,000) (437,000) State taxes expensed currently, deductible in following year (1,057,000) (831,000) Foreign currency translation adjustment (7,400,000) -- Net operating loss carryforwards -- (735,000) Other (1,675,000) (1,818,000) (20,356,000) (14,991,000) Deferred tax liabilities Differences between book and tax basis of property, plant and equipment 19,351,000 18,068,000 Other 3,473,000 1,630,000 22,824,000 19,698,000 $ 2,468,000 $ 4,707,000
7. SHAREHOLDERS' EQUITY The common stock of the Company at December 31, 1995 consists of 100,000,000 authorized shares with a $.50 par value. The Company also has authorized 1,000,000 shares of preferred stock with a par value of $25.00, none of which has been issued. The computation of earnings per share is based upon the weighted average number of common shares outstanding and common stock equivalents, when dilutive. During 1995, 1994 and 1993 the weighted average number of common shares outstanding was 29,895,000, 30,376,000 and 30,708,000, respectively. 8. BUSINESS SEGMENT The Company manufactures motor vehicle parts and accessories for sale on normal, 21 generally unsecured trade terms to original equipment manufacturers (OEMs) and the auto-motive aftermarket on an integrated one-segment basis. At December 31, 1995 and 1994, the allowance for doubtful accounts receivable was $722,000 and $541,000, respectively. The following percentages of the Company's consolidated net sales were made to the Ford Motor Company and General Motors Corporation: 1995, 47.4 percent and 41.2 percent; 1994, 47.0 percent and 41.0 percent; 1993, 46.8 percent and 42.4 percent. 9. INVENTORIES
December 31, 1995 1994 Raw materials $18,485,000 $18,210,000 Work in process 12,815,000 8,965,000 Finished goods 22,523,000 17,571,000 $53,823,000 $44,746,000
Inventories (which include material, labor and factory overhead) are stated at the lower of cost, using the first-in, first-out (FIFO) method, or market. 10. PROPERTY AND DEPRECIATION
December 31, 1995 1994 Land and buildings $ 47,900,000 $ 43,030,000 Machinery and equipment 243,685,000 214,656,000 Leasehold improvements and other 4,540,000 4,487,000 Construction in progress 13,764,000 30,609,000 309,889,000 292,782,000 Less - Accumulated depreciation and amortization 132,351,000 106,929,000 $177,538,000 $185,853,000
Property, plant and equipment are recorded at cost. Major replacements or improvements are capitalized, with expenditures for minor replacements, maintenance and repairs and tooling costs charged against current operations. Maintenance and repairs charged against operations during 1995, 1994 and 1993 were $15,103,000, $12,113,000 and $10,877,000, respectively. Depreciation and amortization are generally provided on the straight-line method over the estimated useful lives which range from 3-33 years. Such depreciation and amortization of fixed assets totaled $25,947,000, $24,571,000 and $20,595,000 during 1995, 1994 and 1993, respectively. Costs and related accumulated depreciation of property replaced, retired or otherwise disposed of are removed from the accounts and gains or losses, if any, are included in the results of operations for the period. Property and equipment no longer used in operations are stated at the lower of cost or estimated net realizable value and included in other current assets. Interest is capitalized on the construction of major facilities. Capitalized interest is recorded as part of the cost of the asset to which it is related and is depreciated over the asset's estimated useful life. Interest costs of $850,000, $1,933,000 and $405,000 were capitalized during 1995, 1994 and 1993, respectively. 11. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair values of the Company's financial instruments are summarized as follows: 22
December 31, 1995 1994 Carrying Carrying Amount Fair Value Amount Fair Value Assets: Cash and equivalents $ 3,366,000 $ 3,366,000 $ 5,884,000 $ 5,884,000 Marketable securities 7,813,000 7,813,000 21,158,000 21,158,000 Long-term investments 6,883,000 6,883,000 5,322,000 5,322,000 Liabilities: Short-term borrowings 4,800,000 4,800,000 28,267,000 28,267,000 Senior notes 11,666,000 12,048,000 30,571,000 31,033,000
Long-term investments include interests in affordable housing limited partnerships which provide favorable income tax benefits to the Company over a fifteen-year period. While the fair value of these long-term investments is not practicable to obtain, the Company believes that the carrying amount represents the best estimate of fair value. The carrying amount of short-term borrowings approximates fair value. The fair value of the Company's Senior notes is estimated based on the discounted value of future cash flows utilizing an estimated discount rate currently available to the Company for similarly structured debt. 12. LIABILITIES The components of accrued and long-term liabilities are as follows:
December 31, 1995 1994 Accrued Payroll and related benefits $ 9,665,000 $10,171,000 Insurance reserves 3,969,000 4,473,000 Taxes, other than income tax 2,478,000 2,135,000 Income taxes 2,217,000 1,579,000 Interest and dividends 1,538,000 1,664,000 Tooling and maintenance 718,000 732,000 Other 613,000 833,000 $21,198,000 $21,587,000 Long-term Executive retirement and deferred compensation plans $ 8,290,000 $ 6,949,000 Deferred operating lease payments 7,168,000 6,262,000 Other 1,749,000 3,686,000 $17,207,000 $16,897,000
13. 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. The Company has employment agreements with certain executive officers that, in addition to customary benefit and severance provisions, guarantee lump sum payments after a change in control of the Company, if certain events occur. Compensation which might be payable under these agreements has not been accrued as no such change in control has occurred. 23 14. OTHER INCOME Other income (expense) includes pre-production costs of $5,830,000 and $1,100,000 relating to the start-up of the Fayetteville, Arkansas chrome-plating facility in 1995 and 1994, respectively. In 1994, other income (expense) includes pre-production costs of $730,000 related to the start-up of the Chihuahua, Mexico cast aluminum wheel facility. 15. QUARTERLY FINANCIAL DATA (UNAUDITED) (In thousands except per share amounts)
December 31, 1995 First Second Third Fourth Total Quarter Quarter Quarter Quarter Year Net Sales $134,360 $142,761 $113,176 $131,700 $521,977 Gross Profit 31,419 34,200 20,890 27,288 113,797 Net Income 15,725 16,699 8,285 12,355 53,064 Earnings Per Share .53 .56 .28 .42 1.78 Dividends Per Share .045 .05 .05 .05 .195 December 31, 1994 First Second Third Fourth Total Quarter Quarter Quarter Quarter Year Net Sales $105,938 $120,706 $107,384 $122,610 $456,638 Gross Profit 24,574 30,328 26,138 30,328 111,368 Net Income 12,515 15,397 12,642 15,761 56,315 Earnings Per Share .41 .51 .42 .52 1.85 Dividends Per Share .03 .045 .045 .045 .165
24 Statement of Management's Financial Responsibility To Our Shareholders: The management of Superior Industries International, Inc. is responsible for the integrity and objectivity of the financial and operating information contained in this Annual Report, including the consolidated financial statements. The consolidated financial statements were prepared in accordance with generally accepted accounting principles appropriate in the circumstances, and include amounts that are based on management's best estimates and judgment. Management of the Company has established a system of internal accounting controls which provides reasonable assurance that assets are properly safeguarded and accounted for and that transactions are executed in accordance with management's authorization and recorded and reported properly. The consolidated financial statements have been audited by our independent public accountants, Arthur Andersen LLP whose unqualified report is presented herein. Their opinion is based on procedures performed in accordance with generally accepted auditing standards, including tests of the accounting records, obtaining an understanding of internal accounting controls solely for purposes of planning and performing their audits, and such other auditing procedures as they considered necessary in the circumstances to provide them reasonable assurance that the consolidated financial statements are neither materially misleading nor contain material errors. The Audit Committee of the Board of Directors, consisting solely of outside Directors, meets periodically with the independent public accountants and management to review and discuss the scope and major findings of the independent accountants' examination. The independent accountants have free access to the Audit Committee at any time. Louis L. Borick President and Chairman of the Board R. Jeffrey Ornstein Vice President & CFO 25 Report of Independent Public Accountants To Superior Industries International, Inc.: We have audited the accompanying consolidated balance sheets of Superior Industries International, Inc. (a California corporation) and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Superior Industries International, Inc. and subsidiaries as of December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Arthur Andersen LLP Los Angeles, California February 13, 1996 EX-21.1 5 LIST OF SUBSIDIARIES 1 EXHIBIT 21.1 LIST OF SUBSIDIARIES
Percentage of Voting Stock Jurisdiction Owned by the of Company or Name Incorporation Other Subsidiary ---- ------------- ---------------- Superior - Ideal, Inc. Iowa, U.S.A. 100% owned by Company Superior Performance Ontario, Canada 100% Products (Canada) Inc. owned by Company Industrias Universales Mexico 100% Unidas de Mexico, S.A. owned by Company Superior Industries Delaware, U.S.A. 100% International - owned by Company P.R. Inc. Suinco Assurance Ltd. Bermuda 100% owned by Company Superior Industries Delaware, U.S.A. 100% International Leasing owned by Superior Corporation Industries International - P.R. Inc. Superior Astechnology Delaware, U.S.A. 100% Inc. owned by Company Topy-Superior Limited Tokyo, Japan 50% owned by Company Superior Engineered Delaware, U.S.A. 100% Technologies, Inc. owned by Company Superior Industries Chihuahua, Mexico 100% de Mexico S.A. de C.V. owned by Company and Superior Engineered Technologies, Inc. Suoftec Light Metal Products B.V. Netherlands 100% owned by Company
2
Percentage of Voting Stock Jurisdiction Owned by the of Company or Name Incorporation Other Subsidiary ---- ------------- ---------------- Suoftec Light Metal Products KFT Hungary 50% owned by Suoftec Light Metal Products B.V. Superior Industries International - Tennessee, U.S.A. 100% Tennessee, Inc. owned by Superior International Distribution Corporation Superior Industries International - Kansas, U.S.A. 100% Kansas, Inc. owned by Superior International Distribution Corporation Superior Industries International - Arkansas, U.S.A. 100% Arkansas, Inc. owned by Superior International Distribution Corporation Superior Industries International - California, U.S.A. 100% California, Inc. owned by Superior International Distribution Corporation Superior Industries Management California, U.S.A. 100% Corporation owned by Company Superior Industries International California, U.S.A. 100% Distribution Corporation owned by Company Superior Industries International - Michigan, U.S.A. 100% Michigan, Inc. owned by Superior International Distribution Corporation
EX-23.1 6 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports dated February 13, 1996, included in Superior Industries International, Inc.'s annual report to shareholders on Form 10-K for the year ended December 31, 1995, into the Company's previously filed Registration Statements File Nos. 2-80130, 33-48547 and 33-64088. ARTHUR ANDERSEN LLP Los Angeles, California March 22, 1996 EX-27.1 7 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1995 AND THE CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1995 DEC-31-1995 3,366 7,813 72,163 1,274 53,823 142,659 309,889 177,538 341,770 81,746 2,964 14,515 0 0 214,638 341,770 521,997 523,103 408,200 428,165 6,732 0 3,288 84,918 31,854 53,064 0 0 0 53,064 1.78 0 OTHER EXPENSES INCLUDE MISCELLANEOUS EXPENSE
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