NOTE 1 – NATURE OF OPERATIONS AND PRESENTATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Superior Industries International, Inc. (referred to herein as the “Company” or “we,” “us” and “our”) designs and manufactures aluminum wheels for sale to original equipment manufacturers (“OEMs”) and aftermarket customers. We are one of the largest suppliers of cast aluminum wheels to the world’s leading automobile and light truck manufacturers, with manufacturing operations in the United States, Mexico, Germany and Poland. Our OEM aluminum wheels are sold primarily for factory installation, as either standard equipment or optional equipment on vehicle models manufactured by BMW-Mini, Daimler AG Company (Mercedes-Benz, AMG, Smart), FCA, Ford, GM, Honda, Jaguar-Land Rover, Mazda, Nissan, PSA, Renault, Subaru, Suzuki, Toyota, VW Group (Volkswagen, Audi, Skoda, Porsche, Bentley) and Volvo. We also sell aluminum wheels to the European aftermarket under the brands ATS, RIAL, ALUTEC and ANZIO. North America and Europe represent the principal markets for our products, but we have a global presence and influence with North American, European and Asian OEMs. We have determined that our North American and European operations should be treated as separate operating segments as further described in Note 5, “Business Segments.”

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the SEC’s requirements for quarterly reports on Form 10-Q and U.S. GAAP and, in our opinion, contain all adjustments, of a normal and recurring nature, which are necessary for fair presentation of (i) the condensed consolidated income statements for the three and six month periods ended June 30, 2019 and June 30, 2018, (ii) the condensed consolidated statements of comprehensive income (loss) for the three and six month periods ended June 30, 2019 and June 30, 2018, (iii) the condensed consolidated balance sheets at June 30, 2019 and December 31, 2018, (iv) the condensed consolidated statements of cash flows for the six month periods ended June 30, 2019 and June 30, 2018, and (v) the condensed consolidated statements of shareholders’ equity for the three and six month periods ended June 30, 2019 and June 30, 2018. This Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and notes thereto filed with the Securities and Exchange Commission (“SEC”) in our 2018 Annual Report on Form 10-K.

Interim financial reporting standards require us to make estimates that are based on assumptions regarding the outcome of future events and circumstances not known at that time, including the use of estimated effective tax rates. Inevitably, some assumptions will not materialize, unanticipated events or circumstances may occur which vary from those estimates and such variations may significantly affect our future results. Additionally, interim results may not be indicative of our results for future interim periods or our annual results.

Cash paid for interest was $21.6 million and $22.1 million for the six months ended June 30, 2019, and 2018, respectively. Net cash income taxes paid was $2.9 million and $0.9 million for the six months ended June 30, 2019, and 2018, respectively. As of June 30, 2019, and 2018, $18.1 million and $8.3 million, respectively, of equipment had been purchased but not yet paid for and is included in accounts payable and accrued expenses in our consolidated balance sheets.

ASU 2016-02, Topic 842, “Leases.” Effective January 1, 2019, we adopted ASU 2016-02, ASC 842, “Leases,” the new lease accounting standard, using the optional transition approach. Adoption of the standard resulted in recognition of operating lease right-of-use (“ROU”) assets and lease liabilities of $18.2 million and $18.6 million, respectively, as well as a charge to eliminate previously deferred rent of $0.4 million, as of January 1, 2019. The ASU also requires lessees to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. Under the optional transition approach, financial statements for prior periods have not been restated and the disclosures applicable under the previous standard will be included for those periods. In adopting the standard, the Company has adopted the package of practical expedients. As a consequence, the Company has not reassessed (1) whether existing or expired contracts contain leases under the new definition of a lease, (2) lease classification for expired or existing leases (finance vs. operating) and (3) whether previously capitalized initial direct costs qualify for capitalization under the new standard. In addition, the Company has also adopted an accounting policy to exclude leases of less than one year from capitalization.

ASU 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” In January 2018, the FASB issued ASU 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which gives entities the option to reclassify to retained earnings the tax effects resulting from the Tax Cut and Jobs Act (“the Act”) related to items in accumulated other comprehensive income (“AOCI”) that the FASB refers to as having been stranded in AOCI. The new guidance may be applied retrospectively to each period in which the effect of the Act is recognized in the period of adoption. The Company adopted this guidance in the first quarter of 2019. The guidance requires new disclosures regarding a company’s accounting policy for releasing tax effects in AOCI. The Company has elected to not reclassify the income tax effects of the Tax Cut and Jobs Act from AOCI.

ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” The objective of the ASU is to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the test. Step 2 measures goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill to the carrying amount. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. We are evaluating the impact this new standard will have on our financial statements and disclosures.

ASU 2018-13, “Fair Value Measurement.” In August 2018, the FASB issued an ASU entitled “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement,” which is designed to improve the effectiveness of disclosures by removing, modifying and adding disclosures related to fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The ASU allows for early adoption in any interim period after issuance of the update. We are evaluating the impact this guidance will have on our financial statement disclosures.

ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans.” In August 2018, the FASB issued an ASU entitled “Compensation - Retirement Benefits - Defined Benefit Plans - General Subtopic 715-20 - Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans,” which is designed to improve the effectiveness of disclosures by removing and adding disclosures related to defined benefit plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020. The new standard allows for early adoption in any year end after issuance of the update. We are evaluating the impact this new standard will have on our financial statement disclosures.

Restatement for Reclassification of Certain Foreign Currency Translation Adjustments

Subsequent to the issuance of the September 30, 2018 interim financial statements, the Company identified an error related to the classification of foreign currency translation adjustments associated with the European non-controlling redeemable equity within the June 30, 2018 and September 30, 2018 condensed consolidated statements of shareholders’ equity, condensed consolidated balance sheets, condensed consolidated income statements and condensed consolidated statements of comprehensive income. As a result, the amounts previously reported have been corrected as the Company has reclassified $2.9 million of European non-controlling redeemable equity translation adjustments from retained earnings to cumulative translation adjustment for the three and six month periods ended June 30, 2018. In addition, the basic and diluted earnings (loss) per share amounts for the three and six month periods ended June 30, 2018 have been corrected accordingly. The Company’s condensed consolidated statements of cash flows for the six month period ended June 30, 2018 were unaffected. Management evaluated the materiality of this misstatement from quantitative and qualitative perspectives and concluded it is not material to the prior period.

	Three Months Ended									Six Months Ended
	June 30, 2018									June 30, 2018
	As Previously Reported			Adjustment			As Restated			As Previously Reported			Adjustment			As Restated
Condensed Consolidated Income Statements and Note 12 Earnings per Share
Earnings (loss) per share - Basic	$	0.09		$	(0.11	)	$	(0.02	)	$	0.16		$	(0.11	)	$	0.05
Earnings (loss) per share - Diluted		0.09			(0.11	)		(0.02	)		0.16			(0.11	)		0.05

Condensed Consolidated Statements of Comprehensive Income (Loss)
Foreign currency translation gain (loss), net of tax	$	(38,084	)		2,851			(35,233	)	$	(17,180	)		2,851			(14,329	)
Other comprehensive income (loss), net of tax		(56,029	)		2,851			(53,178	)		(21,128	)		2,851			(18,277	)
Comprehensive income (loss)		(47,894	)		2,851			(45,043	)		(2,676	)		2,851			175

	Six Months Ended
	June 30, 2018
	As Previously Reported			Adjustment			As Restated
Condensed Consolidated Statement of Shareholders' Equity
Cumulative Translation Adjustment:
Net foreign currency translation adjustment	$	(17,180	)	$	2,851		$	(14,329	)
Cumulative translation adjustment balance at June 30, 2018		(92,546	)		2,851			(89,695	)
Retained Earnings:
European non-controlling redeemable equity translation adjustment		2,851			(2,851	)	—
Retained earnings balance at June 30, 2018		392,316			(2,851	)		389,465
Total Shareholders' Equity:
Net foreign currency translation adjustment	$	(17,180	)	$	2,851		$	(14,329	)
European non-controlling redeemable equity translation adjustment		2,851			(2,851	)	—
Total shareholders' equity balance at June 30, 2018		369,372						369,372