Competition in the market for aluminum wheels is based primarily on price, technology, quality, delivery, and overall customer service. We are the largest producer of aluminum wheels for OEM installations in North America.service, price, quality and technology. We currently supply approximately 2117 percent and 13 percent of the aluminum wheels installed on passenger cars and light-duty trucks in North America. America and Europe, respectively.

Competition is global in nature with a significant volume of exports from Asia into North America. There are several competitors with facilities in North America but we estimate that we have more than twice the North American production capacity of any competitor based on our current estimation. See alsocompetitor. Some of the key competitors in North America include Central Motor Wheel of America, CITIC Dicastal Co., Ltd., Prime Wheel Corporation, Enkei, Hands Corporation, and Ronal. Key European competitors include Ronal, Borbet, Maxion and CMS. We are the leading manufacturer of alloy wheels in the European aftermarket, where the competition is highly fragmented. Key competitors include Alcar, Brock, Borbet, ATU and Mak. Refer to Item 1A., "Risk Factors"1A, “Risk Factors,” of this Annual Report. Other

Fiscal year 2019 and 2018 started on January 1 and ended December 31. The fiscal year isfor 2017 consisted of the 52- or 53-week period ending generallyended December 31, 2017. Thus, fiscal years 2019 and 2018 reflect one less calendar week of North America operations than fiscal year 2017. Historically our fiscal year ended on the last Sunday of the calendar year. TheWhile our European operations historically reported on a calendar year end, these fiscal years 2016, 2015periods aligned as of December 31, 2017. Beginning in 2018, both our North American and 2014 comprisedEuropean operations are on a calendar fiscal year with each month ending on the 52-week periods ended on December 25, 2016, December 27, 2015 and December 28, 2014, respectively.last day of the calendar month. For convenience of presentation, all fiscal years are referred to as beginning as of January 1, and ending as of December 31, but actually reflect our financial position and results of operations for the periods described above.

The following discussion of risk factors contains “forward-looking” statements, which may be important to understanding any statement in this Annual Report or elsewhere. The following information should be read in conjunction with Item 7. "Management's

Predominantly, our sales are made in domesticto the European and U.S. markets and almost exclusively within North America.automotive markets. Therefore, our financial performance depends largely on conditions in the European and U.S. automotive industry, which in turn can be affected significantly by broad economic and financial market conditions. Consumer demand for automobiles is subject to considerable volatility as a result of consumer confidence in general economic conditions, levels of employment, prevailing wages, fuel prices and the availability and cost of consumer credit. With steady improvement in the North American automotive industry since the global recession that began in 2008, vehicle production levels in 2016 reached the highest level in the last decade. However, there can be no guarantee that the improvements in recent years will be sustained or that reductions from current production levels will not occur in future periods.credit, as well as changing consumer preferences. Demand for aluminum wheels can be further affected by other factors, including pricing and performance comparisons to competitive materials such as steel. Finally, the demand for our products is influenced by shifts of market share between vehicle manufacturers and the specific market penetration of individual vehicle platforms being sold by our customers.

We operate in a highly competitive industry.

The global automotive component supply industry is highly competitive, both domestically and internationally.competitive. Competition is based on a number of factors, including price, technology, quality, delivery, and overall customer service, price, quality, technology and available capacity to meet customer demands. Some of our competitors are companies, or divisions or subsidiaries of companies, which are larger and have greater financial and other resources than we do. We cannot ensure that our products will be able to compete successfully with the products of these competitors. In particular, our ability to increase manufacturing capacity typically requires significant investments in facilities, equipment and personnel. OurThe majority of our operating facilities are at full or near to full capacity levels which may cause us to incur labor costs at premium rates in order to meet customer requirements, experience increased maintenance expenses or require us to replace our machinery and equipment on an accelerated basis. Furthermore, the nature of the markets in which we compete has attracted new entrants, particularly from low costlow-cost countries. As a result, our sales levels and margins continue to be adversely affected by pricing pressures reflective of significant competition from producers located in low-cost foreign markets, such as China. Such competition with lower-costlower cost structures poses a significant threat to our ability to compete internationally and domestically. These factors have led to our customers awarding business to foreign competitors in the past, and they may continue to do so in the future. In addition, any of our competitors may foresee the course of market development more accurately, develop products that are superior to our products, have the ability to produce similar products at a lower cost or adapt more quickly to

A trade war, other governmental action related to tariffs or international trade agreements, changes in United States social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently developmanufacture and sell products, could adversely affect our business.A significant portionand any resulting negative sentiments towards the United States as a result of our business activities are conducted in Mexico. New leadership in the U.S. federal government is not supportive of certain existing international trade agreements, including the North American Free Trade Agreement (“NAFTA”). If the U.S. withdraws from or materially modifies NAFTA or certain other international trade agreements,such changes, likely would have an adverse effect on our business, financial condition, and results of operations couldand cash flows.

6

Cost of manufacturing our products in Mexico, Germany and Poland may be adversely affected. Proposalsaffected by tariffs imposed by the United States, trade protection laws, policies and other regulations affecting trade and investments, social, political, labor, or general economic conditions. Other factors that can affect the business and financial results of our Mexican, German and Polish operations include, but are not limited to, institute a border adjustmentchanges in cost structures, currency effects of 20% for imports could have a negative impact on our operations.

Due to the growth of our operations outside of the U.S.,United States, we have experienced increasedexperience exposure to foreign currency gains and losses in the ordinary course of our business. As a result, fluctuations in the exchange rate between the U.S. dollar, the Mexican peso and any currencies of other countries in which we conduct our business may have a material impact on our financial condition, as cash flows generated in foreign currencies may be used, in part, to service our U.S. dollar-denominated liabilities, or vice versa.

Additionally, we may enter intoare exposed to commodity and energy price risks due to significant aluminum raw material requirements and the energy intensive nature of our operations. Natural gas and electricity prices are subject a to large number of variables that are outside of our control. We use financial derivatives and fixed-price agreements with suppliers to reduce the effect of any volatility on our financial results.

The foreign currency forward andor option contracts, the natural gas forward contracts, and the fixed-price agreements we enter into with financial institutions and suppliers are designed to protect against foreign exchange risks and price risks associated with certain existing assets and liabilities, certain firmly committed transactions and forecasted

Fluctuations in foreign currency exchange rates may also affect the USD value of assets and liabilities of our foreign operations, as well as assets and liabilities denominated in non-functional currencies such as the Euro, and may adversely affect reported earnings and, accordingly, the comparability of period-to-period results of operations. Changes in currency exchange rates or commodity and energy prices may affect the relative prices at which we and our foreign competitors sell products in the same market. In addition, changes in the value of the relevant currencies or commodities and energy prices may affect the cost of certain items required in our operations. We cannot ensure that fluctuations in exchange rates or commodities and energy prices will not otherwise have a material adverse effect on our financial condition or results of operations or cause significant fluctuations in quarterly and annual results of operations.

We do not expect to generate sufficient cash to repay all of our indebtedness (including the Term Loan Facility and Notes) or obligations relating to the redeemable preferred stock by their respective maturity dates and may be forced to take other actions to satisfy these obligations, which may not be successful.

Our ability to make scheduled payments or to refinance our debt obligations or redeemable preferred stock depends on our financial and operating performance, which is subject to prevailing economic, industry and competitive conditions and to certain financial, business, economic and other factors beyond our control. We may not be able to maintain a sufficient level of cash flow from operating activities to permit us to pay the principal, premium, if any, interest and/or dividends on our debt, redeemable preferred stock and other indebtedness.  

If our cash flows and capital resources are insufficient to fund our debt service obligations or redeemable preferred stock obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or seek to restructure or refinance our indebtedness, including the Notes. Our ability to restructure or refinance our debt will depend on the condition of the capital and credit markets and our financial condition at such time.

7

We do not expect to generate sufficient cash to repay all principal due under the €250.0 million aggregate principal amount of 6.0% Senior Notes due June 15, 2025 (the “Notes”) of $243.1 million and the $400.0 million Senior Secured Term Loan Facility (“Term Loan Facility” or “Term Loan B”) due May 23, 2024 of $371.8 million (together with the Revolving Credit Facility referred to as the USD Senior Secured Credit Facility, “USD SSCF”), in full by the respective maturity dates, which will likely require us to refinance a portion or all of the outstanding debt. We might not be able to refinance the debt at satisfactory terms. Any refinancing of our debt could be at higher interest rates and associated transactions costs and may require us to comply with more onerous covenants, which could further restrict our business operations and limit our financial flexibility. In addition, any failure to make payments of interest and principal on our outstanding indebtedness and dividends or redemption payments on our redeemable preferred stock on a timely basis would likely result in a reduction of our credit ratings, which could harm our ability to incur additional indebtedness or issue equity, or to refinance all or portions of these obligations. These alternative measures may not be successful and may not permit us to meet our scheduled debt service or other payment obligations, including (i) redemption of our redeemable preferred stock at a redemption price equal to the greater of $300.0 million (2.0 times stated value) or the product of the number of common shares into which the redeemable preferred stock could be converted (5.3 million shares currently) and the then current market price of our common stock and (ii) the repurchase of the Notes or redemption of the redeemable preferred stock upon a change of control or repurchase of the Notes upon sales of certain assets. The holders of the preferred stock have redemption rights that allow them to force us to redeem the preferred stock on or after September 14, 2025 to the extent allowable under Delaware Law.  In the absence of such cash flows and resources, we could face substantial liquidity constraints and might be required to sell material assets or operations to attempt to meet our debt service and other obligations. The credit agreements governing the USD SSCF and the EUR 45.0 million credit line under the EUR Senior Secured Credit Facility (“EUR SSCF”), taken together the Global Senior Secured Credit Facility (“GSSCF”), and the Indenture for the Notes restrict our ability to conduct asset sales and/or use the proceeds from asset sales. We may not be able to consummate these asset sales to raise capital or sell assets at prices and on terms that we believe are fair, and any proceeds that we do receive may not be adequate to meet any debt service obligations then due, as well as payments due with respect to our redeemable preferred stock. If we cannot meet our debt service obligations, the holders of our debt may accelerate our debt and, to the extent such debt is secured, foreclose on our assets. In such an event, we may not have sufficient assets to repay all of our debt.

Under the USD SSCF and EUR SSCF, we had available unused commitments of $156.4 million and 44.6 million Euros, respectively, as of December 31, 2019, which are critical to the Company’s ability to pay all of its obligations in a timely manner.

The credit lines under the USD SSCF and EUR SSFC will mature on May 23, 2022 and May 22, 2022, respectively, which is prior to the maturities of our other outstanding debt. We might not be able to extend these credit lines beyond the current due dates or may only be able to extend them for smaller amounts. This in turn might reduce our ability to refinance our other outstanding debt or other obligations in future years. It might also cause the rating agencies to downgrade our credit ratings. Additionally, it might require us to hold more cash in our bank accounts to ensure our ability to pay our obligations in a timely manner, which in turn could reduce our ability to pay down debt or other obligations.

Our substantial indebtedness and the corresponding interest expense could adversely affect our financial condition

We have a significant amount of indebtedness. As of December 31, 2019, our total debt was $630.6 million ($615.0 million net of unamortized debt issuance costs of $15.6 million). Additionally, we had availability of $156.4 million under the USD SSCF as well as 44.6 million Euros under the EUR SSCF at December 31, 2019.

A significant portion of our cash flow from operations will be used to pay our interest expense and will not be available for other business purposes.  We cannot be certain that our business will generate sufficient cash flow or that we will be able to enter into future financings that will provide sufficient proceeds to meet or pay the interest on our debt.

Subject to the limits contained in the credit agreements governing our GSSCF and the indenture governing our  €250.0 million aggregate principal amount of 6.0% Senior Notes due June 15, 2025 (the “Notes”) (with outstanding principal balance of €217.0 million at December 31 2019) and our other debt instruments, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt could intensify.

In addition, the indenture covering the Notes (the “Indenture”) and the credit agreements governing the GSSCF and our other debt instruments contain restrictive covenants that among other things, could limit our ability to incur liens, engage in mergers and acquisitions, sell, transfer or otherwise dispose of assets, make investments, acquisitions, redeem our capital stock or pay dividends. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of the maturity of all of our debt.

A downgrade of our credit rating or a decrease of the prices of the Company’s common stock, the USD SSCF or the Notes could adversely impact our financial performance.

8

The Company, its USD SSCF, and the Notes, are rated by Standard and Poor’s and Moody’s. These ratings are widely followed by investors, customers, and suppliers, and a downgrade by one or both of these rating agencies might cause: suppliers to cancel our contracts, demand price increases, or decrease payment terms; customers to reduce their business activities with us; or investors to reconsider investments in financial instruments issued by Superior, all of which might cause a decrease of the price of our common stock, our Notes, and the price of the bilaterally traded Term Loan B which is a part of the USD SSCF.

A decrease in our common stock, Notes and/or Term Loan B prices, in turn, might accelerate such negative trends. A reduction in the price of the Notes and Term Loan B implies an increase of the yield debt investors demand to provide us with financing, which, in turn, would make it more difficult for us to refinance our existing debt, redeemable preferred stock obligations and/or future debt or redeemable preferred stock obligations.  

The terms of the credit agreement governing the GSSCF, the Indenture, and other debt instruments, as well as the documents governing other debt that we may incur in the future, may restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

The Indenture, the credit agreements governing the GSSCF and our other debt instruments, and the documents governing other debt that we may incur in the future, may contain a number of covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including restrictions on our ability to:

In addition, the restrictive covenants in the credit agreement governing the GSSCF and other debt instruments require us to maintain specified financial ratios and satisfy other financial condition tests to the extent subject to certain financial covenant conditions. Our ability to meet those financial ratios and tests can be affected by events beyond our control. We may not meet those ratios and tests.

A breach of the covenants or restrictions under the Indenture governing the Notes, under the credit agreement governing the GSSCF, or under other debt instruments could result in an event of default under the applicable indebtedness. Such a default may allow the creditors under such facility to accelerate the related debt, which may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the credit agreement governing our GSSCF would permit the lenders under our revolving credit facilities to terminate all commitments to extend further credit under these facilities. Furthermore, if we were unable to repay the amounts due and payable under the GSSCF or under other secured debt instruments, those lenders could proceed against the collateral granted to them to secure that indebtedness. We have pledged substantially all of our assets as collateral under the GSSCF. In the event our lenders or holders of the Notes accelerate the repayment of our borrowings, we may not have sufficient assets to repay that indebtedness or be able to borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms or on terms acceptable to us. As a result of these restrictions, we may be:

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under our GSSCF are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains the same, and our net

9

income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. As of December 31, 2019, approximately $371.8 million of our debt was variable rate debt. Our anticipated annual interest expense on $371.8 million variable rate debt at the current rate of 5.7 percent would be $21.2 million. We have entered into interest rate swaps exchanging floating for fixed rate interest payments in order to reduce interest rate volatility. As of December 31, 2019, we have executed interest rate swaps for $260.0 million, maturing $25.0 million March 31, 2020, $35.0 million December 31, 2020, $50 million September 30, 2022, and $150 million December 31, 2022. In the future, we may again enter into interest rate swaps to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.

We may be adversely affected by changes in LIBOR reporting practices, the method in which LIBOR is determined or the use of alternative reference rates.

The interest rates under our USD SSCF are calculated using LIBOR. On July 27, 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021 and it is unclear whether new methods of calculating LIBOR will be established. If LIBOR ceases to exist, a comparable or successor reference rate as approved by the Administrative Agent under the USD SSCF will apply or such other reference rate as may be agreed by the Company and the lenders under the credit agreement governing the USD SSCF. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, is considering replacing U.S. dollar LIBOR with a newly created index, calculated based on repurchase agreements backed by treasury securities. It is not possible to predict the effect of these changes, other reforms or the establishment of alternative reference rates in the United Kingdom, the United States or elsewhere. To the extent these interest rates increase, our interest expense will increase, which could adversely affect our financial condition, operating results and cash flows.

We are subject to taxation related risks in multiple jurisdictions.

We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Significant judgment is required in determining our global provision for income taxes, deferred tax assets or liabilities and in evaluating our tax positions on a worldwide basis. While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. We are also subject to ongoing tax audits. These audits can involve complex issues, which may require an extended period of time to resolve and can be highly subjective. Tax authorities may disagree with certain tax reporting positions taken by us and, as a result, assess additional taxes against us. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision.

In addition, governmental tax authorities are increasingly scrutinizing the tax positions of companies. Many countries in the European Union, as well as a number of other countries and organizations such as the Organization for Economic Cooperation and Development, are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business. The impact of tax law changes could result in an overall tax rate increase to our business.

Increases in the costs and restrictions on availability of raw materials could adversely affect our operating margins and cash flow.

The cost of aluminum is a significant component in the overall cost of a wheel and in our selling prices to OEM customers. The priceCustomer prices are adjusted for fluctuations in aluminum we purchase is adjusted monthlyprices based primarily on changes in certain published market indices, but the timing of suchprice adjustments is based on specific customer agreements and can vary from monthly to quarterly. As a result, the timing of aluminum price adjustments with customers flowing through sales rarely will match the timing of such changes in cost and can result in fluctuations to our gross profit. This is especially true during periods of frequent increases or decreases in the market price of aluminum.

We are also subject to various foreign, federal, state and local environmental laws, ordinances and regulations, including those governing discharges into the air and water, the storage, handling and disposal of solid and hazardous wastes, the remediation of soil and groundwater contaminated by hazardous substances or wastes and the health and safety of our employees. The nature of our current and former operations and the history of industrial uses at some of our facilities expose us to the risk of liabilities or claims with respect to environmental and worker health and safety matters which could have a material adverse effect on our financial health.condition. In addition, some of our properties are subject to indemnification and/or cleanup obligations of third parties with respect to environmental matters. However, in the event of the insolvency or bankruptcy of such third parties, we could be required to bearassume the liabilities that would otherwise be the responsibility of such third parties.

Our business requires extensive product development activities to launch new products. Accordingly, there is a risk that wheels under development may not be ready by the start of production or may fail to meet the customer’s specifications. In any such case, warranty or compensation claims might be raised, or litigation might be commenced, against the Company.

Moreover, there are risks related to civil liability under our customer supply contracts (civil liability clauses in contracts with customers, contractual risks related to civil liability for causing delay in production launch, etc.). If we fail to ensure production launch as and when required by the customer, thus jeopardizing production processes at the customer’s facilities, this could lead to increased costs, giving rise to recourse claims against, or causing loss of orders by the Company. This could also have an adverse effect on our financial condition, results of operations.

Our success depends, in part, on our ability to attract, hire, train and retain qualified managerial, operational, engineering, sales and marketing personnel. We face significant competition for these types of employees in our industry. We may be unsuccessful in attracting and retaining the personnel we require to conduct our operations successfully. In addition, key personnel may leave us and compete against us. Our success also depends, to a significant extent, on the continued service of our senior management team. We may be unsuccessful in replacing key managers who either resign or retire. The lossDuring the last several years we have experienced significant turnover in our senior management members, additional losses of any membermembers of our senior management team or other experienced senior employees could impair our ability to execute our business plans and strategic initiatives, cause us to lose customers and experience reduced net sales, or lead to employee morale problems and/or the loss of other key employees. In any such event, our financial condition, results of operations, internal control over financial reporting or cash flows could be adversely affected.

We rely on the accuracy, capacity and security of our information technology ("IT")systems. Despite the security measures that we have implemented, including those measures related to cybersecurity, our systems, causing an IT security breach may lead to a material disruptionas well as those of our ITcustomers, suppliers and other service providers could be breached or damaged by computer viruses, malware, phishing attacks, denial-of-service attacks, natural or man-made incidents or disasters or unauthorized physical or electronic access. These types of incidents have become more prevalent and pervasive across industries, including in our industry, and are expected to continue in the future. A breach could result in business disruption, theft of our intellectual property, trade secrets or customer information and unauthorized access to personnel information. Although cybersecurity and the continued development and enhancement of our controls, processes and practices designed to protect our information technology systems and/from attack, damage or the loss of businessunauthorized access are a high priority for us, our activities and investment may not be deployed quickly enough or successfully protect our systems against all vulnerabilities, including technologies developed to bypass our security measures. In addition, outside parties may attempt to fraudulently induce employees or customers to disclose access credentials or other sensitive information resulting in adverse consequencesorder to gain access to our business, including: an adverse impact on our operations due to the theft, destruction, loss, misappropriation or release of confidential data or intellectual property, operational or business delays resulting from the disruption of ITsecure systems and subsequent clean-upnetworks. There are no assurances that our actions and mitigation activities, an inabilityinvestments to timely prepareimprove the maturity of our systems, processes and file our financial reports withrisk management framework or remediate vulnerabilities will be sufficient or completed quickly enough to prevent or limit the Securities Exchange Commission and negative publicity resulting in reputationimpact of any cyber intrusion. Moreover, because the techniques used to gain access to or brand damage with our customers, partners or industry peers.

We are also dependent on security measures that some of our third-party customers, suppliers and realizeother service providers take to protect their own systems and infrastructures. Some of these third parties store or have access to certain of our sensitive data, as well as confidential information about their own operations, and as such are subject to their own cybersecurity threats. Any security breach of any of these third-parties’ systems could result in unauthorized access to our information technology systems, cause us to be non-compliant with applicable laws or regulations, subject us to legal claims or proceedings, disrupt our operations, damage our reputation, and cause a loss of confidence in our products and services, any of which could adversely affect our financial performance.

Competitors could copy our products or technologies and we could violate protected intellectual property rights or trade secrets of our competitors or other third parties.

We register business-related intellectual property rights, such as industrial designs and trademarks, hold licenses and other agreements covering the expected benefitsuse of such joint ventures or acquisitions. Integrating acquired operationsintellectual property rights, and have taken steps to ensure that our trade secrets and technological know-how remain confidential. Nevertheless, there is a significant challenge,risk that third parties would attempt to copy, in full or in part, our products, technologies or industrial designs, or to obtain unauthorized access and use of Company secrets, technological know-how or other protected intellectual property rights. Also, other companies could successfully develop technologies, products or industrial designs similar to ours, and thus potentially compete with us.

Further, there iscan be no assurance that we will not unknowingly infringe intellectual property rights of our competitors, such as patents and industrial designs, especially due to the fact that the interpretations of what constitutes protected intellectual property may differ. Similarly, there is a risk that we will illegitimately use intellectual property developed by our employees, which is subject in each case to relevant regulations governing employee-created innovations. If a dispute concerning intellectual property rights arises, in which the relevant court issues an opinion on the disputed intellectual property rights contrary to us, identifying a breach of intellectual property rights, we may be ablerequired to manage the integrations successfully. Failure to successfully integrate operationspay substantial damages or to realizestop the expected benefitsuse of such joint ventures or acquisitions may have an adverse impact on our results of operations and financial condition.

All these events could have a material adverse effect on our reportedassets, financial condition, results of operations or cash flows.

12

Impairment of goodwill would negatively impact our consolidated results of operations and net worth.

As of December 31, 2019, we had approximately $184.8 million of goodwill which represented approximately 14.1 percent of total assets on our consolidated balance sheet related to our acquisition of Uniwheels. Goodwill is not amortized but we test it for impairment on an annual basis as of December 31, or on an interim basis if an event or circumstance indicates that an impairment is more likely than not to have occurred, which could result in recognition of a goodwill impairment.  A goodwill impairment could materially adversely affect our results of operations for the period in which such charge is recorded.

Our business could be negatively impacted by a threatened proxy contest with two stockholders who have each nominated an individual for election to our Board of Directors at the 2020 annual meeting.

We recently received notices from each of GAMCO Asset Management Inc. (“GAMCO”) and D.C. Capital LLC (“D.C. Capital”) announcing their intent to each nominate one individual for election to our Board of Directors at the 2020 annual meeting. If a proxy contest results from one or both notices received from GAMCO or D.C. Capital, our business could be adversely affected. Responding to nominations by activist stockholders are costly and time-consuming, and divert the attention of our Board of Directors and senior management team from the pursuit of business strategies, which could adversely affect our results of operations and financial position.

We may be exposed to risks related to existing and other international jurisdictions. Our income tax provisionfuture profit and cash tax liability in the future could be adversely affected by changes in the distribution of earnings in countriesloss transfer agreements executed with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws and the discovery of new information in the courseGerman subsidiaries of our European operations.

Profit and loss transfer agreements are one of the prerequisites of the taxation of Superior and its German subsidiaries as a German tax return preparation process. Wegroup. For tax purposes, a profit and loss transfer agreement must have a contract term for a minimum of five years. In addition, such agreement must be fully executed. If a profit and loss transfer agreement or its actual execution does not meet the prerequisites for the taxation as a German tax group, Superior Industries International AG (“SII AG”) and each subsidiary are alsotaxed on their own income (and under certain circumstances even with retrospective effect). Additionally, 5 percent of dividends from the subsidiary to SII AG, or other Superior European controlling entities within the European Union would be regarded as non-deductible expenses at the SII AG level, or level of other Superior European controlling entities. Furthermore, the compensation of a loss of a subsidiary would be regarded as a contribution by SII AG into the subsidiary and thus, would not directly reduce SII AG’s profits. As a consequence, if the profit and loss transfer agreements do not meet the prerequisites of a German tax group, this could have a future material adverse effect on our assets, financial condition, results of operations or cash flows.

Purchase of additional shares of Uniwheels may require a higher purchase price.

Superior executed a Domination and Profit Loss Transfer Agreement, “DPLTA”, which became effective in January 2018. According to the terms of the DPLTA, SII AG offered to purchase any outstanding shares of Uniwheels for cash consideration of Euro 62.18. The cash consideration paid to shareholders, which tendered under the DPTLA may be subject to ongoing tax audits. These audits can involve complex issues, which may require an extended periodchange based on appraisal proceedings that the minority shareholders of time to resolve and can be highly judgmental. Tax authorities may disagree with certain tax reporting positions taken by us and, as a result, assess additional taxes against us. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision.

Our European operations include five locations. The European headquarters is situated in Bad Dürkheim, Germany which includes our European management, sales and distribution functions, as well as the logistics center and warehouse for the aftermarket business. The largest of European production facilities is in Stalowa Wola, Poland, which consists of 3 plants. The newest plant in Poland was put into operation in the beginning of June 2016. Another production facility is situated in Werdohl, Germany, where most development work is performed. Forged wheels are manufactured in Fußgönheim, Germany, near the Bad Dürkheim offices. The European locations also include a research and development center in Lüdenscheid, Germany. Our European production facilities encompass approximately 1.5 million square feet. We own all of our manufacturing facilities in Europe, and we lease our European headquarters located in Bad Dürkheim, Germany.

In general, our manufacturing facilities, which have been constructed at various times, over the past several years, are in good operating condition and are adequate to meet our current production capacity requirements. There are active maintenance programs to keep these facilities in good condition, and we have an active capital spending program to replace equipment as needed to maintain factory reliability and remain technologically competitive on a worldwide basis.

15

Our common stock is traded on the New York Stock Exchange under the symbol “SUP.”

The following graph compares the cumulative total stockholder return from December 31, 20112014 through December 31, 2016,2019, for our common stock, the Russell 2000 and a peer group⁽¹⁾ of companies that we have selected for purposes of this comparison. We have assumed that dividends have been reinvested, and the returns of each company in the Russell 2000 and the peer group have been weighted to reflect relative stock market capitalization. The graph below assumes that $100 was invested on December 31, 2011,2014, in each of our common stock, the stocks comprising the Russell 2000 and the stocks comprising the peer group.

 

		Superior Industries International, Inc.				Russel 2000				Peer Group(1)
2014		$	100			$	100			$	100
2015		$	96			$	95			$	92
2016		$	141			$	116			$	115
2017		$	81			$	132			$	135
2018		$	27			$	118			$	111
2019		$	22			$	148			$	144

(1)	We do not believe that there is a single published industry or line of business index that is appropriate for comparing stockholder returns. As a result, we have selected a peer group comprised of companies as disclosed in the 2020 Proxy Statement.

	Superior Industries International, Inc.				Russel 2000				Proxy Peers
2011	$	100			$	100			$	100
2012	$	132			$	116			$	109
2013	$	135			$	162			$	156
2014	$	134			$	169			$	143
2015	$	130			$	162			$	143
2016	$	190			$	196			$	189

(1)We do not believe that there is a single published industry or line of business index that is appropriate for comparing stockholder returns.  As a result, we have selected a peer group comprised of companies as disclosed in the 2017 Annual Proxy Statement.

Dividends

Per share cash dividends declared totaled $0.72 during each of 2016 and 2015. Continuation of dividends is contingent upon various factors, including economic and market conditions, none of which can be accurately predicted, and the approval of our Board of Directors.

Holders of Common Stock

As of February 28, 2017,21, 2020, there were approximately 393356 holders of record of our common stock.

Quarterly Common Stock Price Information

Our common stock is traded on the New York Stock Exchange under the symbol "SUP".

The following table sets forth the high and low sales price per share of our common stock during the fiscal periods indicated.

	2016								2015
	High				Low				High				Low
First Quarter	$	23.43			$	16.35			$	20.12			$	17.63
Second Quarter	$	27.90			$	21.53			$	19.68			$	18.17
Third Quarter	$	32.12			$	24.76			$	20.22			$	16.60
Fourth Quarter	$	30.12			$	22.45			$	20.45			$	17.75

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table shows our purchases of our common stock during the fourth quarter of 2016:

												(d)
												Maximum Dollar
									(c)			Value of Shares
									Total Number of			That May Yet be
		(a)							Shares Purchased			Purchased Under
		Total Number			(b)				as Part of Publicly			Publicly Announced
		of Shares			Average Price				Announced			Programs (1)
Period		Purchased			Paid Per Share				Programs			(in thousands)
September 26, 2016 to October 23, 2016		—			$	—			—			$	46,746,883
October 24, 2016 to November 20, 2016		239,745			$	23.62			239,745			$	41,073,118
November 21, 2016 to December 31, 2016		60,686			$	25.23			60,686			$	39,538,761
Total		300,431			$	23.94			300,431

(1)

In October 2014, our Board of Directors approved a stock repurchase program (the "2014 Repurchase Program") authorizing the repurchase of up to $30.0 million of our common stock. Under the 2014 Repurchase Program, we repurchased common stock from time to time on the open market or in private transactions, totaling 1,056,954 shares of company stock at a cost of $19.6 million in 2015 and 585,970 shares for $10.3 million in January of 2016.

In January of 2016, our Board of Directors approved a new stock repurchase program (the “2016 Repurchase Program”), authorizing the repurchase of up to an additional $50.0 million of common stock.  Under the 2016 Repurchase Program, we repurchased common stock from time to time on the open market or in private transactions, totaling 454,718 shares of company stock at a cost of $10.4 million in 2016.

Not applicable.

Recent Sales of Unregistered Securities

During the fiscal year 2016, there were no sales of unregistered securities.

Not applicable.

17

---

Securities Authorized for Issue Under Equity Compensation Plans

The information about securities authorized for issuance under Superior’s equity compensation plans is included in Note 15,19, “Stock-Based Compensation” in the Notes to Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data” of this Annual Report and will also be included in our 2017 Annual2020 Proxy Statement under the caption “Securities Authorized for Issuance under the Equity Compensation Plans.”

ITEM 6 - SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction with Item 7, "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” and Item 8, "Financial“Financial Statements and Supplementary Data"Data” of this Annual Report.

Fiscal Year Ended December 31,		2019				2018				2017				2016				2015
Income Statement (000s)
Net sales (1)		$	1,372,487			$	1,501,827			$	1,108,055			$	732,677			$	727,946
Value added sales (2)		$	755,325			$	797,187			$	616,753			$	408,690			$	360,846
Gross profit (3)		$	116,062			$	163,527			$	102,897			$	86,204			$	71,217
Income (loss) from operations (4)		$	(50,059	)		$	85,805			$	21,518			$	54,602			$	36,294
Net income (loss) attributable to Superior (4)		$	(96,460	)		$	25,961			$	(6,203	)		$	41,381			$	23,944
Adjusted EBITDA (5)		$	168,795			$	185,623			$	140,085			$	88,511			$	76,053
Balance Sheet (000s)
Total assets (6)		$	1,311,867			$	1,451,616			$	1,551,252			$	542,756			$	539,929
Long-term debt		$	611,025			$	661,426			$	679,552			$	—			$	—
Redeemable preferred stock		$	160,980			$	144,463			$	144,694			$	—			$	—
Share Data
Net income (loss)
- Basic		$	(5.10	)		$	0.29			$	(1.01	)		$	1.63			$	0.90
- Diluted		$	(5.10	)		$	0.29			$	(1.01	)		$	1.62			$	0.90
Dividends declared		$	0.18			$	0.36			$	0.45			$	0.72			$	0.72

(1)	Effective January 1, 2018, the Company adopted ASU 2014-09, Topic ASC 606, “Revenue from Contracts with Customers”, on a modified retrospective basis. Accordingly, periods prior to 2018 have not been adjusted.

(2)

Value added sales is a key measure that is not calculated according to U.S. GAAP. Refer to “Management’s Discussion and Analysis, Non-GAAP Financial Measures” section of this Annual Report for a definition of value added sales and a reconciliation of value added sales to net sales, the most comparable GAAP measure.

Our fiscal year is the 52- or 53-week period ending generally on the last Sunday of the calendar year. The fiscal years 2016, 2015, 2014 and 2013 comprised the 52-week periods ended on December 25, 2016, December 27, 2015, December 28, 2014 and December 29, 2013, respectively. The 2012 fiscal year comprised the 53-week period ended December 30, 2012. For convenience of presentation, all fiscal years are referred to as beginning as of January 1, and ending as of December 31, but actually reflect our financial position and results of operations for the periods described above.

(3)

In 2019, we recognized a non-cash charge to cost of sales of $14.8 million in connection with the plan to reduce production and manufacturing operations at our Fayetteville, Arkansas location, including $7.6 million of accelerated depreciation for excess equipment, $3.2 million write-down of supplies inventory, $1.6 million of employee severance, $0.6 million of accelerated amortization of right of use assets under operating leases and $1.8 million of relocation costs for redeployment of machinery and equipment (refer to Note 23, “Restructuring” in the Notes to the Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data” in this Annual Report).

Fiscal Year Ended December 31,		2016				2015				2014				2013				2012
Income Statement (000s)
Net sales		$	732,677			$	727,946			$	745,447			$	789,564			$	821,454
Value added sales (1)		$	408,690			$	360,846			$	369,355			$	400,591			$	397,915
Closure and Impairment Costs (2)		$	1,458			$	7,984			$	8,429			$	—			$	—
Gross profit		$	86,204			$	71,217			$	50,222			$	64,061			$	60,607
Income from operations		$	54,602			$	36,294			$	17,913			$	34,593			$	32,880
Income before income taxes
and equity earnings		$	54,721			$	35,283			$	15,702			$	36,841			$	34,489
Income tax provision (3)		$	(13,340	)		$	(11,339	)		$	(6,899	)		$	(14,017	)		$	(3,598	)
Net income		$	41,381			$	23,944			$	8,803			$	22,824			$	30,891
Adjusted EBITDA (4)		$	88,511			$	76,053			$	55,753			$	63,616			$	59,599
Balance Sheet (000s)
Current assets		$	254,081			$	245,820			$	276,011			$	384,218			$	404,908
Current liabilities		$	85,964			$	73,862			$	71,962			$	99,430			$	66,578
Working capital		$	168,117			$	171,958			$	204,049			$	284,788			$	338,330
Total assets		$	542,756			$	539,929			$	579,910			$	653,388			$	599,601
Long-term debt		$	—			$	—			$	—			$	—			$	—
Shareholders' equity		$	398,226			$	413,912			$	439,006			$	483,063			$	466,905
Financial Ratios
Current ratio (5)		3.0:1				3.3:1				3.8:1				3.9:1				6.1:1
Return on average shareholders' equity (6)		10.2		%		5.6		%		1.9		%		4.8		%		6.7		%
Share Data
Net income
- Basic		$	1.63			$	0.90			$	0.33			$	0.83			$	1.13
- Diluted		$	1.62			$	0.90			$	0.33			$	0.83			$	1.13
Shareholders' equity at year-end		$	15.84			$	15.86			$	16.42			$	17.79			$	17.11
Dividends declared		$	0.72			$	0.72			$	0.72			$	0.20			$	1.12

⁽¹⁾ Value added sales is a key measure that is not calculated according to U.S. GAAP. In the discussion of operating results, we provide information regarding value added sales. Value added sales represents net sales less the value of aluminum and services provided by outside service providers that are included in net sales. As discussed further below, arrangements with our customers allow us to pass on changes in aluminum prices and outside service provider costs; therefore, fluctuations in underlying aluminum prices and the use of outside service providers generally do not directly impact our profitability. Accordingly, value added sales is worthy of being highlighted for the benefit of users of our financial statements. Our intent is to allow users of the financial statements to consider our net sales information both with and without the aluminum and outside service provider cost components thereof. Management uses value added sales as a key metric to determine growth of the company because it eliminates the volatility of aluminum prices.

During 2015, we modified the presentation of value added sales to also exclude third-party manufacturing costs passed directly through to customers and retrospectively applied this modification to 2012 through 2014. See the Non-GAAP Financial Measures section of this Annual Report for a reconciliation of value added sales to net sales.

⁽²⁾See Note 2, "Restructuring in Notes to Consolidated Financial Statements" in Item 8, "Financial Statements and Supplementary Data" in this Annual Report for a discussion of restructuring charges. During 2016, we sold the shut-down Rogers facility for total proceeds ofrecorded $4.3 million resulting in a $1.4 million gain on sale. Prior to selling the facility, we incurred $1.5impairment of fixed assets and asset relocation costs, $2.0 million of further closure costs including carrying costs for the closed facility and $0.3 million in depreciation. During 2015, the shutdown of the Rogers facility resulted in a gross margin loss of $8.0 million. We incurred $4.3 million in restructuring costs related to an impairment of fixed assets and other associated costs such as asset relocation costs. Additionally, we incurred $2.0 million of further closure costs including carrying costs for the closed facility and $1.7 million in depreciation. The adjusted EBITDA impact of the Rogers facility closure for 2015 was $6.3 million, which includes the $4.3 million of restructuring costs and $2.0 million of carrying costs related to the closed facility. During 2014, we had $8.4 million of restructuring costs related to the closure of the Rogers facility. The carrying costs for the closed facility are not included in the restructuring line in the Consolidated Income Statements of our Consolidated Financial Statements.

(4)

In the fourth quarter of 2019, we recognized goodwill and indefinite-lived intangible impairment charges totaling $102.2 million for our European reporting unit (refer to Note 10, “Goodwill and Other Intangible Assets” in the Notes to the Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data” in this Annual Report).

(5)

Adjusted EBITDA is a key measure that is not calculated according to GAAP. Refer to “Management’s Discussion and Analysis, Non-GAAP Financial Measures” section of this Annual Report for a definition of Adjusted EBITDA and a reconciliation of our Adjusted EBITDA to net income, the most comparable GAAP measure.

(3)

( See Note 10, "Income Taxes in Notes to Consolidated Financial Statements" in Item 8, "Financial Statements and Supplementary Data" in this Annual Report for a discussion of material items impacting the 2016, 2015 and 2014 income tax provisions.6)

In 2019, we adopted ASC 842, “Leases,” the new lease accounting standard, resulting in recognition of operating lease right-of-use assets of $18.2 million effective January 1, 2019.

⁽⁴⁾ Adjusted EBITDA is a key measure that is not calculated according to GAAP. Adjusted EBITDA is defined as earnings before interest income and expense, income taxes, depreciation, amortization, restructuring and other closure costs and impairments of long-lived assets and investments. We use Adjusted EBITDA as an important indicator of the operating performance of our business. We use Adjusted EBITDA in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors and evaluating short-term and long-term operating trends in our operations. We believe the Adjusted EBITDA financial measure assists in providing a more complete understanding of our underlying operational measures to manage our business, to evaluate our performance compared to prior periods and the marketplace, and to establish operational goals. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making. Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. See the Non-GAAP Financial Measures section of this Annual Report for a reconciliation of our Adjusted EBITDA to net income.

⁽⁵⁾ The current ratio is current assets divided by current liabilities.

⁽⁶⁾ Return on average shareholders' equity is net income divided by average shareholders' equity.  Average shareholders' equity is the beginning of the year shareholders' equity plus the end of year shareholders' equity divided by two.

18

---

ITEM 7 - MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in Item 8, "Financial“Financial Statements and Supplementary Data"Data” in this Annual Report. This discussion contains forward-looking statements, which involve risks and uncertainties. For cautions about relying on such forward-looking statements, pleasePlease refer to the section entitled “Forward Looking Statements” at the beginning of this Annual Report immediately prior to Item 1. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including but not limited to those discussed in Item 1A, "Risk Factors"“Risk Factors” and elsewhere in this Annual Report.

Executive Overview

Historically our

Our principal business focus primarily was on providingis the design and manufacture of aluminum wheels for relatively high-volume programssale to OEMs in North America and Europe and aftermarket suppliers in Europe. We employ approximately 8,400 employees, operating in eight manufacturing facilities in North America and Europe with lower degreesa combined annual manufacturing capacity of competitive differentiation. In orderapproximately 20 million wheels. We are one of the largest suppliers to improveglobal OEMs, and we believe we are the #1 European aluminum wheel aftermarket manufacturer and supplier. Our OEM aluminum wheels accounted for approximately 92 percent of our strategic position,sales in 2019 and are sold for factory installation 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, SEAT, Skoda, Porsche, Bentley) and Volvo. We 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 augmenteda global presence and influence with North American, European and Asian OEMs.  The following chart shows our product portfolio with wheels containing higher technical contentsales by customer for the years ended December 31, 2019, 2018 and greater differentiation. We believe this direction is2017:

Globally, we shipped 19.2 million units down from 21.0 million in 2018, generally consistent with overall industry volume trends.  Demand for our products is mainly driven by light-vehicle production levels in North America and Europe, as well as production levels at our key customers and take rates on programs we serve. North American light-vehicle production in 2019 was 16.3 million vehicles, as compared to 17.0 million vehicles in 2018. In Europe, light vehicle production level in 2019 was 17.7 million vehicles, as compared to 18.5 million vehicles in 2018.

19

---

The following chart shows the trendcomparison of our operational performance in 2019, 2018 and 2017:

For the calendar year 2019, sales were lower due to reduced volumes in both North America and Europe. Our 2019 Adjusted EBITDA was lower than 2018 primarily due to lower industry volumes in North America and Europe, rising energy rates, the impact of the marketGM strike and needs of our customers. In connection with this strategic advancement, we openedlaunch challenges in North America, partially offset by a new plant in Mexico in 2015 and continue

to invest in new manufacturing processes targeting theshift toward larger more sophisticated finishes and larger wheel diameter.

20

---

The following table is a summary of the Company’s operating results for 2019, 2018 and 2017:

Results of Operations

Fiscal Year Ended December 31,		2019				2018				2017
(Thousands of dollars, except per share amounts)
Net Sales
North America		$	704,320			$	800,383			$	732,418
Europe			668,167				701,444				375,637
Net sales			1,372,487				1,501,827				1,108,055
Cost of sales			(1,256,425	)			1,338,300				1,005,158
Gross profit			116,062				163,527				102,897
Percentage of net sales			8.5	%			10.9	%			9.3	%
Selling, general and administrative			63,883				77,722				81,379
Impairment of goodwill and indefinite-lived intangibles			102,238				—				—
Income (loss) from operations			(50,059	)			85,805				21,518
Percentage of net sales			(3.6	)%			5.7	%			1.9	%
Interest expense, net			(47,011	)			(50,097	)			(40,004	)
Other (expense) income, net			4,815				(6,936	)			13,188
Change in fair value of redeemable preferred    stock embedded derivative			(782	)			3,480				6,164
Income tax provision			(3,423	)			(6,291	)			(6,875	)
Consolidated net income (loss)			(96,460	)			25,961				(6,009	)
Less: net loss attributable to non-controlling interests			—				—				(194	)
Net income (loss) attributable to Superior			(96,460	)			25,961				(6,203	)
Percentage of net sales			(7.0	)%			1.7	%			(0.6	)%
Diluted earnings (loss) per share		$	(5.10	)		$	0.29			$	(1.01	)
Value added sales (1)		$	755,325			$	797,187			$	616,753
Adjusted EBITDA (2)		$	168,795			$	185,623			$	140,085
Percentage of net sales			12.3	%			12.4	%			12.6	%
Percentage of value added sales			22.3	%			23.3	%			22.7	%
Unit shipments in thousands			19,246				20,991				17,008

(1)

Value added sales is a key measure that is not calculated according to GAAP. Refer to Item 7, “Management’s Discussion and Analysis, Non-GAAP Financial Measures” section of this Annual Report for a definition of value added sales and a reconciliation of value added sales to net sales, the most comparable GAAP measure.

(2)	Adjusted EBITDA is a key measure that is not calculated according to GAAP. Refer to Item 7, “Management’s Discussion and Analysis, Non-GAAP Financial Measures” section of this Annual Report for a definition of Adjusted EBITDA and a reconciliation of our Adjusted EBITDA to net income.

2019 versus 2018

Shipments

Wheel unit shipments were 19.2 million for 2019, compared to unit shipments of 21.0 million in the prior year, a decrease of 8.3 percent. The decrease occurred primarily in our North American operations and was driven by softer industry production levels, lower production at our key customers, including the impact of the UAW labor strike at General Motors, and lower take rates on the programs we serve.

Net Sales

Net sales for 2019 were $1,372.5 million, compared to net sales of $1,501.8 million for the same period in 2018.  The reduction in net sales is primarily driven by reduced volumes, lower aluminum prices in both North America and Europe, and a weaker Euro, partially offset by improved product mix comprised of larger diameter productswheels and premium finishes in both regions.

21

---

Cost of Sales

Cost of sales were $1,256.4 million in 2019, compared to $1,338.3 million in the prior year period. The decrease in cost of sales was due primarily due to lower volumes, lower aluminum prices, and a weaker Euro partially offset by higher aluminum content associated with larger diameter wheels and $14.8 million of restructuring and relocation costs related to our Fayetteville, Arkansas manufacturing location.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for 2019 were $63.9 million, or 4.7 percent of net sales, compared to $77.7 million, or 5.2 percent of net sales for the same period in 2018.  The decrease is primarily due to a reduction in acquisition and integration expenses and the alignment of reporting for SG&A between our North American and European operations.

Impairment of Goodwill and Indefinite-lived Intangibles

In 2019 we recognized a goodwill and indefinite-lived intangibles impairment charge of $102.2 million relating to our European reporting unit (refer to Note 10, “Goodwill and Other Intangible Assets” in the Notes to the Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data” in this Annual Report).

Net Interest Expense

Net interest expense for 2019 was $47.0 million, compared to interest expense of $50.1 million in 2018. The reduction in interest expense was primarily due to the 2018 repricing of the Company’s $400.0 million Senior Secured Term Loan Facility (“Term Loan Facility”), the early extinguishment of a portion of the 6% Senior Notes due June 15, 2025 (“Notes”) in 2019 and decreased loan reference rates, primarily US Dollar LIBOR rates.

Other Income (Expense)

Other income was $4.8 million in 2019, compared with other expense of $(6.9) million in 2018. The increase in other income was primarily driven by a $3.7 million gain on the early extinguishment of a portion of the Notes in 2019 and a foreign exchange gain in 2019 versus a foreign exchange loss in 2018.  

Change in Fair Value of Embedded Derivative Liability

During 2019, the redeemable preferred stock embedded derivative liability associated with the conversion and the early redemption options increased $0.8 million to $3.9 million primarily due to higher volatility and lower dividend assumptions with the respect to the conversion option and a shorter expected time horizon with respect to the redemption option.

Income Tax Provision

The income tax provision for 2019 was $3.4 million on pre-tax loss of $93.0 million, representing an effective tax rate of (3.7) percent. The effective tax rate was lower than the statutory rate primarily due to the effects of U.S. taxation on foreign earnings under Global Intangible Low-Tax Income (GILTI) provisions of tax reform, goodwill impairment in Germany offset by a favorable split of jurisdictional pre-tax income, and the generation of a new polish SEZ Credit. The income tax provision for 2018 was $6.3 million on pre-tax earnings of $32.3 million, representing an effective income tax rate of 19.5 percent.

Net Income (Loss) Attributable to Superior

Net loss attributable to Superior in 2019 was $(96.5) million, or a loss of $(5.10) per diluted share, compared to net income attributable to Superior of $26.0 million, or an earnings per diluted share of $0.29, in 2018.

22

---

Segment Sales and Income from Operations

		Year Ended December 31,
		2019				2018				Change
(Dollars in thousands)
Selected data
Net Sales
North America		$	704,320			$	800,383			$	(96,063	)
Europe			668,167				701,444				(33,277	)
Total net sales		$	1,372,487			$	1,501,827			$	(129,340	)
Income (loss) from Operations
North America		$	16,713			$	29,702			$	(12,989	)
Europe			(66,772	)			56,103				(122,875	)
Total income from operations		$	(50,059	)		$	85,805			$	(135,864	)

North America

In 2019, net sales of our North America segment decreased 12.0 percent, compared to 2018, primarily due to a 13.2 percent decrease in volumes, including the impact of the UAW labor strike at General Motors, and lower aluminum prices, partially offset by improved product mix comprised of larger diameter wheels and premium wheel finishes. The decline in unit shipments was primarily due to lower sales to Ford, Nissan, Toyota and FCA. U.S. and Mexico sales as a percentage of North American total sales were approximately 14.8 percent and 85.2 percent, respectively, during 2019, which typically have more value.compares to 15.9 percent and 84.1 percent for 2018. North American segment income from operations decreased in 2019 due primarily to a decrease in volumes and restructuring and relocation costs related to our Fayetteville, Arkansas facility, partially offset by favorable procurement savings, product mix and foreign exchange.

Europe

Net sales of our European segment for 2019 decreased 4.7 percent, compared to 2018, primarily due to a weaker Euro, lower aluminum prices and lower volume, partially offset by improved product mix comprised of larger diameter wheels and premium wheel finishes. Sales in Germany and Poland as a percentage of total European segment sales were approximately 36.8 percent and 63.2 percent, respectively, during 2019, which compares to 39.9 percent and 60.1 percent for 2018. European segment income from operations for the year ended 2019 decreased primarily due to a $102.2 million charge for impairment of goodwill and indefinite-lived intangibles.  Additionally, segment income was lower due to reduced cost performance related to higher energy costs, lower volumes and negative foreign exchange effects from the Euro, which was partially offset by favorable mix.

2018 versus 2017

Shipments

Wheel unit shipments were 21 million for 2018, an increase of 23.4 percent, compared to unit shipments of 17 million in the prior year period. The increase in unit shipments was primarily due to the inclusion of an additional five months of the European operation’s units, which drove 4.2 million units of improvement.

Net Sales

Net sales for 2018 were $1,501.8 million, compared to net sales of $1,108.1 million in 2017. The increase was driven by the inclusion of an additional five months of our European operations, which contributed $305.0 million of the increase. Additionally, a 9.8 percent increase in our global average selling price per wheel contributed $89.0 million of the sales increase, due to increases in aluminum prices and improved product mix comprised of larger diameter wheels and premium finishes.

Cost of Sales

Cost of sales were $1,338.3 million in 2018 compared to $1,005.2 million in the prior year period. The increase in cost of sales was due mainly to $263.0 million associated with the inclusion of an additional five months of the European operations. Additionally, cost of sales increased due to higher aluminum prices and increased manufacturing facilitycosts associated with larger diameter wheels, energy rates in Mexico commenced initial commercialand launch costs in North America.

23

---

Selling, General and Administrative Expenses

Selling, general and administrative expenses for 2018 were $77.7 million, or 5.2 percent of net sales, compared to $81.4 million, or 7.3 percent of net sales in 2017. The decrease as a percentage of sales is due to $22.4 million of reduced acquisition and integration expenses.

Net Interest Expense

Net interest expense for 2018 was $50.1 million and $40.0 million for 2017. The increase is due to the full year of interest on the acquisition debt in 2018, partially offset by a non-recurring interest cost related to the bridge loan financing for the European business acquisition incurred in 2017.

Net Other (Expense) Income

Net other expense was $(6.9) million in 2018 compared with net other income of $13.2 million in 2017. The change was primarily due to foreign exchange losses of $(1.0) million in 2018 compared to gains of $12.9 million in 2017 and $2.2 million to year-over-year changes in derivative contracts. The remaining items were of an individually insignificant nature. 

Change in Fair Value of Embedded Derivative Liability

During 2018 and 2017, we recognized a $3.5 million and $6.2 million change in the fair value of our redeemable preferred stock embedded derivative liability, respectively, primarily due to the declines in our stock price experienced in the respective years.

Income Tax Provision

The income tax provision for 2018 was $6.3 million on pre-tax income of $32.3 million primarily due to the split of jurisdictional pre-tax income or loss and finalizing 2017 provisional amounts recorded for the enactment-date-effects of The Tax Cuts and Jobs Act (“the Act”). The income tax provision for 2017 was $6.9 million on pre-tax income of $0.9 million primarily due to earnings in countries with tax rates lower than the U.S. statutory rate, acquisition costs and the effects of the Act.

Net Income (Loss) Attributable to Superior

Net income attributable to Superior in 2018 was $26.0 million, or $0.29 per diluted share, compared to a net loss in 2017 of $(6.2) million, or $(1.01) loss per diluted share.

Segment Sales and Income from Operations

		Year Ended December 31,
		2018				2017				Change
(Dollars in thousands)
Selected data
Net Sales
North America		$	800,383			$	732,418			$	67,965
Europe			701,444				375,637				325,807
Total net sales		$	1,501,827			$	1,108,055			$	393,772
Income from Operations
North America		$	29,702			$	9,808			$	19,894
Europe			56,103				11,710				44,393
Total income from operations		$	85,805			$	21,518			$	64,287

North America

In 2018, net sales of our North America segment increased 9.3 percent due to an 11.1 percent increase in average selling price per wheel partially offset by a 1.7 percent decrease in volumes. The increase in average selling price per wheel, contributed $81.5 million, and was driven by higher aluminum pricing, which we generally pass through to our customers, and improved product mix comprised of larger diameter wheels and premium finishes. Unit shipments declined from 11.5 million in 2017 to 11.3 million in 2018 resulting in a $12.2 million reduction in revenue. The decline in unit shipments was primarily due to lower sales to Ford, FCA, BMW and Subaru, partially offset by increased sales to GM. North American segment sales between U.S. and Mexico were approximately 15.9 percent and 84.1 percent, respectively during 2018, which compares to 17.0 percent and 83.0 percent for 2017. The North America

24

---

segment income from operations increased in 2018 due primarily to lower integration costs and favorable product mix, partially offset by increased launch and energy costs.

Europe

In 2018, net sales of our European segment increased 86.7 percent primarily due to an additional five months of sales, which contributed $283.3 million, and a 6.5 percent increase in the average selling price per wheel. The increase in average selling price per wheel, was driven by higher aluminum pricing, which we generally pass through to our customers. European segment sales between Germany and Poland were approximately 39.9 percent and 60.1 percent, respectively, during 2018, which compares to 41.3 percent and 58.7 percent for 2017. European segment income from operations for the year ended 2018 increased consistent with increasing sales, as well as a reduction in integration related expenses from $14.8 million in 2017 to $2.4 million in 2018.

Financial Condition, Liquidity and Capital Resources

Our sources of liquidity primarily include cash, cash equivalents and short-term investments, net cash provided by operating activities, our senior notes and borrowings under available debt facilities, factoring arrangements for trade receivables and, from time to time, other external sources of funds. Working capital (current assets minus current liabilities) and our current ratio (current assets divided by current liabilities) were $163.1 million and 1.9, respectively, at December 31, 2019, versus $192.0 million and 2.1:1 at December 31, 2018. As of December 31, 2019, our cash, cash equivalents and short-term investments totaled $77.9 million compared to $48.2 million at December 31, 2018.

Our working capital requirements, investing activities and cash dividend payments have historically been funded from internally generated funds, debt facilities, cash equivalents and short-term investments, and we believe these sources will continue to meet our   capital requirements, as well as our currently anticipated short-term needs. Capital expenditures consist of ongoing maintenance and operational improvements (“maintenance”), as well as capital related to new product offerings and expanded capacity for existing products (“new business”). Over time capital expenditures have consisted of roughly equal components of maintenance and new business, the most significant of which in recent years has been our investment in physical vapor deposition (PVD) technology which went into production in 2019.      

In connection with the acquisition of our European business, we entered into several debt and equity financing arrangements during 2017. On March 22, 2017, we entered into a USD Senior Secured Credit facility (“USD SSCF”) consisting of a $400.0 million Senior Secured Term Loan Facility (“Term Loan Facility”) and a $160.0 million revolving credit facility (“Revolving Credit Facility”). On May 22, 2017, we issued 150,000 shares of redeemable preferred stock to TPG Growth III Sidewall, L.P. (“TPG”) for an aggregate purchase price of $150.0 million. On June 15, 2017, we issued €250.0 aggregate principal amount of 6% Senior Notes due June 15, 2025 (“Notes”). In addition, as a part of our European business acquisition, we assumed $70.7 million of outstanding debt.

During the firstsecond quarter of 20152019, the Company amended the EUR Senior Secured Credit Facility (“EUR SSCF”), our European revolving credit facility, increasing the available borrowing limit from 30.0 million Euro to 45.0 million Euro and reached initial rated capacity duringextending the term to May 22, 2022. In addition, the European business entered into equipment loan agreements totaling $13.4 million (12.0 million Euro) in the fourth quarter of 2015. We completed a project to expand production capacity at this facility during2019, but the first quarterCompany had not drawn down on the loans as of 2016. The total costs incurred were $132.7 million, of which $127.0 million related toDecember 31, 2019. On January 1, 2020, the initial rated capacityavailable borrowing limit of the new facilityEUR SSCF was increased from 45.0 million Euro to 60.0 million Euro. All other terms of the EUR SSCF remained unchanged.

Balances outstanding under the Term Loan Facility, Notes, and $5.7an equipment loan as of December 31, 2019 were $371.8 million, related$243.1 million, $12.7 million, respectively. The redeemable preferred stock balance issued to TPG amounted to $161.0 million as of December 31, 2019. There was no balance outstanding under the expansion. As partRevolving Credit Facility of the USD SSCF at December 31, 2019 and unused commitments were $156.4 million. In addition, there was 44.6 million Euro available under our continued strategyEUR SSCF as of December 31, 2019. Cash and funds available under credit facilities were $284.2 million at December 31, 2019.   

On September 3, 2019, the Company announced that its Board of Directors determined to provide our customers with premium finishes, we began building a physical vapor deposition ("PVD") finishing facility nextsuspend the Company’s quarterly common dividend.

25

---

The following table summarizes the cash flows from operating, investing and financing activities as reflected in the consolidated statements of cash flows.

Fiscal Year Ended December 31,		2019				2018				2017
(Thousands of dollars)
Net cash provided by operating activities		$	162,842			$	156,116			$	63,710
Net cash used in investing activities			(54,663	)			(77,097	)			(777,614	)
Net cash (used in) provided by financing activities			(76,599	)			(76,338	)			701,107
Effect of exchange rate changes on cash			(1,117	)			(1,577	)			1,371
Net increase (decrease) in cash and cash equivalents		$	30,463			$	1,104			$	(11,426	)

2019 versus 2018

Operating Activities

Net cash provided by operating activities was $162.8 million in 2019 compared to one of our already existing facilities. PVD is a finishing method that creates bright chrome-like finishes that are produced with an environmentally safe process. The addition of PVD wheel coating capability and capacity will be completed during 2017 and will be operational$156.1 million in 2018. The total anticipated expenditureyear-over-year increase in operating cash flow is primarily due to improved working capital management. The reduction in inventory was driven by lower production volumes and aluminum prices. The increase in payables due to improved terms with aluminum suppliers was largely offset by the lower year-over-year reduction in accounts receivable.

Investing Activities

Net cash used in investing activities was $54.7 million in 2019 compared to $77.1 million in 2018. The decline in cash used in investing activities in 2019 was due to the year-over-year reduction in capital expenditures, as well as cash proceeds received upon sale of other assets in 2019.

Financing Activities

Net cash used in financing activities was $76.6 million compared to $76.3 million in 2018. The modest increase in cash used in financing activities was due to prepayments on the PVD expansion is $30.0 million. Becauseterm loan and early extinguishment of the majority6% Notes in 2019, substantially offset by lower purchases of non-controlling redeemable shares and, to a lesser extent, lower cash dividends largely due to suspension of the common share dividend in the third quarter of 2019.

2018 versus 2017

Operating Activities

Net cash provided by operating activities was $156.1 million in 2018 and $63.7 million in 2017. The increase in cash flow provided by operating activities was mainly due to the inclusion of a full year of our customer programsEuropean operations as compared to seven months in 2017, improved working capital management and the introduction of a receivables factoring program in North America, which generated $30.1 million of operating cash flows in the year.

Investing Activities

Net cash used in investing activities was $77.1 million in 2018 compared to $777.6 million in 2017. Net cash used in investing activities was higher in 2017 due to our European business acquisition in 2017.

Financing Activities

Net cash used in financing activities was $76.3 million compared to net cash provided by financing activities of $701.1 million in 2017. Net cash provided by financing activities was higher in 2017 due to the issuance of debt to finance the European business acquisition.

26

---

Contractual Obligations

Contractual obligations as of December 31, 2019 are planned two or three yearsas follows (amounts in advance,millions):

		Payments Due by Fiscal Year
Contractual Obligations		2020				2021				2022				2023				2024				Thereafter				Total
Long-term debt		$	3.0			$	3.0			$	3.0			$	3.0			$	372.4			$	243.1			$	627.5
Retirement plans			1.5				1.5				1.5				1.5				1.5				41.7				49.2
Purchase obligations			18.6				1.8				—				—				—				—				20.4
Finance leases			1.1				0.9				0.5				0.1				0.1				0.4				3.1
Operating leases			2.9				2.6				2.2				1.9				1.8				4.8				16.2
Total		$	27.1			$	9.8			$	7.2			$	6.5			$	375.8			$	290.0			$	716.4

The table above does not reflect unrecognized tax benefits and related interest and penalties of $34.3 million, for which the upgradetiming of settlement is uncertain, $8.7 million of liabilities for derivative financial instruments maturing in 2020 through 2023 nor the redeemable preferred stock embedded derivative liability of $3.9 million. In addition, the table does not include dividend payments due quarterly nor the redemption value of the redeemable preferred stock in 2025.

Off-Balance Sheet Arrangements

As of December 31, 2019, we had no significant off-balance sheet arrangements other than factoring of $49.6 million of our product portfolio will occur over time.

During the last three yearstrade receivables.

NON-GAAP FINANCIAL MEASURES

In this Annual Report, we have seen a transformation of the company. During this transformational period we have embarked on strategic initiativesdiscuss two important measures that have contributedare not calculated according to a significant increase to earnings. The chart below highlights three key indicators of our growth. Diluted earnings per share increased by almost 5 times, Adjusted EBITDA has grown 59 percent and the return on equity has grown 830 basis points during the last three years. The improvement in earnings is the culmination of improvements in gross margin, lower selling, general and administrative expenses and a lower tax rate.

Included in 2016 Adjusted EBITDA are significant operating inefficiencies incurred primarily in one of our manufacturing facilities in the last six months of 2016. The inefficiencies stemmed from a variety of issues that reduced production rates. Contributing factors to the inefficiencies included an electricity outage and unanticipated equipment reliability issues which reduced finished goods and work-in-process inventories. We also experienced several new product launches and significant ramp-up in demand for newer products for which unusually high scrap rates were occurring. Lower than normal production yields coupled with the loss of inventory safety stock resulted in a series of expedited shipments to customers and other operating inefficiencies. The higher than normal costs included approximately $13 million in freight expediting costs, which primarily related to the last six months. By the end of January 2017, the affected plant returned to near full capacity and the expedited shipments ceased.

We continue to focus on programs to reduce overall costs through improved operational and procurement practices, capital reinvestment and more rigorous factory maintenance to improve equipment reliability. These investments will typically consist of equipment upgrades and other capital projects focused on improving equipment reliability, increasing production efficiency and enhancing manufacturing process control to better accommodate newer, more complex wheel programs. Our capital investment projects increased in 2016 following a significant decrease in 2015 from the 2014 level when the construction of the new plant in Mexico was in process. It is possible that capital expenditure levels will continue at higher levels as we continue to focus on achieving further improvements to operational efficiencies and manufacturing process capabilities.

Net sales in 2016 increased $4.8 million to $732.7 million from $727.9 million in 2015.  Value added sales in 2016 increased $47.9 million to $408.7 million from $360.8 million in 2015, reflecting improvement in unit volume. See the Non-GAAP Financial Measures section of this annual report for a reconciliation ofU.S. GAAP, value added sales to net sales. In 2016, wheel shipments increased 9.0 percent to 12.3 million compared to 11.2 million in 2015, which is higher than the increase in North American production of passenger cars and light-duty trucks.

Overall North American production of passenger cars and light-duty trucks in 2016 was reported by industry publications as increasing by 2.5 percent versus 2015 with production of light-duty trucks, which includes pick-up trucks, SUV's, vans and "crossover vehicles", increasing 6 percent and production of passenger cars decreasing 3 percent.  Current production levels of

the North American automotive industry now have reached the highest level in the past decade. Results for 2016, 2015 and 2014 reflect the continuing trend of growth since the 2009 recession. Current economic conditions and low consumer interest rates have been generally supportive of market growth and, in addition, the continuing high levels in the average age of vehicles on the road appears to be contributing to higher rates of vehicle replacement.

During the last three years we have seen a significant increase in cash from operations. We have utilized the cash from operations to continue enhancing the operational efficiencies of the company and enhance shareholder value. As part of our commitment to enhancing shareholder value, we have been repurchasing our common stock. In October 2014, our Board of Directors approved the 2014 Repurchase Program, authorizing the repurchase of up to $30.0 million of our common stock. Under the 2014 Repurchase Program, we repurchased 1,056,954 shares of company stock at a cost of $19.6 million in 2015 and 585,970 shares for $10.3 million in January 2016. In January of 2016, our Board of Directors approved the 2016 Repurchase Program, authorizing the repurchase of up to $50.0 million of common stock. Under the 2016 Repurchase Program, we repurchased 454,718 shares of company stock at a cost of $10.4 million in 2016. The enhancements to shareholder value have resulted in an increase in share price over the last three years. The chart below highlights the cash from operations and the stock performance in the last three years.

Historical stock price - The chart shows the historical stock price from

January 1, 2014 to December 31, 2016.

Listed in the table below are several key indicators we use to monitor our financial condition and operating performance.

Results of Operations

Fiscal Year Ended December 31,		2016				2015				2014
(Thousands of dollars, except per share amounts)
Net sales		$	732,677			$	727,946			$	745,447
Value added sales (1)		$	408,690			$	360,846			$	369,355
Gross profit		$	86,204			$	71,217			$	50,222
Percentage of net sales		11.8		%		9.8		%		6.7		%
Income from operations		$	54,602			$	36,294			$	17,913
Percentage of net sales		7.5		%		5.0		%		2.4		%
Net income		$	41,381			$	23,944			$	8,803
Percentage of net sales		5.6		%		3.3		%		1.2		%
Diluted earnings per share		$	1.62			$	0.90			$	0.33
Adjusted EBITDA (2)		$	88,511			$	76,053			$	55,753
Percentage of net sales (3)		12.1		%		10.4		%		7.5		%
Percentage of value added sales (4)		21.7		%		21.1		%		15.1		%

⁽¹⁾Adjusted EBITDA.

Value added sales is a key measure that is not calculated according to GAAP. In the discussion of operating results, we provide information regarding value added sales. Value added sales represents net sales less the value of aluminum and services provided by outsideoutsourced service providers that areincluded in net sales. As discussed further below, arrangements with our customers allow us to pass on changes in aluminum prices and outside service provider costs; therefore, fluctuations in underlying aluminum prices and the use of outside service providers generally do not directly impact our profitability. Accordingly, value added sales is worthy of being highlighted for the benefit of users of our financial statements. Our intent is to allow users of the financial statements to consider our net sales information both with and without the aluminum and outside service provider cost components thereof. Management utilizes value added sales as a key metric to determine growth of the company because it eliminates the volatility of aluminum prices. See the Non-GAAP Financial Measures section of this annual report for a reconciliation of value added sales to net sales.

⁽²⁾ Adjusted EBITDA is a key measure that is not calculated according to GAAP. Adjusted EBITDA is defined as earnings before interest income and expense, income taxes, depreciation, amortization, restructuring and other closure costs and impairments of long-lived assets and investments. We use Adjusted EBITDA as an important indicator of the operating performance of our business. We use Adjusted EBITDA in internal financial forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors and evaluating short-term and long-term operating trends in our operations. We believe the Adjusted EBITDA financial measure assists in providing a more complete understanding of our underlying operational measures to manage our business, to evaluate our performance compared to prior periods and the marketplace and to establish operational goals. We believe that these non-GAAP financial measures are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making. Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. See the Non-GAAP Financial Measures section of this annual report for a reconciliation of our Adjusted EBITDA to net income.

⁽³⁾ Adjusted EBITDA: Percentage of net sales is a key measure that is not calculated according to GAAP. Adjusted EBITDA as a percentage of net sales is defined as Adjusted EBITDA divided by net sales. See the Non-GAAP Financial Measures section of this annual report for a reconciliation of Adjusted EBITDA.

⁽⁴⁾ Adjusted EBITDA: Percentage of value added sales is a key measure that is not calculated according to GAAP. Adjusted EBITDA as a percentage of value added sales is defined as Adjusted EBITDA divided by value added sales. See the Non-GAAP Financial Measures section of this annual report for a reconciliation of Adjusted EBITDA and value added sales.

2014 Restructuring Actions and Ongoing Cost

During the third quarter of 2014, we completed a review of initiatives to reduce costs and enhance our competitive position. Based on this review, we committed to a plan to close operations at our Rogers, Arkansas facility, which was completed during the fourth quarter of 2014. The closure resulted in a reduction of workforce of approximately 500 employees and a shift in production to other facilities. The total cost incurred as a result of the Rogers facility closure is $15.9 million, of which $4.1 million was paid in cash. As of December 31, 2016, estimated remaining cash payments total $0.2 million, mainly for final moving costs.

During 2016, we sold the Rogers facility for total proceeds of $4.3 million, resulting in a $1.4 million gain on sale. Rogers incurred $1.5 million in closure and operating costs during 2016, which included $0.3 million in depreciation. During 2015, we completed the shutdown of the Rogers facility which resulted in a gross margin loss of $8.0 million. We incurred $4.3 million in restructuring costs related to an impairment of fixed assets and other associated costs such as asset relocation costs. Additionally, we also experienced $2.0 million of further carrying costs associated with the closed facility and $1.7 million in depreciation. The closure of our Rogers facility negatively impacted gross profit by $8.4 million, which includes $5.4 million of depreciation accelerated due to shortened useful lives for assets idled when operations ceased at the Rogers facility. The Rogers facility adjusted EBITDA impact was a negative $3.0 million, negative $6.3 million and a positive $0.2 million in 2014, 2015 and 2016, respectively. See the Non-GAAP Financial Measures section of this annual report for a reconciliation of Adjusted EBITDA to net income, and value added sales to net sales.

In addition, other measures were taken to reduce costs, including the sale of the company's two aircraft, which was completed in 2015. The results for 2014 reflect the impact of costs related to these actions, totaling $1.3 million in SG&A for the write-down of the carrying value of an aircraft we sold in 2015 and a small loss on the sale of our second aircraft.

2016 versus 2015

Net Sales

The following table summarizes the impact that volume, aluminum and product mix had on the change in sales from 2015 to 2016:

Net Sales Comparison				Year Ended
(Dollars in thousands)
Year ended December 31, 2015				$	727,946
Volume				60,827
Aluminum prices				(61,460		)
Other				5,364
Year ended December 31, 2016				$	732,677

Net sales in 2016 increased $4.8 million to $732.7 million from $727.9 million in 2015. Wheel shipments increased by 9 percent in 2016 compared to 2015 resulting in $60.8 million higher sales compared to 2015. Net sales were unfavorably impacted by a decline in the value of the aluminum component of sales which we generally pass through to our customers and resulted in $61.5 million lower revenues. The average selling price of our wheels decreased 8 percent due to the unfavorable impact of the decline in aluminum value. Increases in unit shipments to GM, Nissan, Toyota and Subaru were partially offset by decreases in unit shipments to Ford and FCA.  Wheel program development revenues totaled $10.0 million in 2016 and $6.9 million in 2015.

U.S. Operations

Net sales of our U.S. plants in 2016 decreased 32 percent, to $120.4 million from $177.2 million in 2015, reflecting a decrease in unit shipments and a decrease in the average selling price of our wheels. Unit shipments from our U.S. plants decreased 28 percent in 2016, primarily reflecting the reallocation of production volume to our plants in Mexico. The decline in volume resulted in $50.5 million lower sales. The average selling price of our wheels decreased 7 percent primarily due to the decline in the value of the aluminum component coupled with the mix of wheel sizes and finishes sold. The lower aluminum value decreased revenues by approximately $9.4 million when compared to 2015.

Mexico Operations

Net sales of our Mexico plants in 2016 increased 11 percent, to $612.3 million from $550.7 million in 2015, reflecting a 20 percent increase in unit shipments offset partially by an 8 percent decrease in the average selling prices of our wheels. The unit shipment volume increase in 2016 resulted in $111.3 million higher sales. The 8 percent decrease in the average selling price of our wheels was primarily a result of the lower pass-through price of aluminum partially offset by a favorable mix of wheel sizes and finishes sold. The lower aluminum value decreased revenues by approximately $52.1 million when compared to 2015.

Our major customer mix, based on unit shipments, is shown below:

Fiscal Year Ended December 31,	2016		2015		2014
Ford	36	%	42	%	42	%
GM	29	%	25	%	24	%
Toyota	14	%	14	%	12	%
FCA	6	%	8	%	10	%
Other international customers	15	%	11	%	12	%
Total	100	%	100	%	100	%

According to Ward's Auto Info Bank, overall North American production of passenger cars and light-duty trucks in 2016 increased approximately 3 percent, while production of the specific passenger car and light-duty truck programs using our wheels increased 1 percent. In contrast to the overall market, our total shipments increased by 9 percent, resulting in our share of the North American aluminum wheel market increasing by 1 percentage point on a year-over-year basis. The increase in market share was 4 percentage points in passenger car programs, offset by a 3 percentage point decline in light-duty trucks.

According to Ward's Automotive Group, the aluminum wheel penetration rate on passenger cars and light-duty trucks in the U.S. was 81 percent for the 2016 model year and 79 percent for the 2015 model year, compared to 81 percent for the 2014 model year. We expect the ratio of aluminum to steel wheels to remain relatively stable.

At the customer level, shipments in 2016 to Ford decreased 7 percent compared to 2015, as shipments of passenger car wheels decreased 20 percent and light-duty truck wheels decreased 2 percent.  At the program level, the major unit shipment decreases for the F-Series trucks, Fiesta, Escape, Focus, Fusion and Taurus were offset partially by increases for the Edge, Explorer, MKZ, Flex, MKS, Expedition and MKC.  

Shipments to GM in 2016 increased 28 percent compared to 2015, as the unit volume of passenger car wheels increased nearly 4 times and light-duty truck wheel shipments increased less than 1 percent.  The major unit shipment increases to GM were for the K2XX platform vehicles, Malibu, Traverse and Volt, partially offset by shipment decreases for the SRX, Terrain, Enclave, Impala, ATS and Colorado.

Shipments to Toyota in 2016 increased 7 percent compared to 2015, as shipments of light-duty truck wheels increased 24 percent and passenger car wheels decreased 24 percent.  The major unit shipment increases to Toyota were for the Tacoma, Highlander and Sienna, partially offset by unit shipment decreases for the Avalon, Venza and Tundra.

Shipments to FCA in 2016 decreased 15 percent compared to 2015, as passenger car wheel shipments increased 82 percent and the unit volume of light-duty truck wheels decreased 23 percent.  The major unit shipment decreases to FCA were for the Town and Country, Durango, Journey and Magnum/Charger which were partially offset by unit shipment increases for the Dodge-Ram trucks and Dodge Challenger.

Shipments to other international customers in 2016 increased 45 percent compared to 2015, as shipments of passenger car wheels increased 39 percent and shipments of light-duty truck wheels increased 66 percent. The higher unit volumes included increases of 86 percent to Nissan, 17 percent to Mazda, 16 percent to Subaru and 20 percent to BMW, while unit volumes decreased 20 percent to VW. At the program level, major unit shipment increases to international customers were for Nissan's Sentra, Kicks, Altima and Note, Toyota Scion iA which is manufactured by Mazda, BMW X3 and Subaru's Impreza and Legacy, offset partially by unit shipment decreases for the Nissan Titan, Mazda 2, Nissan Versa and VW Jetta.

Cost of Sales

Aluminum, natural gas and other direct material costs are a significant component of our costs to manufacture wheels.  These costs are substantially the same for all of our plants since many common suppliers service both our U.S. and Mexico operations. Consolidated cost of sales includes costs for both our U.S. and international operations, which are principally our wheel manufacturing operations in Mexico, and certain costs that are not allocated to a specific operation.  These unallocated expenses include corporate services that are primarily incurred in the U.S. but are not charged directly to our world-wide operations, such as engineering services for wheel program development and manufacturing support, environmental and other governmental compliance services.

In 2016, consolidated cost of goods sold decreased $10.2 million to $646.5 million, or 88 percent of net sales, compared to $656.7 million, or 90 percent of net sales, in 2015. Cost of sales in 2016 primarily reflects a decline in aluminum prices of approximately $53.8 million, which we generally pass through to our customers, offset by an increase in freight, maintenance and supply costs. Freight costs increased $16.4 million to $20.4 million in 2016, compared to $4.0 million in 2015 due mainly to expedited shipments of approximately $13 million to customers arising from the operating inefficiencies discussed in the executive overview section. Repair and maintenance costs increased $4.3 million and supply costs increased $3.4 million in 2016 when compared to 2015. Cost of sales associated with corporate services such as engineering support for wheel program development and manufacturing support increased $2.4 million in 2016 when compared to 2015 primarily due to pre-production charges incurred on new product platforms and increased compensation costs.

U.S. Operations

Cost of sales for our U.S. operations decreased in 2016 by $61.6 million, or 30 percent when compared to 2015.  The 2016 decline in cost of sales for our U.S. plant primarily reflects the effect of reallocating production volume to our Mexico facilities which resulted in a 28 percent decline in unit shipments and the reduction of labor and aluminum costs by $6.1 million and $10.9 million, respectively, when compared to 2015. Lower aluminum prices also contributed to the decline.

Mexico Operations

Cost of sales for our Mexico operations increased by $51.4 million in 2016 when compared to 2015, which is mainly driven by a 20 percent increase in wheel shipments. During 2016, plant labor and benefit costs, including overtime premiums, increased

approximately $4.6 million, primarily as a result of higher average headcount and wage increases. Direct material and contract labor costs increased approximately $1.9 million from 2015 primarily due to the 20 percent rise in unit shipments. The increase in direct material costs was more than offset by a decrease of approximately $42.9 million of aluminum purchase costs which we generally pass through to our customers. Depreciation increased $0.8 million in 2016 compared to 2015. Supply and small tool costs increased $4.5 million and plant repair and maintenance expenses increased $4.9 million in 2016 compared to 2015.

Gross Profit

Consolidated gross profit increased $15.0 million for 2016 to $86.2 million, or 12 percent of net sales, compared to $71.2 million, or 10 percent of net sales, last year. The increase in gross profit primarily reflects the favorable impact of the 9 percent increase in unit shipments and cost reduction resulting from the shift in manufacturing from our U.S. facility to facilities in Mexico. Partially offsetting the increase in gross profit were operating inefficiencies incurred in one of our manufacturing facilities in the last six months of 2016.

The cost of aluminum is a component of our selling prices to OEM customers and a significant component of the overall cost of a wheel. The price for aluminum we purchase is adjusted monthly based primarily on changes in certain published market indices. Our selling prices are adjusted periodically based upon aluminum market price changes, but the timing of such adjustments is based on specific customer agreements and can vary from monthly to quarterly. Even if aluminum selling price adjustments were to perfectly match changes in aluminum purchase prices, an increasing aluminum price will result in a declining gross margin percentage - i.e., same gross profit dollars divided by increased sales dollars equals lower gross profit percentage. The opposite is true in periods during which the price of aluminum decreases. In addition, although our sales are continuously adjusted for aluminum price changes, these adjustments rarely will match exactly the changes in our aluminum purchase prices and cost of sales.  As estimated by the company, when compared to 2015, the unfavorable impact on gross profit related to such differences in timing of aluminum adjustments was approximately $7.7 million in 2016.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $31.6 million, or 4 percent of net sales, in 2016 compared to $34.9 million, or 5 percent of net sales, in 2015. The 2016 decrease is primarily attributable to a $1.4 million gain on sale of the Rogers facility in the last quarter of 2016, a $1.0 million reduction of severance costs and a $1.4 million decline in compensation and employee benefit costs.

Income from Operations

Consolidated income from operations increased $18.3 million in 2016 to $54.6 million, or 7 percent of net sales, from $36.3 million, or 5 percent of net sales, in 2015.

Consolidated income from operations in 2016 was favorably impacted by a 9 percent increase in unit shipments, which was partially offset by operating inefficiencies incurred in one of our manufacturing facilities as more fully explained in the cost of sales discussion above.

U.S. Operations

Operating income from our U.S. operations for 2016 increased by $5.5 million compared to 2015. Operating income increased in 2016 as improved cost performance offset the impact of a 28 percent decrease in unit shipments. The overall cost improvement resulted from improved productivity, as well as lower supply and repair and maintenance costs. However, the lower production levels had an unfavorable impact on operating income due to lower absorption of fixed overhead costs in 2016 when compared to 2015.

Mexico Operations

Operating income from our Mexico operations increased by $12.8 million in 2016 compared to 2015 and reflects a $12.5 million increase in gross profit in 2016. The increase in gross profit primarily reflects a 20 percent increase in unit shipments and a favorable mix of wheel sizes and finishes sold, when compared to 2015.

U.S. versus Mexico Production

During 2016, wheels produced by our Mexico and U.S. operations accounted for 86 percent and 14 percent, respectively, of our total production.  During 2015, wheels produced by our Mexico and U.S. operations accounted for 78 percent and 22 percent, respectively, of our total production.

Interest Income, net and Other Income (Expense), net

Net interest income was $0.2 million and $0.1 million in 2016 and 2015, respectively due to the increase in the average cash balance which was mainly related to the increase in operating income.

Net other income (expense) was expense of $0.1 million and $1.1 million in 2016 and 2015, respectively.

Also included in other income (expense) net are foreign exchange losses of $0.4 million and $1.2 million in 2016 and 2015, respectively.

Effective Income Tax Rate

Our income before income taxes was $54.7 million in 2016 and $35.3 million in 2015. The effective tax rate on the 2016 pretax income was 24.4 percent compared to 32.1 percent in 2015.

The 2016 effective income tax rate was 24.4 percent.  The effective tax rate was lower than the U.S. federal statutory rate primarily as a result of income in jurisdictions where the statutory rate is lower than the U.S. rate and tax benefits due to the release of tax liabilities related to uncertain tax positions as a result of settlements with various tax jurisdictions.

Our effective income tax rate for 2015 was 32.1 percent.   The effective tax rate was lower than the U.S. federal statutory rate primarily as a result of net decreases in the liability for uncertain tax positions partially offset by the reversal of deferred tax assets related to stock based compensation. 

We are a multinational company subject to taxation in many jurisdictions. We record liabilities dealing with uncertainty in the application of complex tax laws and regulations in the various taxing jurisdictions in which we operate. If we determine that payment of these liabilities will be unnecessary, we reverse the liability and recognize the tax benefit during the period in which we determine the liability no longer applies. Conversely, we record additional tax liabilities or valuation allowances in a period in which we determine that a recorded liability is less than we expect the ultimate assessment to be or that a tax asset is impaired. The effects of recording liability increases and decreases are included in the effective income tax rate.

Net Income

Net income in 2016 was $41.4 million, or 6 percent of net sales compared to $23.9 million, or 3 percent of net sales in 2015. Earnings per share were $1.62 and $0.90 per diluted share in 2016 and 2015, respectively.

2015 versus 2014

Net Sales

Net sales in 2015 decreased $17.5 million to $727.9 million from $745.4 million in 2014.  Wheel shipments increased by 1 percent in 2015 compared to 2014 with the higher volume resulting in $6.7 million higher sales compared to 2014. Net sales were unfavorably impacted by a decline in the value of the aluminum component of sales which we generally pass through to our customers and resulted in $11.3 million lower revenues. The average selling price of our wheels decreased 2 percent as the unfavorable impact of the decline in aluminum value and the mix of wheel sizes and finishes sold was offset partially by a favorable change in the volume of wheels sold. Decreases in unit shipments to FCA, BMW, Mitsubishi, Nissan, Tesla and VW were partially offset by increases in unit shipments to Ford, GM, Mazda, Subaru and Toyota.  Wheel program development revenues totaled $6.9 million in 2015 and $9.0 million in 2014.

U.S. Operations

Net sales of our U.S. wheel plants in 2015 decreased $84.3 million, or 32 percent, to $177.2 million from $261.5 million in 2014, reflecting a decrease in unit shipments and a decrease in the average selling price of our wheels. Unit shipments from our U.S. plants decreased 32 percent in 2015, primarily reflecting the reallocation of production volume from the Rogers facility to our plants in Mexico. The decline in volume resulted in $80.4 million lower sales. The volume impact and the 1 percent decrease in the average selling price of our wheels, primarily due to the mix of wheel sizes and finishes sold, was partially offset by an increase in the pass-through price of aluminum. The lower aluminum value decreased revenues by approximately $2.7 million when compared to 2014.

Mexico Operations

Net sales of our Mexico wheel plants in 2015 increased $66.8 million, or 14 percent, to $550.7 million from $483.9 million in 2014, reflecting a 17 percent increase in unit shipments offset partially by a 2 percent decrease in the average selling prices of our wheels. Unit shipments increased in 2015 with the increase in volume resulting in $83.2 million higher sales. The 2 percent decrease in the average selling price of our wheels primarily was a result of an unfavorable mix of wheel sizes and finishes sold and the lower pass-through price of aluminum. The lower aluminum value decreased revenues by approximately $8.6 million when compared to 2014.

Cost of Sales

In 2015, consolidated cost of goods sold decreased $38.5 million to $656.7 million, or 90 percent of net sales, compared to $695.2 million, or 93 percent of net sales, in 2014. Cost of sales in 2015 primarily reflects a decrease in labor and other costs, reflective of the reallocation of production from the U.S. to facilities in Mexico, as well as due to a decline in aluminum prices, which we generally pass through to our customers, when compared to 2014. Plant labor and benefit costs decreased $23.3 million to $93.5 million in 2015, from $116.8 million in 2014. Direct material and subcontract costs increased approximately $3.2 million to $414.1 million from $410.9 million in 2014 primarily due to the 1 percent rise in sales volume. However, the increase in direct material costs was offset by a decrease of approximately $5.3 million of aluminum price which we generally pass through to our customers. Repair and maintenance costs declined $4.6 million to $22.1 million in 2015, compared to $26.7 million in 2014 and supply costs decreased $4.4 million to $19.1 million in 2015, from $23.5 million in 2014. Cost of goods sold for our U.S. operations decreased $82.4 million, while cost of goods sold for our Mexico operations increased $44.4 million, when comparing 2015 to 2014 due to the change in units sold as discussed below. Cost of sales associated with corporate services such as engineering support for wheel program development and manufacturing support decreased $0.7 million in 2015 when compared to 2014.

U.S. Operations

Cost of sales for our U.S. operations decreased by $82.4 million, or 31 percent, in 2015, when compared to 2014.  Cost of sales for our U.S. plants in 2015 primarily reflects the effect of reallocating production volume to Mexico facilities which resulted in a 32 percent decline in unit shipments and reduced labor and other costs, when compared to 2014. During 2015, plant labor and benefit costs, including overtime premiums, decreased approximately $26.8 million, or 46 percent, primarily as a result of reduced headcount and decreases in contract labor, when compared to 2014. The rise in aluminum prices, which we generally pass through to our customers, was $0.5 million. Other favorable changes in 2015 included a $3.9 million decrease in supply and small tool costs and a $4.4 million decrease in plant repair and maintenance costs. These cost reductions largely reflect the decline in production volumes due to the closure of the Roger’s facility.

Mexico Operations

Cost of sales for our Mexico operations increased by $44.4 million in 2015 when compared to 2014, which is mainly driven by a 17% increase in wheel shipments. During 2015, plant labor and benefit costs, including overtime premiums, increased approximately $3.5 million, or a 6 percent increase, when compared to last year, primarily as a result of higher average headcount and wage increases. Direct material and subcontract costs increased approximately $41.3 million to $307.2 million from $265.9 million in 2014 primarily due to the 17 percent rise in unit shipments. The increase in direct material costs was partially offset by a decrease of approximately $7.1 million of aluminum price which we generally pass through to our customers. Depreciation increased $7.9 million to $24.9 million from $17.0 million in 2014 due to the addition of the new plant in 2015. Supply and small tool costs decreased $0.4 million and plant repair and maintenance expenses decreased $0.2 million.

Gross Profit

Consolidated gross profit increased $21.0 million for 2015 to $71.2 million, or 10 percent of net sales, compared to $50.2 million, or 7 percent of net sales, last year. The increase in gross profit primarily reflects the favorable impact of the 1 percent increase in unit shipments and the decrease in labor and other costs which relates to the shift in manufacturing from our Rogers facility to facilities in Mexico.

When comparing 2015 with 2014, the unfavorable impact on gross profit related to such differences in timing of aluminum adjustments was approximately $6.1 million in 2015; however, this impact was offset by unreimbursed cost increases for aluminum alloying premiums.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $34.9 million, or 5 percent of net sales, in 2015 and $32.3 million, or 4 percent of net sales, in 2014. The 2015 increase is primarily attributable to higher professional service fees of $1.4 million and legal fees of $0.6 million. The higher level of professional service and legal fees incurred during 2015 relate to costs incurred in association

with the move of the corporate office from California to Michigan. We incurred recruiting costs, severance, relocation, duplicative costs and training costs of $4.1 million to ensure a successful transition.

Income from Operations

Consolidated income from operations increased $18.4 million in 2015 to $36.3 million, or 5 percent of net sales, from $17.9 million, or 2 percent of net sales, in 2014.  Income from our Mexico operations increased $21.3 million and income from our U.S. operations increased $0.6 million, when comparing 2015 to 2014.  Offsetting these increases were costs relating to relocating our corporate office. Included below are the major items that impacted income from operations for our U.S. and Mexico operations during 2015.

Consolidated income from operations in 2015 was unfavorably impacted by start-up costs associated with our new plant in Mexico and the transition of our corporate office. While initial commercial production began in the first quarter of 2015, cost absorption was sub-optimal until production volumes reach planned levels towards the end of 2015.

U.S. Operations

Operating income from our U.S. operations for 2015 increased by $0.6 million compared to 2014. Operating income increased in 2015 as lower costs overall offset the impact of a 32 percent decrease in unit shipments. The overall cost improvement included reductions in labor due to the reallocation of production to Mexico facilities and improved productivity, as well as lower supply and repair and maintenance costs as more fully explained in the cost of sales discussion above. However, the lower production levels had an unfavorable impact on operating income due to lower absorption of fixed overhead costs in 2015 when compared to 2014. As a percentage of net sales, our gross margin decreased 2 percent in 2015 when compared to 2014.

Mexico Operations

Operating income from our Mexico operations increased by $21.3 million in 2015 compared to 2014.  Income from operations in 2015 reflects a $22.4 million increase in gross profit, as compared to 2014. The increase in gross profit in 2015 is due to a 17 percent increase in unit shipments offset by lower average selling price due to an unfavorable mix of wheel sizes and finishes sold, when compared to 2014.

U.S. versus Mexico Production

During 2015, wheels produced by our Mexico and U.S. operations accounted for 78 percent and 22 percent, respectively, of our total production.  During 2014, wheels produced by our Mexico and U.S. operations accounted for 69 percent and 31 percent, respectively, of our total production.

Interest Income, net and Other Income (Expense), net

Net interest income was $0.1 million and $1.1 million in 2015 and 2014, respectively due to the increase in the average cash balance which was mainly related to the increase in operating income. Net other income (expense) was expense of $1.1 million and $3.3 million in 2015 and 2014, respectively. Included in other income (expense) in 2014 was a $2.5 million impairment charge for an equity investment accounted for under the cost method of accounting. In 2010 we acquired a minority interest in Synergies Casting Limited ("Synergies"(“OSPs”), a private aluminum wheel manufacturer based in Visakhapatnam, India. In October 2014, a typhoon caused significant damage to the facilities and operations of Synergies and, in the fourth quarter of 2014, we tested the $4.5 million carrying value of our investment for impairment. Based on our evaluation, we determined that an other-than-temporary impairment existed and wrote the investment down to its estimated fair value of $2.0 million. Also included in other income (expense) net are foreign exchange losses of $1.2 million and $1.0 million in 2015 and 2014, respectively.

Effective Income Tax Rate

Our income before income taxes was $35.3 million in 2015 and $15.7 million in 2014. The effective tax rate on the 2015 pretax income was 32.1 percent in 2015 compared to 43.9 percent in 2014.

Our effective income tax rate for 2015 was 32.1 percent.   The effective tax rate was lower than the US federal statutory rate primarily as a result of net decreases in the liability for uncertain tax positions partially offset by the reversal of deferred tax assets related to stock based compensation. 

Our effective income tax rate for 2014 was 43.9 percent.  The effective tax rate was higher than the US federal statutory rate primarily as a result of valuation allowances established for foreign deferred tax assets and various permanent differences including non-deductible expenses related to recent tax law changes in Mexico partially offset by a favorable net impact of a reduction in the liability for unrecognized tax positions.

Net Income

Net income in 2015 was $23.9 million, or 3 percent of net sales, and included an income tax provision of $11.3 million compared to $8.8 million, or 1 percent of net sales in 2014, including an income tax provision of $6.9 million. Earnings per share were $0.90 and $0.33 per diluted share in 2015 and 2014, respectively.

Liquidity and Capital Resources

Our sources of liquidity include cash and cash equivalents, short-term investments, net cash provided by operating activities, our senior secured revolving credit facility discussed below and other external sources of funds. During the three years ended December 31, 2016, we had no bank or other interest-bearing debt. At December 31, 2016, our cash, cash equivalents and short-term investments totaled $58.5 million compared to $53.0 million at year-end 2015 and $66.2 million at the end of 2014.

Our working capital requirements, investing activities and cash dividend payments have historically been funded from internally generated funds, proceeds from the exercise of stock options or existing cash, cash equivalents and short-term investments, and we believe these sources will continue to meet our capital requirements in the foreseeable future. Our working capital decreased in 2016, primarily due to an increase in accounts payable related to timing of payments. In December 2014, we entered into a senior secured revolving credit facility (discussed below) to provide financing, as necessary, for general corporate purposes.

As part of our commitment to enhancing shareholder value, we have been repurchasing our common stock. In October 2014, our Board of Directors approved the 2014 Repurchase Program, authorizing the repurchase of up to $30.0 million of our common stock. Through December 31, 2015, we repurchased 1,056,954 shares of company stock at a cost of $19.6 million under the 2014 Repurchase Program. The 2014 Repurchase Program was completed in January 2016, with purchases since December 31, 2015 of 585,970 shares for a cost of $10.3 million. In January of 2016, our Board of Directors approved a new stock repurchase program (the “2016 Repurchase Program”), authorizing the repurchase of up to $50.0 million of common stock.  Under the 2016 Repurchase Program, we may repurchase common stock from time to time on the open market or in private transactions. The timing and extent of the repurchases under the 2016 Repurchase Program will depend upon market conditions and other corporate considerations in our sole discretion. Through December 31, 2016, we repurchased 454,718 shares of company stock at a cost of $10.4 million under the 2016 Repurchase Program.

On December 19, 2014, we entered into a senior secured credit agreement (the "Credit Agreement") with J.P. Morgan Securities LLC, JPMorgan Chase Bank, N.A. (“JPMCB”) and Wells Fargo Bank, National Association (together with JPMCB, the “Lenders”). The Credit Agreement consists of a senior secured revolving credit facility in an initial aggregate principal amount of $100.0 million (the “Facility”). In addition, the company is entitled to request, subject to certain terms and conditions and the agreement of the Lenders, an increase in the aggregate revolving commitments under the Facility or to obtain incremental term loans in an aggregate amount not to exceed $50.0 million, which are uncommitted to by any lender. The company intends to use the proceeds of the Facility to finance the working capital needs, and for the general corporate purposes of the company and its subsidiaries. At December 31, 2016, the company had $97.2 million of availability under the Facility after giving effect to $2.8 million in outstanding letters of credit.

The following table summarizes the cash flows from operating, investing and financing activities as reflected in the consolidated statements of cash flows.

Fiscal Year Ended December 31,		2016				2015				2014
(Thousands of dollars)
Net cash provided by operating activities		$	78,491			$	59,349			$	11,627
Net cash used in investing activities		(35,038		)		(34,946		)		(110,435		)
Net cash used in financing activities		(37,327		)		(31,348		)		(33,612		)
Effect of exchange rate changes on cash		(376		)		(3,470		)		(4,430		)
Net (decrease) increase in cash and cash equivalents		$	5,750			$	(10,415	)		$	(136,850	)

2016 versus 2015

Our liquidity remained strong in 2016. Working capital (current assets minus current liabilities) and our current ratio (current assets divided by current liabilities) were $168.1 million and 3.0:1, respectively, at December 31, 2016, versus $172.0 million and 3.3:1 at December 31, 2015.  The 2016 decrease in working capital resulted primarily from an increase in accounts payable related to timing of payments which was partially offset by an increase in inventory. We generate our principal working capital resources primarily through operations. The increase in cash from working capital in 2016 primarily reflects a significant increase in net income and an increase in accounts payable offset by increased inventories. Assuming continuation of our historically strong liquidity, which includes funds available under our revolving credit facility, we believe we are well positioned to take advantage of new and complementary business opportunities, and to fund our working capital and capital expenditure requirements for the foreseeable future.

Net cash provided by operating activities increased $19.1 million to $78.5 million for 2016, compared to net cash provided by operating activities of $59.3 million for 2015.  The increase in operating activities relates primarily to the $17.4 million increase in net income. Additional sources of cash flow related to an $15.9 million increase in accounts payable and an $8.0 million decrease in accounts receivable. Offsetting amounts were cash flow uses of $22.3 million increase in inventories and a $4.7 million decrease in income tax payable.

Our principal investing activities during 2016 were the funding of $39.6 million of capital expenditures and $4.3 million proceeds from the sale of the Rogers facility.  Principal investing activities during 2015 included the funding of $39.5 million of capital expenditures and the purchase of $1.0 million of certificates of deposit, partially offset by the receipt of $3.8 million cash proceeds from maturing certificates of deposit and $1.9 million proceeds from sales of fixed assets.  

Our principal financing activities during 2016 consisted of the repurchase of our common stock for cash totaling $20.7 million and payment of cash dividends on our common stock totaling $18.3 million, partially offset by the receipt of cash proceeds from the exercise of stock options totaling $1.6 million. Financing activities during 2015 consisted of the repurchase of our common stock for cash totaling $19.6 million and payment of cash dividends on our common stock totaling $19.1 million, partially offset by the receipt of cash proceeds from the exercise of stock options totaling $7.3 million.

2015 versus 2014

Working capital (current assets minus current liabilities) and our current ratio (current assets divided by current liabilities) were $172.0 million and 3.3:1, respectively, at December 31, 2015, versus $204.0 million and 3.8:1 at December 31, 2014.  The 2015 decrease in working capital resulted primarily from expenditures for an expansion to our new Mexican wheel plant, repurchases of our common stock (see Item 5, "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities" in this Annual Report) and timing of activity affecting the working capital accounts. We generate our principal working capital resources primarily through operations. The increase in cash from working capital in 2015 primarily reflects a lower balance of inventory and prepaid aluminum in addition to a higher balance in accrued expenses, offset by higher accounts receivable, and lower accounts payable.

Net cash provided by operating activities increased $47.7 million to $59.3 million for 2015, compared to net cash provided by operating activities of $11.6 million for 2014.  The primary operating activities during 2015 included net income of $23.9 million and depreciation of $34.5 million. Additional sources of cash flow related to an $11.5 million decrease in inventories, $4.7 million increase in income tax payable and $4.6 million increase in other current liabilities. Offsetting amounts were cash flow uses of $14.0 million increase in accounts receivable, $2.1 million increase in other assets and a $1.1 million decrease in accounts payable.

Our principal investing activities during 2015 were the funding of $39.5 million of capital expenditures and the purchase of $1.0 million of certificates of deposit, partially offset by the receipt of $3.8 million cash proceeds from maturing certificates of deposit and $1.8 million proceeds from sales of fixed assets.  Principal investing activities during 2014 included the funding of $112.6 million of capital expenditures and the purchase of $3.8 million of certificates of deposit, partially offset by the receipt of $3.8 million cash proceeds from maturing certificates of deposit and $1.9 million proceeds from sales of fixed assets.  

Our principal financing activities during 2015 consisted of the repurchase of our common stock for cash totaling $19.6 million and payment of cash dividends on our common stock totaling $19.1 million, partially offset by the receipt of cash proceeds from the exercise of stock options totaling $7.3 million. Financing activities during 2014 consisted of the repurchase of our common stock for cash totaling $21.8 million and payment of cash dividends on our common stock totaling $19.4 million, partially offset by the receipt of cash proceeds from the exercise of stock options totaling $7.4 million.

Risk Management

We are subject to various risks and uncertainties in the ordinary course of business due, in part, to the competitive global nature of the industry in which we operate, to changing commodity prices for the materials used in the manufacture of our products, and to development of new products.

We have operations in Mexico with sale and purchase transactions denominated in both pesos and dollars.  The peso is the functional currency of certain of our operations in Mexico. The settlement of accounts receivable and accounts payable transactions denominated in a non-functional currency results in foreign currency transaction gains and losses. In 2016, the value of the Mexican peso decreased by 19 percent in relation to the U.S. dollar.  For the years ended December 31, 2016, 2015 and 2014, we had foreign currency transaction losses of $0.4 million, $1.2 million and $1.0 million, respectively, which are included in other income (expense) in the Consolidated Income Statements in Item 8, "Financial Statements and Supplementary Data" of this Annual Report.

Since 1990, the Mexican peso has experienced periods of relative stability followed by periods of major declines in value. The impact of changes in value of our foreign operations relative to the U.S. dollar has resulted in a cumulative unrealized translation loss at December 31, 2016 of $105.2 million. Translation gains and losses are included in other comprehensive income (loss) in the Consolidated Statements of Shareholders' Equity in Item 8, "Financial Statements and Supplementary Data" of this Annual Report.

Changes in currency exchange rates may affect the relative prices at which we and our foreign competitors sell products in the same market. In addition, changes in the value of the relevant currencies may affect the cost of certain items required in our operations. Due to customer requirements, a significant shift is occurring in the currency denominated in our contracts with our customers. As a result of this change we currently project that in 2016 and beyond the vast majority of our revenues will be denominated in the U.S. dollar, rather than a more balanced mix of U.S. dollar and Mexican peso. In the past we have relied upon significant revenues denominated in the Mexican peso to provide a "natural hedge" against foreign exchange rate changes impacting our peso denominated costs incurred at our facilities in Mexico. Accordingly, the foreign exchange exposure associated with peso denominated costs is a growing risk factor and could have a material adverse effect on our operating results.

We are entering into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks associated with certain existing assets and liabilities, certain firmly committed transactions and forecasted future cash flows. We have implemented a program to hedge a portion of our material foreign exchange exposures, typically for up to 36 months. However, we may choose not to hedge certain foreign exchange exposures for a variety of reasons, including but not limited to accounting considerations and the prohibitive economic cost of hedging particular exposures. We do not use derivative contracts for trading, market-making, or speculative purposes. For additional information on our derivatives, see Notes 4 and 15 of the Notes to the Financial Statements in Item 8, "Financial Statements and Supplementary Data" of this Annual Report.

When market conditions warrant, we may enter into purchase commitments to secure the supply of certain commodities used in the manufacture of our products, such as aluminum, natural gas and other raw materials. We previously had several purchase commitments for the delivery of natural gas through 2015. These natural gas contracts were considered to be derivatives under U.S. GAAP, and when entering into these contracts, it was expected that we would take full delivery of the contracted quantities of natural gas over the normal course of business. Accordingly, at inception, these contracts qualified for the normal purchase, normal sale ("NPNS") exemption provided for under U.S. GAAP.

Contractual Obligations

Contractual obligations as of December 31, 2016 are as follows (amounts in millions):

		Payments Due by Fiscal Year
Contractual Obligations		2017				2018				2019				2020				2021				Thereafter				Total
Retirement plans		$	1.2			$	1.4			$	1.4			$	1.5			$	1.4			$	46.4			$	53.3
Purchase obligations		0.3				—				—				—				—				—				0.3
Operating leases		0.8				0.7				0.4				0.4				0.4				1.8				4.5
Total		$	2.3			$	2.1			$	1.8			$	1.9			$	1.8			$	48.2			$	58.1

The table above includes, under Purchase Obligations, amounts committed related to expansion or purchase of equipment. The table above does not reflect unrecognized tax benefits of $5.3 million, for which the timing of settlement is uncertain, and a $24.8 million liability carried on our consolidated balance sheet at December 31, 2016 for derivative financial instruments maturing in 2017 through 2019.

Off-Balance Sheet Arrangements

As of December 31, 2016, we had no significant off-balance sheet arrangements.

Inflation

Inflation has not had a material impact on our results of operations or financial condition for the three years ended December 31, 2016. Cost increases in our principal raw material, aluminum, fundamentally are passed through to our customers, with timing of the pass-through dependent on the specific commercial agreements. Wage increases have averaged approximately 3 percent during this period. Cost increases for labor, other raw materials and for energy may not be recovered in our selling prices. Additionally, competitive global pricing pressures are expected to continue, which may lessen the possibility of recovering these types of cost increases in selling prices.

NON-GAAP FINANCIAL MEASURES

In this annual report, we discuss two important measures that are not calculated according to U.S. GAAP, value added sales and Adjusted EBITDA.

Value added sales is a key measure that is not calculated according to GAAP. In the discussion of operating results, we provide information regarding value added sales. Value added sales represent net sales less the value of aluminum and services provided by OSP’s that are included in net sales. As discussed further below, arrangements with our customers allow us to pass on changes in aluminum prices and OSP costs;prices; therefore, fluctuations in underlying aluminum price and the use of OSP’s generally doesdo not directly impact our profitability. Accordingly, value added sales is worthy of being highlighted for the benefit of users of our financial statements. Our intent is to allow users of the financial statements to consider our net sales information both with and without the aluminum and OSP cost components thereof. Management utilizes value added sales as a key metric to determine growth of the companyCompany because it eliminates the volatility of aluminum prices.

Fiscal Year Ended December 31,		2019				2018				2017				2016				2015
(Thousands of dollars)
Net sales		$	1,372,487			$	1,501,827			$	1,108,055			$	732,677			$	727,946
Less, aluminum value and OSP			(617,162	)			(704,640	)			(491,302	)			(323,987	)			(367,100	)
Value added sales		$	755,325			$	797,187			$	616,753			$	408,690			$	360,846

Fiscal Year Ended December 31,	2016			2015			2014			2013			2012
(Thousands of dollars)
Net Sales	$	732,677		$	727,946		$	745,447		$	789,564		$	821,454
Less, aluminum value and OSP	(323,987		)	(367,100		)	(376,092		)	(388,973		)	(423,539		)
Value added sales	$	408,690		$	360,846		$	369,355		$	400,591		$	397,915

Adjusted EBITDA is a key measure that is not calculated according to U.S. GAAP. Adjusted EBITDA is defined as earnings before interest income and expense, income taxes, depreciation, amortization, restructuring charges and other closure costs and impairments of long-lived assets and investments.investments, changes in the fair value of the redeemable preferred stock embedded derivative liability, acquisition and integration costs, certain hiring and separation related costs, gains associated with early debt extinguishment, and accounts receivable factoring fees. We use Adjusted EBITDA as an important indicator of the operating performance of our business. Adjusted EBITDA is used in our internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors and evaluating short-term and long-term operating trends in our operations. We believe the Adjusted EBITDA financial measure assists in providing a more complete understanding of our underlying operational measures to manage our business, to evaluate our performance compared to prior periods and the marketplace and to establish operational goals. Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies.

Adjusted EBITDA as a percentage of net sales is a key measure that is not calculated according to GAAP. Adjusted EBITDA as a percentage of net sales is defined as Adjusted EBITDA divided by net sales.

Adjusted EBITDA as a percentage of value added sales is a key measure that is not calculated according to GAAP. Adjusted EBITDA as a percentage of value added sales is defined as Adjusted EBITDA divided by value added sales.

27

---

The following table reconciles our net income, the most directly comparable GAAP financial measure, to our Adjusted EBITDA:

Fiscal Year Ended December 31,		2019				2018				2017				2016				2015
(Thousands of dollars)
Net income (loss)		$	(96,460	)		$	25,961			$	(6,009	)		$	41,381			$	23,944
Interest expense (income), net			47,011				50,097				40,004				(245	)			(103	)
Income tax provision			3,423				6,291				6,875				13,340				11,339
Depreciation (1)			75,773				68,753				54,167				34,261				34,530
Amortization			24,944				26,303				15,168				—				—
Impairment of goodwill and indefinite-lived intangibles (5)			102,238				—				—				—				—
Acquisition, integration, restructuring, debt    extinguishment gains and factoring fees (2)			11,084				11,698				36,044				1,210				6,343
Change in fair value of redeemable preferred stock    embedded derivative liability (3)			782				(3,480	)			(6,164	)			—				—
Gain on sale of facility (4)			—				—				—				(1,436	)			—
Adjusted EBITDA		$	168,795			$	185,623			$	140,085			$	88,511			$	76,053
Adjusted EBITDA as a percentage of net sales			12.3	%			12.4	%			12.6	%			12.1	%			10.4	%
Adjusted EBITDA as a percentage of value added    sales			22.3	%			23.3	%			22.7	%			21.7	%			21.1	%

(1)	Depreciation expense in 2019, 2016 and 2015 includes $7.6 million, $0.2 million and $1.7 million, respectively, of accelerated depreciation charges as a result of shortened estimated useful lives due to restructuring activities.

(2)

In 2019, we incurred approximately $5.4 million of Fayetteville restructuring costs (excluding $7.6 million of accelerated depreciation), and $1.8 million of machinery and equipment relocation costs from Fayetteville to other Superior sites, $4.8 million of certain hiring and separation costs, $1.7 million of acquisition and integration costs, $1.0 million of accounts receivable factoring fees, and $3.7 million of gains on extinguishment of debt.

Fiscal Year Ended December 31,	2016			2015			2014			2013			2012
(Thousands of dollars)
Net income	$	41,381		$	23,944		$	8,803		$	22,824		$	30,891
Interest income, net	(245		)	(103		)	(1,095		)	(1,691		)	(1,252		)
Income tax provision	13,340			11,339			6,899			14,017			3,598
Depreciation (1)	34,261			34,530			35,582			28,466			26,362
Closure costs (excluding accelerated depreciation) (2)	1,210			6,343			5,564			—			—
Gain on sale of facility (2)	(1,436		)	—			—			—			—
Adjusted EBITDA	$	88,511		$	76,053		$	55,753		$	63,616		$	59,599
Adjusted EBITDA as a percentage of net sales	12.1		%	10.4		%	7.5		%	8.1		%	7.3		%
Adjusted EBITDA as a percentage of value added sales	21.7		%	21.1		%	15.1		%	15.9		%	15.0		%

⁽¹⁾ Depreciation expense

In 2018, we incurred approximately $9.7 million in 2016integration costs, $1.5 million of CEO separation costs and 2015 includes $0.2$0.5 million of accounts receivable factoring fees.

In 2017, we incurred $25.1 million of costs related to the acquisition of Uniwheels and $1.7$10.8 million respectively of accelerated depreciation charges as a result of shortened estimated useful lives due to restructuring activities described in Note 2, "Restructuring" in Notes to Consolidated Financial Statements in Item 8, "Financial Statements and Supplementary Data" in this Annual Report.

⁽²⁾ In the fourth quarter ofintegration costs.

During 2016, we sold the Rogers facility for total proceeds of $4.3 million, resulting in a $1.4 million gain on sale. Prior to the sale in 2016, Rogers incurred $1.5$1.2 million in closure and operating costs which included(excluding $0.3 million in depreciation. Thedepreciation) associated with the closure of our facility in Rogers, facility adjusted EBITDA was a positive $0.2 million in 2016 due to the $1.4 million gain on sale. Arkansas.

During 2015, we had completed the shutdown of the Rogers facility which resulted in a gross margin loss of $8.0 million. We incurredrecording $4.3 million in restructuring costs related to an impairment of fixed assets, and other associated costs such as asset relocation costs. Additionally, we also experienced $2.0 million of further closure costs including inefficiencies and $1.7 million in depreciation. The adjusted EBITDA impact of the Rogers facility closure for 2015 was $6.3 million, which includes the $4.3 million of restructuring costs and $2.0 million of inefficiency costs related to the closure. During 2014, we recorded $3.1 million of restructuring costs excluding accelerated depreciation and we impaired an investment by $2.5 million.costs.

(3)

The change in the fair value is mainly driven by the change in our stock price from the original valuation date in May 2017. Refer to Note 4, “Fair Value Measurements” and Note 5, “Derivative Financial Instruments” in the Notes to the Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data” in this Annual Report.

(4)	In the fourth quarter of 2016, we sold the Rogers facility, which resulted in a $1.4 million gain on sale.

(5)

In the fourth quarter of 2019, we recognized a goodwill and indefinite-lived intangibles impairment charge of $102.2 million   relating to our European reporting unit (refer to Note 10, “Goodwill and Other Intangible Assets” in the Notes to the Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data” in this Annual Report).

Critical Accounting Policies and Estimates

The preparation

Accounting estimates are an integral part of the consolidated financial statements in conformity with U.S. GAAP requires management to apply significant judgment in makingstatements. These estimates require the use of judgments and assumptions that affect amountsthe reported therein, as well as financial information included in this Management's Discussion and Analysis of Financial Condition and Results of Operations. These estimates and assumptions, which are based upon historical experience, industry trends, terms of various past and present agreements and contracts and information available from other sources that are believed to be reasonable under the circumstances, form the basis for making judgments about the carrying valuesamounts of assets and liabilities, thatthe disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses in the periods presented. We believe the accounting estimates employed are not readily apparent through other sources. There can be no assurance thatappropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in developing estimates actual results reportedcould differ from the original estimates, requiring adjustments to these balances in future periods (refer to Note 1, “Summary of Significant Accounting Policies” in the future will not differ from these estimates, or that future changesNotes to Consolidated Financial Statements in these estimates will not adversely impactItem 8, “Financial Statements and Supplementary Data” in this Annual Report for our results of operations or financial condition. As described below, the most significant accounting estimates inherent in the preparation of our financial statements include estimates and assumptions as to revenue recognition, inventory valuation, amortization of preproduction costs, impairment of and the estimated useful lives of our long-lived assets, the fair value of stock-based compensation, as well as those used in the determination of liabilitiespolicies related to self-insured portions of employee benefits, workers' compensation, derivatives and deferred income taxes.

our critical accounting estimates).

28

---

Wheel Revenue Recognition - Our products are manufactured to customer specifications under standard purchase orders. We shipSales of our products to OEM customers based on release schedules provided weekly by our customers. Our sales and production levels are highly dependent upon the weekly forecasted production levels of our customers. Sales of these products, net of estimated pricing adjustments and their related costs are recognized when title and risk of losscontrol transfers to the customer, generally upon shipment. Tooling reimbursement revenues, related to initial tooling reimbursed by our customers, are deferred and recognized over the expected life of the wheel program on a straight-line basis. A portion of our selling prices to OEM customers is attributable to the aluminum content of our wheels. Our selling prices are adjusted periodically for changes in the current aluminum market based upon specified aluminum price indices during specific pricing periods, as agreed with our customers. See Preproduction CostsOur selling prices also incorporate a wheel weight price component which is based on customer product specifications. Weights are monitored, and Revenue Recognition Relatedprices are adjusted as variations arise. Customer contract prices are generally adjusted quarterly to Long-Term Supply Arrangements incorporate these price adjustments. Price adjustments due to production efficiencies are generally recognized as and when negotiated with customers.

Redeemable Preferred Stock Embedded Derivative -belowWe issued redeemable preferred stock as a part of the financing for a discussionthe acquisition of tooling reimbursement revenues.

Derivative Financial Instrumentsour European business. The redeemable preferred stock includes embedded derivatives relating to the conversion and Hedging Activities - In orderearly redemption options. Accordingly, we have recorded an embedded derivative liability representing the combined fair value of the right of holders to hedge exposure related to fluctuations in foreign currency ratesreceive common stock upon conversion of redeemable preferred stock at any time (the “conversion option”) and the costright of certain commodities usedthe holders to exercise their early redemption option upon the occurrence of a redemption event (the “early redemption option”). The embedded derivative liability is adjusted to reflect fair value at each period end with changes in fair value recorded in the manufacture“Change in fair value of redeemable preferred stock embedded derivative liability” financial statement line item of the Company’s consolidated income statement.

A binomial option pricing model is used to estimate the fair value of the conversion and early redemption options embedded in the redeemable preferred stock. The binomial model utilizes a “decision tree” whereby future movement in the Company’s common stock price is estimated based on the volatility factor. The binomial option pricing model requires the development and use of assumptions. These assumptions include estimated volatility of the value of our products, we periodically may purchase derivative financial instruments such as forward contracts, optionscommon stock, assumed possible conversion or collarsearly redemption dates, an appropriate risk-free interest rate, risky bond rate and dividend yield (refer to offset or mitigate the impact of such fluctuations. Programs to hedge currency rate exposure may address ongoing transactions including, foreign-currency-denominated receivables and payables, as well as specific transactions related to purchase obligations. Programs to hedge exposure to commodity cost fluctuations would be based on underlying physical consumption of such commodity. At December 31, 2016, we held forward currency exchange contracts as discussed below.

We account for our derivative instruments as either assets or liabilities and carry them at fair value.

For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income ("AOCI") in shareholders’ equity and reclassified into incomeNote 5, “Derivative Financial Instruments” in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in current income. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. For forward exchange contracts designated as cash flow hedges, changes in the time value are included in the definition of hedge effectiveness. Accordingly, any gains or losses related to this component are reported as a component of AOCI in shareholders’ equity and reclassified into income in the same period or periods during which the hedged transaction affects earnings. Derivatives that do not qualify as hedges are adjusted to fair value through current income. See Note 4, "Derivative Financial Instruments" in Notes to Consolidated Financial Statements in Item 8, for further discussion of derivatives.

When market conditions warrant, we may also enter into contracts to secure the supply of certain commodities used“Financial Statements and Supplementary Data” in the manufacture of our products, such as aluminum, natural gas and other raw materials. We previously had several purchase commitments for the delivery of natural gas through the end of 2015. These natural gas contracts were considered to be derivative instruments under U.S. GAAP and when entering into these contracts, it was expected that we would take full delivery of the contracted quantities of natural gas over the normal course of business. Accordingly, at inception, these contracts qualified for the normal purchase normal sale exemption provided for under U.S. GAAP. As such, we do not account for these purchase commitments as derivatives unless there is a change in the facts or circumstances that causes management to believe that these commitments would not be used in the normal course of business. See Note 18, "Risk Management" in Notes to Consolidated Financial Statements in Item 8this Annual Report for additional information pertaining to these purchase commitments.

embedded derivatives).

Fair Value Measurements - The companyCompany applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis, while other assets and liabilities are measured at fair value on a nonrecurring basis, such as when we have an asset impairment. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

Our derivatives are over-the-counter customized derivative transactions and are not exchange traded. We estimate the fair value of these instruments using industry-standard valuation models such as a discounted cash flow. These models project future cash flows and discount the future amounts to a present value using market-based expectations for interest rates, foreign exchange rates, commodity prices and the contractual terms of the derivative instruments. The discount rate used is the relevant interbank deposit rate (e.g., LIBOR) plus an adjustment for non-performance risk. In certain cases, market data may not be available, and we may use broker quotes and models (e.g., Black-Scholes) to determine fair value. This includes situations where there is lack of liquidity for a particular currency or commodity or when the instrument is longer dated.

Inventories - Inventories are stated at The fair value measurements of the lower of cost or market value and categorized as raw material, work-in-process or finished goods. When necessary, management uses estimates of net realizable value to record inventory reserves for obsolete and/or slow-moving inventory. Our inventory values, whichredeemable preferred shares embedded derivatives are based upon standard costs for raw materials and labor and overhead established atLevel 3 unobservable inputs reflecting management’s own assumptions about the beginning ofinputs used in pricing the year, are adjustedliability (refer to actual costs on a first-in, first-out ("FIFO") basis. Current raw material prices and labor and overhead costs are utilized in developing these adjustments.

Preproduction Costs and Revenue Recognition Related to Long-Term Supply Arrangements - We incur preproduction engineering and tooling costs related to the products produced for our customers under long-term supply agreements. We expense all preproduction engineering costs for which reimbursement is not contractually guaranteed by the customer or which are in excess of the contractually guaranteed reimbursement amount. We amortize the cost of the customer-owned tooling over the expected life of the wheel program on a straight line basis. Also, we defer any reimbursements made to us by our customers and recognize the tooling reimbursement revenue over the same period in which the tooling is in use. ChangesNote 5, “Derivative Financial Instruments” in the facts and circumstances of individual wheel programs may accelerate the amortization of both the cost of the customer-owned tooling and the deferred tooling reimbursement revenues. Recognized tooling reimbursement revenues, which totaled approximately $8.0 million, $5.8

million and $8.2 million, in 2016, 2015 and 2014, respectively, are included in net sales in theNotes to Consolidated IncomeFinancial Statements in Item 8, "Financial“Financial Statements and Supplementary Data" ofData” in this Annual Report.Report).

Impairment of Goodwill - As of December 31, 2019 and 2018, we had recorded goodwill of $184.8 million and $291.4 million as a result of the acquisition of our European business on May 30, 2017. Goodwill is not amortized but is tested for impairment on at least an annual basis.

We conducted the annual goodwill impairment testing as of December 31, 2019 using a quantitative approach. We utilized both an income approach and a market approach to determine the fair value of the European reporting unit as part of our goodwill impairment assessment. The following tables summarizeincome approach is based on projected debt-free cash flow, which is discounted to the unamortized customer-owned tooling costs includedpresent value using discount factors that consider the timing and risk of cash flows. The discount rate used is the weighted average of the estimated cost of equity and of debt (“weighted average cost of capital”). The weighted average cost of capital is adjusted as necessary to reflect risk associated with the business of the European reporting unit. Financial projections are based on estimated production volumes, product

29

---

prices and expenses, including raw material cost, wages, energy and other expenses. Other significant assumptions include terminal value cash flow and growth rates, future capital expenditures and changes in future working capital requirements. The market approach is based on the observed ratios of enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA) of comparable, publicly traded companies. The market approach fair value is determined by multiplying historical and anticipated financial metrics of the European reporting unit by the EBITDA pricing multiples derived from comparable, publicly traded companies. A considerable amount of management judgment and assumptions are required in performing the quantitative impairment test, principally related to determining the fair value of the reporting unit.  While the Company believes its judgments and assumptions are reasonable, different assumptions could change the estimated fair value.

We determined that the carrying value of the European reporting unit exceeded its fair value at December 31, 2019. The decline in fair value was due to lower forecasted industry production volumes in our non-currentlong-range plan (completed in the fourth quarter of 2019), as compared to our prior year long-range plan. This was primarily due to softening in the Western and Central European automotive market. Industry forecasts for Western and Central European production volumes in 2020 to 2023 are lower than prior year forecasts by approximately 6 percent, with the most significant decline in the outlook occurring in the fourth quarter of 2019. Similarly, EBITDA and cash flow for the European reporting unit declined as compared to the prior year long-range plan due to lower forecasted production volumes, which adversely impacted fair value under both the income and market approaches, respectively. In determining the fair value, the Company weighted the income and market approaches, 75 percent and 25 percent, respectively. Significant assumptions used under the income approach included a weighted average cost of capital (WACC) of 10.0 percent and a long-term growth rate of 2.0 percent. In determining the WACC, management considered the level of risk inherent in the cash flow projections and current market conditions. The use of these unobservable inputs results in classification of the fair value estimate as a Level 3 measurement in the fair value hierarchy. Based on the results of our quantitative analysis, we recognized a non-cash goodwill impairment charge equal to the excess of the carrying value over the fair value of the European reporting unit at December 31, 2019 of $99.5 million (refer to Note 1, “Summary of Significant Accounting Policies” and Note 10, “Goodwill and Other Intangible Assets” in the Notes to Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data” in this Annual Report for further discussion of asset impairments).

Impairment of Intangible Assets – Intangible assets include both finite and indefinite-lived intangible assets. Finite-lived intangible assets consist of brand names, technology and customer relationships. Finite-lived intangible assets are amortized on a straight-line over their estimated useful lives (since the deferred tooling revenues includedpattern in accrued liabilities which the asset will be consumed cannot be reliably determined). Indefinite-lived intangible assets, excluding goodwill, consist of trade names associated with our aftermarket business.  In the fourth quarter of 2019, we recognized an indefinite-lived intangible impairment charge of $2.7 million relating to trade names used in our European aftermarket business (refer to Note 1, “Summary of Significant Accounting Policies” and other non-current liabilities:

December 31,		2016				2015
(Dollars in Thousands)
Unamortized Preproduction Costs
Preproduction costs		$	78,299			$	73,095
Accumulated amortization		(65,100		)		(58,632		)
Net preproduction costs		$	13,199			$	14,463
Deferred Tooling Revenue
Accrued liabilities		$	5,419			$	2,908
Other non-current liabilities		2,593				1,266
Total deferred tooling revenue		$	8,012			$	4,174

Note 10, “Goodwill and Other Intangible Assets” in the Notes to Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data” in this Annual Report for further discussion of asset impairments).  

Impairment of Long-Lived Assets and Investments - In accordance with U.S. GAAP, managementManagement evaluates the recoverability and estimated remaining lives of long-lived assets whenever facts and circumstances suggest that the carrying value of the assets may not be recoverable or the useful life has changed. See Note 1, "SummaryFair value is determined primarily using anticipated cash flows. If the carrying amount of Significant Accounting Policies" in Notes to Consolidated Financial Statements in Item 8 for further discussion ofa long-lived asset impairments.

When facts and circumstances indicate that there may have beengroup is considered impaired, a loss in value, management will also evaluate its costis recorded based on the amount by which the carrying amount exceeds fair value. The North American and equity method investments to determine whether there wasEuropean reporting units are separately tested for impairment on an other-than-temporary impairment. If a loss in the value of the investment is determined to be other than temporary, then the decline in value is recognized in earnings. See Note 9, "Investment in Unconsolidated Affiliate" in Notes to Consolidated Financial Statements in Item 8 for discussion of our investment.

asset group basis.

Retirement Plans - Subject to certain vesting requirements, our unfunded retirement plan generally provides for a benefit based on final average compensation, which becomes payable on the employee'semployee’s death or upon attaining age 65, if retired. The net periodic pension cost and related benefit obligations are based on, among other things, assumptions of the discount rate future salary increases and the mortality of the participants. The net periodic pension costs and related obligations are measured using actuarial techniques and assumptions. Seeassumptions (refer to Note 12, "Retirement Plans"17, “Retirement Plans” in the Notes to Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data” in this Annual Report for a description of these assumptions.assumptions).

The following information illustrates the sensitivity to a change in certain assumptions of our unfunded retirement plans as of December 31, 2016.2019. Note that these sensitivities may be asymmetrical and are specific to 2016.2019. They also may not be additive, so the impact of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities shown.

The effect of the indicated increase (decrease) in selected factors is shown below (in thousands):

							Increase (Decrease) in:
							Projected Benefit
		Percentage					Obligation at				2016 Net Periodic								Increase (Decrease) in:
Assumption		Change					December 31, 2016				Pension Cost				Percentage Change				Projected Benefit Obligation at December 31, 2019				2020 Net Periodic Pension Cost
Discount rate		+	1.0	%			$	(3,157	)		$	(162	)			+1.0	%		$	(3,482	)		$	(3	)
Rate of compensation increase		+	1.0	%			$	457			$	58				+1.0	%		$	356			$	28

Stock-Based Compensation

Valuation of Deferred Tax Assets - We accountThe ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for stock-based compensation using the fair value recognition in accordance with U.S. GAAP. We use the Black-Scholes option-pricing model to determine the fair value of any stock options granted, which requires us to make estimates regarding dividend yields on our common stock, expected volatility in the price of our common stock, risk free interest rates, forfeiture rates and the expected life of the option. To the extent these estimates change, our stock-based compensation expense would change as well.tax law for each applicable tax jurisdiction. The fair value of any restricted shares awardedassessment regarding whether a valuation allowance is calculated using the closing market price of our common stock on the date of issuance. We recognize these compensation costs net of the applicable forfeiture rates and recognize the compensation costs for only those shares expected to vest on a straight-line basis over the requisite service

period of the award, whichrequired or should be adjusted is generally the option vesting term of three or four years. We estimated the forfeiture rate based on our historical experience.

Workers' Compensationan evaluation of possible sources of taxable income and Loss Reserves - We self-insure any losses arising out of workers' compensation claims. Workers' compensation accruals are based upon reported claims in processalso considers all available positive and actuarial estimatesnegative evidence factors. Our accounting for losses incurred but not reported. Loss reserves, including incurred but not reported reserves, are estimated using actuarial methods and ultimate settlements may vary significantly from such estimates due to increased claim frequency or the severity of claims.

Accounting for Income Taxes - We account for income taxes using the asset and liability method. The asset and liability method requires the recognitionvaluation of deferred tax assets and liabilities for expectedrepresents our best estimate of future tax consequences of temporary differences that currently exist between the tax basis and financial reporting basis ofevents. Changes in our assets and liabilities. We calculate current andestimates, due to unanticipated market conditions, governmental legislative actions or events, could have a material effect on our ability to utilize deferred tax provisions based on estimates and assumptions that could differ from actual results reflected on the income tax returns filed during the following years. Adjustments based on filed returns are recorded when identified in the subsequent years.

The effect on deferred taxes for a change in tax rates is recognized in income in the period that the tax rate change is enacted. In assessing the realizability ofassets. At December 31, 2019 total deferred tax assets we consider whether it is more likely than not that some portion of thewere $82.4 million and valuation allowances against those deferred tax assets will not be realized. A valuation allowance is provided for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. We believe that the determinationwere $22.9 million (refer to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it is based, among other things, on an estimate of future taxable incomeNote 15, “Income Taxes” in the U.S.Notes to Consolidated Financial Statements in Item 8, “Financial Statements and certain other jurisdictions, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material.

In determining when to release the valuation allowance established against our net deferred income tax assets, we consider all available evidence, both positive and negative.  Consistent with our policy, the valuation allowance against our net deferred income tax assets will not be reversed until such time as we have generated three years of cumulative pre-tax income and have reached sustained profitability, which we define as two consecutive one-year periods of pre-tax income.

We accountSupplementary Data” in this Annual Report for our uncertain tax positions utilizing a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities. If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent period in which the more likely than not standard is met, the issue is resolved with the taxing authority, or the statute of limitations expires. Positions previously recognized are derecognized when we subsequently determine the position no longer is more likely than not to be sustained. Evaluation of tax positions, their technical merits and measurements using cumulative probability are highly subjective management estimates. Actual results could differ materially from these estimates.

Presently, we have not recorded a deferred tax liability for temporary differences related to investments in foreign subsidiaries that are essentially permanent in duration. These temporary differences may become taxable upon a repatriation of earnings from the subsidiaries or a sale or liquidation of the subsidiaries. At this time the company does not have any plans to repatriate income from its foreign subsidiaries.

New Accounting Standards

In May 2014 the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This update outlines a single, comprehensive model for accounting for revenue from contracts with customers. We plan to adopt this update on January 1, 2018. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method)additional information). We anticipate adopting the standard using the modified retrospective method. There may be differences in timing of revenue recognition under the new standard compared to recognition under ASC 605 - Revenue Recognition.

In July 2015, the FASB issued an ASU entitled“Simplifying the Measurement of Inventory.” The ASU replaces the current lower of cost or market test with a lower of cost or net realizable value test when cost is determined on a first-in, first-out or average cost basis. The standard is effective for public entities for annual reporting periods beginning after December 15, 2016, and interim

periods therein. It is to be applied prospectively and early adoption is permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations.

In February of 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required 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. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations.

In March 2016, the FASB issued an ASU entitled "Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." The objective of the ASU is to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations.

In August 2016, the FASB issued an ASU entitled "Statement of Cash Flows (Topic 740): Classification of Certain Cash Receipts and Cash Payments." The objective of the ASU is to address the diversity in practice in the presentation of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact this guidance will have on our statement of cash flows.

In October 2016, the FASB issued an ASU entitled "Income Taxes (Topic 230): Intra-Entity Transfers of Assets Other than Inventory." The objective of the ASU is to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations.

In November 2016, the FASB issued an ASU entitled "Statement of Cash Flows (Topic 230): Restricted Cash." The objective of the ASU is to address the diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact this guidance will have on our statement of cash flows.

In January 2017, the FASB issued an ASU entitled "Business Combinations (Topic 805): Clarifying the Definition of a Business." The objective of the ASU is to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations.

In January 2017, the FASB issued an ASU entitled "Intangibles - Goodwill and Other (Topic 350): 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 goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency. A significant portion of ourWe have business operations are conducted in Mexico.the United States, Mexico, Germany and Poland. As a result, we have a certain degree of market risk with respect to our cash flows due to changes in foreign currency exchange rates when transactions are denominated in currencies other than our functional currency, including inter-company transactions.

In accordance with our corporate risk management policies, we may enter into foreign currency forward, swap and option contracts with financial institutions to protect againstmitigate foreign exchange riskscurrency exposures associated with certain existing assets and liabilities, certain firmly

committed transactions and forecasted future cash flows. We have implemented a program to hedge a portion of our materialPeso, Zloty and Euro foreign exchange exposures,exposure, for up to approximately 3648 months. However, we may choose not to hedge certain foreign exchange exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. We do not use derivative contracts for trading, market-making, or speculative purposes. For additional information on our derivatives, seerefer to Note 4, "Derivative5, “Derivative Financial Instruments"Instruments” in the Notes to Consolidated Financial Statements in Item 8.

8, “Financial Statements and Supplementary Data” in this Annual Report.

At December 31, 20162019, the net fair value liabilityasset of foreign currency exchange derivatives with an aggregate notional value of $522.7 million was $24.8$21.1 million. The potential loss in fair value forof such financial instruments from a 10 percent adverse change in quoted foreign currency exchange rates would be $13.9$56.5 million at December 31, 2016.

During 2016, the Mexican peso2019.

In addition to U.S. dollar exchange rate averaged 18.61 pesos to $1.00. Based on the balance sheetoperational foreign currency exposure, we have issued notes with a face value of €250 million maturing June 15, 2025 (with outstanding principal of €217.0 million at December 31, 2016,2019).   

Interest Rate Risk.  At December 31, 2019, approximately $371.8 million of our debt bears interest at variable rates, currently 5.7 percent. A 100 basis point change in our rate would result in an increase or decrease of $3.7 million. We have entered into interest rate swaps exchanging floating for fixed rate interest payments in order to reduce interest rate volatility. As of December 31, 2019, the fair value liability of interest rate swaps with a notional value of net assets for$260.0 million was $5.8 million. These swaps mature as follows: $25.0 million on March 31, 2020, $35.0 million on December 31, 2020, $50.0 million on September 30, 2022 and $150.0 million on December 31, 2022. In the future, we may again enter into interest rate swaps to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our operations in Mexico was 2,363 million pesos. Accordingly, a 10 percent change in the relationship between the pesovariable rate indebtedness, and the U.S. dollar may result in a translation impact of between $11.5 million and $14.1 million, which would be recognized in other comprehensive (loss) income.

Our business requires us to settle transactions between currencies in both directions - i.e., peso to U.S. dollar and vice versa. To the greatest extent possible, we attempt to match the timing of transaction settlements between currencies to create a “natural hedge.” For 2016, we had a $0.4 million net foreign exchange transaction loss related to the peso. Based on the current business model and levels of production and sales activity, the net imbalance between currencies depends on specific circumstances. While changes in the terms of the contracts with our customers will be creating an imbalance between currencies that we are hedging with foreign currency forward contracts, there can be no assurances that our hedging program will effectively offset the impact of the imbalance between currencies or that the net transaction balance will not change significantly in the future.

Commodity Purchase Commitments.  When market conditions warrant,any swaps we enter into purchase commitments to secure the supply of certain commodities used in the manufacture ofmay not fully mitigate our products, such as aluminum, natural gas and other raw materials. However, we do not enter into derivatives or other financial instrument transactions for speculative purposes. At December interest rate risk.

31 2016, we had no purchase commitments in place for the delivery of aluminum, natural gas or other raw materials in 2017.

See the section captioned "Risk Management" in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" for a further discussion about the market risk we face.

---

ITEM 8 - FINANCIAL STATEMENTSSTATEMENTS AND SUPPLEMENTARY DATA

Index to the Consolidated Financial Statements of Superior Industries International, Inc.

	PAGE
	PAGE
Report of Independent Registered Public Accounting Firm	36 33
Financial Statements
Consolidated Income Statements for the Fiscal Years 2016, 2015 and 2014	38 35
Consolidated Statements of Comprehensive Income for the Fiscal Years 2016, 2015, 2014	39 36
Consolidated Balance Sheets as of the Fiscal Year End 2016 and 2015	40 37
Consolidated Statements of Shareholders’ Equity for the Fiscal Years 2016, 2015 and 2014	41 38
Consolidated Statements of Cash Flows for the Fiscal Years 2016, 2015 and 2014	44 41
Notes to Consolidated Financial Statements	45 42

32

---

REPORT OF INDEPENDENT REGISTEREDREGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors and Stockholders of

Superior Industries International, Inc.

Southfield, Michigan

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Superior Industries International, Inc. and subsidiaries (the “Company”"Company") as of December 25, 201631, 2019 and December 27, 2015, and2018, the related consolidated income statements, statements of income, comprehensive income, shareholders’ equity, and cash flows, for each of the three years in the periodsperiod ended December 25, 2016, December 27, 2015,31, 2019, and December 28, 2014. Our audits also include the financial statementrelated notes and the schedule listed in the Index at Item 15. These15 (collectively referred to as the "financial statements"). In our opinion, the financial statements andpresent fairly, in all material respects, the financial statement schedule are the responsibilityposition of the Company’s management. Our responsibility is to express an opinion on these financial statementsCompany as of December 31, 2019 and financial statement schedule based on our audits.

2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We conducted our auditshave also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2020, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. 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 includesmisstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Superior Industries International, Inc. and subsidiaries as of December 25, 2016 and December 27, 2015, and the results of their operations and their cash flows for each of the three years in the periods ended December 25, 2016, December 27, 2015, and December 28, 2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 25, 2016, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 3, 2017 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP

Detroit, Michigan

March 3, 2017

February 28, 2020

We have served as the Company’s auditor since 2009.

33

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors and Stockholders of

Superior Industries International, Inc.

Southfield, Michigan

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Superior Industries International, Inc. and subsidiaries (the “Company”) as of December 25, 2016,31, 2019, based on criteria established in Internal Control - IntegratedControl-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2019, of the Company and our report dated February 28, 2020, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management'sManagement’s Report on Internal Control overOver Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of theits inherent limitations, of internal control over financial reporting including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be preventedprevent or detected on a timely basis.detect misstatements. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 25, 2016, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 25, 2016 of the Company and our report dated March 3, 2017 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ Deloitte & Touche LLP

Detroit, Michigan

March 3, 2017

February 28, 2020

34

---

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONSOLIDATED INCOME STATEMENTS

(Dollars in thousands, except per share data)

Fiscal Year Ended December 31,		2019				2018				2017
NET SALES		$	1,372,487			$	1,501,827			$	1,108,055
Cost of sales:
Cost of sales			1,256,425				1,338,300				1,005,158
GROSS PROFIT			116,062				163,527				102,897
Selling, general and administrative expenses			63,883				77,722				81,379
Impairment of goodwill and indefinite-lived intangibles			102,238				—				—
INCOME (LOSS) FROM OPERATIONS			(50,059	)			85,805				21,518
Interest expense, net			(47,011	)			(50,097	)			(40,004	)
Other (expense) income, net			4,815				(6,936	)			13,188
Change in fair value of redeemable preferred stock embedded derivative			(782	)			3,480				6,164
CONSOLIDATED INCOME (LOSS) BEFORE INCOME TAXES			(93,037	)			32,252				866
Income tax provision			(3,423	)			(6,291	)			(6,875	)
CONSOLIDATED NET INCOME (LOSS)			(96,460	)			25,961				(6,009	)
Less: net (loss) attributable to non-controlling interest			—				—				(194	)
NET INCOME (LOSS) ATTRIBUTABLE TO SUPERIOR		$	(96,460	)		$	25,961			$	(6,203	)
EARNINGS (LOSS) PER SHARE – BASIC		$	(5.10	)		$	0.29			$	(1.01	)
EARNINGS (LOSS) PER SHARE – DILUTED		$	(5.10	)		$	0.29			$	(1.01	)

Fiscal Year Ended December 31,		2016				2015				2014
NET SALES		$	732,677			$	727,946			$	745,447
Cost of sales:
Cost of sales		645,015				650,717				686,796
Restructuring costs (Note 2)		1,458				6,012				8,429
		646,473				656,729				695,225
GROSS PROFIT		86,204				71,217				50,222
Selling, general and administrative expenses		31,602				34,923				32,309
INCOME FROM OPERATIONS		54,602				36,294				17,913
Interest income, net		245				103				1,095
Other expense, net		(126		)		(1,114		)		(3,306		)
INCOME BEFORE INCOME TAXES		54,721				35,283				15,702
Income tax provision		(13,340		)		(11,339		)		(6,899		)
NET INCOME		$	41,381			$	23,944			$	8,803
EARNINGS PER SHARE - BASIC		$	1.63			$	0.90			$	0.33
EARNINGS PER SHARE - DILUTED		$	1.62			$	0.90			$	0.33

The accompanying notes are an integral part of these consolidated financial statements.

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

35

---

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

Fiscal Year Ended December 31,		2019				2018				2017
Net income (loss) attributable to Superior		$	(96,460	)		$	25,961			$	(6,203	)
Other comprehensive income (loss), net of tax:
Foreign currency translation (loss) gain			(5,168	)			(23,924	)			29,822
Change in unrecognized gains on derivative instruments:
Change in fair value of derivatives			17,515				7,221				14,067
Tax provision			(4,359	)			(1,928	)			(6,464	)
Change in unrecognized gains on derivative instruments,    net of tax			13,156				5,293				7,603
Defined benefit pension plan:
Actuarial gains (losses) on pension obligation, net of curtailments and    amortization			(4,086	)			2,924				(1,931	)
Tax (provision) benefit			1,515				(667	)			310
Pension changes, net of tax			(2,571	)			2,257				(1,621	)
Other comprehensive income (loss), net of tax			5,417				(16,374	)			35,804
Comprehensive income (loss) attributable to Superior		$	(91,043	)		$	9,587			$	29,601

Fiscal Year Ended December 31,		2016				2015				2014
Net income		$	41,381			$	23,944			$	8,803
Other comprehensive (loss) income, net of tax:
Foreign currency translation loss		(16,904		)		(16,810		)		(13,369		)
Change in unrecognized losses on derivative instruments:
Change in fair value of derivatives		(11,062		)		(7,189		)		(7,598		)
Tax benefit		4,250				2,665				2,833
Change in unrecognized losses on derivative instruments, net of tax		(6,812		)		(4,524		)		(4,765		)
Defined benefit pension plan:
Actuarial gains (losses) on pension obligation, net of curtailments and amortization		799				1,807				(4,686		)
Tax (provision) benefit		(295		)		(761		)		1,758
Pension changes, net of tax		504				1,046				(2,928		)
Other comprehensive (loss) income, net of tax		(23,212		)		(20,288		)		(21,062		)
Comprehensive income (loss)		$	18,169			$	3,656			$	(12,259	)

The accompanying notes are an integral part of these consolidated financial statements.

36

---

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

Fiscal Year Ended December 31,		2019				2018
ASSETS
Current assets:
Cash and cash equivalents		$	77,927			$	47,464
Short-term investments			—				750
Accounts receivable, net			76,786				104,649
Inventories, net			168,470				175,578
Income taxes receivable			4,630				6,791
Other current assets			26,375				35,189
Total current assets			354,188				370,421
Property, plant and equipment, net			529,282				532,767
Non-current deferred income tax assets, net			38,607				42,105
Goodwill			184,832				291,434
Intangibles, net			137,078				168,369
Other non-current assets			67,880				46,520
Total assets		$	1,311,867			$	1,451,616
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	123,112			$	107,274
Short-term debt			4,010				3,052
Accrued expenses			60,845				65,662
Income taxes payable			3,148				2,475
Total current liabilities			191,115				178,463
Long-term debt (less current portion)			611,025				661,426
Embedded derivative liability			3,916				3,134
Non-current income tax liabilities			6,523				9,046
Non-current deferred income tax liabilities, net			12,369				18,664
Other non-current liabilities			67,724				49,306
Commitments and contingent liabilities (Note 20)			—				—
Mezzanine equity:
Preferred stock, $0.01 par value
Authorized - 1,000,000 shares issued and outstanding - 150,000 shares    outstanding at December 31, 2019 and December 31, 2018			160,980				144,463
European non-controlling redeemable equity			6,525				13,849
Shareholders’ equity:
Common stock, $0.01 par value
Authorized - 100,000,000 shares
Issued and outstanding - 25,128,158 and 25,019,237 shares at    December 31, 2019 and December 31, 2018			93,331				87,723
Accumulated other comprehensive loss			(100,078	)			(105,495	)
Retained earnings			258,437				391,037
Total shareholders’ equity			251,690				373,265
Total liabilities, mezzanine equity and shareholders’ equity		$	1,311,867			$	1,451,616

Fiscal Year Ended December 31,	2016				2015
ASSETS
Current assets:
Cash and cash equivalents	$	57,786			$	52,036
Short-term investments	750				950
Accounts receivable, net	99,331				112,588
Inventories	82,837				61,769
Income taxes receivable	3,682				1,104
Other current assets	9,695				14,476
Assets held for sale	—				2,897
Total current assets	254,081				245,820
Property, plant and equipment, net	227,403				234,646
Investment in unconsolidated affiliate	2,000				2,000
Non-current deferred income taxes, net	28,838				25,598
Other non-current assets	30,434				31,865
Total assets	$	542,756			$	539,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	37,856			$	20,913
Accrued expenses	46,315				46,214
Income taxes payable	1,793				6,735
Total current liabilities	85,964				73,862
Non-current income tax liabilities	5,301				4,510
Non-current deferred income tax liabilities, net	3,628				8,094
Other non-current liabilities	49,637				39,551
Commitments and contingent liabilities (Note 18)	—				—
Shareholders' equity:
Preferred stock, $0.01 par value
Authorized - 1,000,000 shares
Issued - none	—				—
Common stock, $0.01 par value
Authorized - 100,000,000 shares
Issued and outstanding - 25,143,950 shares
(26,098,895 shares at December 31, 2015)	89,916				88,108
Accumulated other comprehensive loss	(124,925		)		(101,713		)
Retained earnings	433,235				427,517
Total shareholders' equity	398,226				413,912
Total liabilities and shareholders' equity	$	542,756			$	539,929

The accompanying notes are an integral part of these consolidated financial statements.

37

---

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS'SHAREHOLDERS’ EQUITY

FISCAL YEAR ENDED DECEMBER 31, 2014

(Dollars in thousands, except per share data)

		Common Stock								Accumulated Other Comprehensive Income (Loss)
										Unrecognized Gains (Losses)								Cumulative								Non-
		Number of Shares				Amount				on Derivative Instruments				Pension Obligations				Translation Adjustment				Retained Earnings				Controlling Interest				Total
BALANCE AT DECEMBER 31, 2016			25,143,950			$	89,916			$	(16,101	)		$	(3,636	)		$	(105,188	)		$	433,235			$	—			$	398,226
Consolidated net income (loss)			—				—				—				—				—				(6,203	)			194				(6,009	)
Change in unrecognized gains/losses on    derivative instruments, net of tax			—				—				7,603				—				—				—				—				7,603
Change in employee benefit plans, net of    taxes			—				—				—				(1,621	)			—				—				—				(1,621	)
Net foreign currency translation    adjustment			—				—				—				—				29,822				—				4,267				34,089
Stock options exercised			2,000				41				—				—				—				—				—				41
Common stock issued, net of shares    withheld for employee taxes			(13,084	)			—				—				—				—				—				—				—
Stock-based compensation			—				889				—				—				—				—				—				889
Common stock repurchased			(215,841	)			(777	)			—				—				—				(4,237	)			—				(5,014	)
Cash dividends declared ($0.45 per share)			—				—				—				—				—				(10,737	)			—				(10,737	)
Redeemable preferred dividend and    accretion			—				—				—				—				—				(18,912	)			—				(18,912	)
Non-controlling interest			—				—				—				—				—				—				63,200				63,200
UNIWHEELS AG additional tenders			—				(314	)			—				—				—				—				(15,718	)			(16,032	)
BALANCE AT DECEMBER 31, 2017			24,917,025			$	89,755			$	(8,498	)		$	(5,257	)		$	(75,366	)		$	393,146			$	51,943			$	445,723

								Accumulated Other Comprehensive Income (Loss)
	Common Stock							Unrecognized
	Number of Shares			Amount				Gains/Losses on Derivative Instruments				Pension Obligations				Cumulative Translation Adjustment				Retained Earnings				Total
BALANCE AT FISCAL YEAR END 2013	27,155,550			$	75,305			$	—			$	(2,258	)		$	(58,105	)		$	468,121			$	483,063
Net income																				8,803				8,803
Change in unrecognized gains/losses on derivative instruments, net of tax								(4,765		)										—				(4,765		)
Change in employee benefit plans, net of taxes								—				(2,928		)						—				(2,928		)
Net foreign currency translation adjustment								—				—				(13,369		)		—				(13,369		)
Stock options exercised	453,745			7,423				—				—				—				—				7,423
Restricted stock awards granted, net of forfeitures	210,512			—				—				—				—				—				—
Stock-based compensation expense	—			2,315				—				—				—				—				2,315
Tax impact of stock options	—			(416		)		—				—				—				—				(416		)
Common stock repurchased	(1,089,560	)		(3,154		)		—				—				—				(18,636		)		(21,790		)
Cash dividends declared ($0.72 per share)	—			—				—				—				—				(19,330		)		(19,330		)
BALANCE AT FISCAL YEAR END 2014	26,730,247			$	81,473			$	(4,765	)		$	(5,186	)		$	(71,474	)		$	438,958			$	439,006

The accompanying notes are an integral part of these consolidated financial statements.

38

---

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS'SHAREHOLDERS’ EQUITY

FISCAL YEAR ENDED DECEMBER 31, 2015

(Dollars in thousands, except per share data)

		Common Stock								Accumulated Other Comprehensive (Loss) Income
										Unrecognized
		Number of Shares				Amount				Gains (Losses) on Derivative Instruments				Pension Obligations				Cumulative Translation Adjustment				Retained Earnings				Non- controlling Interest				Total
BALANCE AT DECEMBER 31, 2017			24,917,025			$	89,755			$	(8,498	)		$	(5,257	)		$	(75,366	)		$	393,146			$	51,943			$	445,723
Consolidated net income (loss)			—				—				—				—				—				25,961				—				25,961
Change in unrecognized gains/losses    on derivative instruments, net of tax			—				—				5,293				—				—				—				—				5,293
Change in employee benefit plans, net    of taxes			—				—				—				2,257				—				—				—				2,257
Net foreign currency translation    adjustment			—				—				—				—				(23,924	)			—				—				(23,924	)
Stock options exercised			4,500				68				—				—				—				—				—				68
Common stock issued, net of shares    withheld for employee taxes			97,712				—				—				—				—				—				—				—
Stock-based compensation			—				1,525				—				—				—				—				—				1,525
Cash dividends declared ($0.36 per    share)			—				—				—				—				—				(9,353	)			—				(9,353	)
Redeemable preferred dividend and    accretion			—				—				—				—				—				(32,462	)			—				(32,462	)
Preferred stock modification			—				—				—				—				—				15,257				—				15,257
Reclassification to European non-    controlling redeemable equity			—				—				—				—				—				—				(51,943	)			(51,943	)
Adjust European non-controlling    redeemable equity to redemption    value			—				(3,625	)			—				—				—				—				—				(3,625	)
European non-controlling redeemable    equity dividend			—				—				—				—				—				(1,512	)			—				(1,512	)
BALANCE AT DECEMBER 31, 2018			25,019,237			$	87,723			$	(3,205	)		$	(3,000	)		$	(99,290	)		$	391,037			$	—			$	373,265

								Accumulated Other Comprehensive Income (Loss)
	Common Stock							Unrecognized
	Number of Shares			Amount				Gains/Losses on Derivative Instruments				Pension Obligations				Cumulative Translation Adjustment				Retained Earnings				Total
BALANCE AT FISCAL YEAR END 2014	26,730,247			$	81,473			$	(4,765	)		$	(5,186	)		$	(71,474	)		$	438,958			$	439,006
Net income																				23,944				23,944
Change in unrecognized gains/losses on derivative instruments, net of tax								(4,524		)										—				(4,524		)
Change in employee benefit plans, net of taxes								—				1,046								—				1,046
Net foreign currency translation adjustment								—				—				(16,810		)		—				(16,810		)
Stock options exercised	420,642			7,265				—				—				—				—				7,265
Restricted stock awards granted, net of forfeitures	4,960			—				—				—				—				—				—
Stock-based compensation expense	—			2,807				—				—				—				—				2,807
Tax impact of stock options	—			—				—				—				—				—				—
Common stock repurchased	(1,056,954	)		(3,437		)		—				—								(16,201		)		(19,638		)
Cash dividends declared ($0.72 per share)	—			—				—				—				—				(19,184		)		(19,184		)
BALANCE AT FISCAL YEAR END 2015	26,098,895			$	88,108			$	(9,289	)		$	(4,140	)		$	(88,284	)		$	427,517			$	413,912

The accompanying notes are an integral part of these consolidated financial statements.

39

---

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS'SHAREHOLDERS’ EQUITY

FISCAL YEAR ENDED DECEMBER 31, 2016

(Dollars in thousands, except per share data)

(Unaudited)		Common Stock								Accumulated Other Comprehensive (Loss) Income
										Unrecognized
		Number of Shares				Amount				Gains (Losses) on Derivative Instruments				Pension Obligations				Cumulative Translation Adjustment				Retained Earnings				Total
BALANCE AT DECEMBER 31, 2018			25,019,237			$	87,723			$	(3,205	)		$	(3,000	)		$	(99,290	)		$	391,037			$	373,265
Consolidated net income (loss)			—				—				—				—				—				(96,460	)			(96,460	)
Change in unrecognized gains/losses    on derivative instruments, net of    tax			—				—				13,156				—				—				—				13,156
Change in employee benefit plans, net    of taxes			—				—				—				(2,571	)			—				—				(2,571	)
Net foreign currency translation    adjustment			—				—				—				—				(5,168	)			—				(5,168	)
Common stock issued, net of shares    withheld for employee taxes			108,921				—				—				—				—				—				—
Stock-based compensation			—				5,608				—				—				—				—				5,608
Cash dividends declared ($0.18 per    share)			—				—				—				—				—				(4,597	)			(4,597	)
Redeemable preferred dividend and    accretion			—				—				—				—				—				(30,977	)			(30,977	)
European non-controlling redeemable    equity dividend			—				—				—				—				—				(566	)			(566	)
BALANCE AT DECEMBER 31, 2019			25,128,158			$	93,331			$	9,951			$	(5,571	)		$	(104,458	)		$	258,437			$	251,690

								Accumulated Other Comprehensive Income (Loss)
	Common Stock							Unrecognized
	Number of Shares			Amount				Gains/Losses on Derivative Instruments				Pension Obligations				Cumulative Translation Adjustment				Retained Earnings				Total
BALANCE AT FISCAL YEAR END 2015	26,098,895			$	88,108			$	(9,289	)		$	(4,140	)		$	(88,284	)		$	427,517			$	413,912
Net income																				41,381				41,381
Change in unrecognized gains/losses on derivative instruments, net of tax								(6,812		)										—				(6,812		)
Change in employee benefit plans, net of taxes								—				504								—				504
Net foreign currency translation adjustment								—				—				(16,904		)		—				(16,904		)
Stock options exercised	86,908			1,641				—				—				—				—				1,641
Restricted stock awards granted, net of forfeitures	(1,165	)		—				—				—				—				—				—
Stock-based compensation expense	—			3,618				—				—				—				—				3,618
Tax impact of stock options	—			92				—				—				—				—				92
Common stock repurchased	(1,040,688	)		(3,543		)		—				—				—				(17,176		)		(20,719		)
Cash dividends declared ($0.72 per share)	—			—				—				—				—				(18,487		)		(18,487		)
BALANCE AT FISCAL YEAR END 2016	25,143,950			$	89,916			$	(16,101	)		$	(3,636	)		$	(105,188	)		$	433,235			$	398,226

The accompanying notes are an integral part of these consolidated financial statements.

40

---

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

Fiscal Year Ended December 31,		2019				2018				2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)		$	(96,460	)		$	25,961			$	(6,009	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			100,722				95,056				69,335
Income tax, non-cash changes			(3,504	)			(1,048	)			(3,395	)
Impairment of goodwill and indefinite-lived intangibles			102,238				—				—
Stock-based compensation			5,716				2,131				2,576
Amortization of debt issuance costs			4,843				3,868				7,328
Other non-cash items			(714	)			5,733				1,133
Changes in operating assets and liabilities:
Accounts receivable			26,737				42,829				4,599
Inventories			5,262				(6,125	)			(1,264	)
Other assets and liabilities			7,424				(7,732	)			(8,214	)
Accounts payable			7,479				(9,132	)			1,411
Income taxes			3,099				4,575				(3,790	)
NET CASH PROVIDED BY OPERATING ACTIVITIES			162,842				156,116				63,710
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment			(64,294	)			(77,697	)			(70,937	)
Acquisition of Uniwheels, net of cash acquired			—				—				(706,733	)
Proceeds from sales and maturities of investments			—				600				—
Other investing activities			9,631				—				56
NET CASH USED IN INVESTING ACTIVITIES			(54,663	)			(77,097	)			(777,614	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt			—				—				975,571
Proceeds from issuance of redeemable preferred shares			—				—				150,000
Repayment of debt			(46,024	)			(7,936	)			(323,177	)
Cash dividends paid			(22,556	)			(28,816	)			(19,473	)
Purchase of non-controlling redeemable shares			(6,681	)			(39,048	)			—
Cash paid for common stock repurchase			—				—				(5,014	)
Payments related to tax withholdings for stock-based compensation			(108	)			(606	)			(1,687	)
Net decrease in short term debt			—				—				(10,877	)
Proceeds from borrowings on revolving credit facility			114,040				324,450				71,750
Repayments of borrowings on revolving credit facility			(114,040	)			(324,450	)			(100,650	)
Proceeds from exercise of stock options			—				68				41
Redeemable preferred shares issuance costs			—				—				(3,737	)
Financing costs paid			—				—				(31,640	)
Other financing activities			(1,230	)			—				—
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES			(76,599	)			(76,338	)			701,107
Effect of exchange rate changes on cash			(1,117	)			(1,577	)			1,371
Net increase (decrease) in cash and cash equivalents			30,463				1,104				(11,426	)
Cash and cash equivalents at the beginning of the period			47,464				46,360				57,786
Cash and cash equivalents at the end of the period		$	77,927			$	47,464			$	46,360

Fiscal Year Ended December 31,	2016				2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	41,381			$	23,944			$	8,803
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	34,261				34,530				35,582
Income tax, non-cash changes	(4,669		)		(9,531		)		(5,771		)
Impairments of long-lived assets and other charges	—				2,688				2,500
Stock-based compensation	3,618				2,807				2,315
Other non-cash items	812				1,400				2,560
Changes in operating assets and liabilities:
Accounts receivable	8,043				(14,030		)		(16,184		)
Inventories	(22,339		)		11,509				(9,297		)
Other assets and liabilities	6,244				2,469				(9,138		)
Accounts payable	15,880				(1,132		)		(6,109		)
Income taxes	(4,740		)		4,695				6,366
NET CASH PROVIDED BY OPERATING ACTIVITIES	78,491				59,349				11,627
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment	(39,575		)		(39,543		)		(112,556		)
Proceeds from sales and maturities of investments	200				3,750				3,750
Purchase of investments	—				(950		)		(3,750		)
Proceeds from sales of fixed assets	4,337				1,815				1,873
Other	—				(18		)		248
NET CASH USED IN INVESTING ACTIVITIES	(35,038		)		(34,946		)		(110,435		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid	(18,340		)		(19,082		)		(19,351		)
Cash paid for common stock repurchase	(20,719		)		(19,638		)		(21,790		)
Proceeds from exercise of stock options	1,641				7,265				7,423
Excess tax benefits from exercise of stock options	91				107				106
NET CASH USED IN FINANCING ACTIVITIES	(37,327		)		(31,348		)		(33,612		)
Effect of exchange rate changes on cash	(376		)		(3,470		)		(4,430		)
Net increase (decrease) in cash and cash equivalents	5,750				(10,415		)		(136,850		)
Cash and cash equivalents at the beginning of the period	52,036				62,451				199,301
Cash and cash equivalents at the end of the period	$	57,786			$	52,036			$	62,451

The accompanying notes are an integral part of these consolidated financial statements.

41

---

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2016

2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Headquartered in Southfield, Michigan, the principal business of

Superior Industries International, Inc. (referred to herein as the “company”“Company”, “Superior”, or “we,” “us” and “our”) is the designdesigns and manufacture ofmanufactures aluminum wheels for sale to original equipment manufacturers ("OEMs"(“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 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, Jaguar-Land Rover, Mazda, Mitsubishi, Nissan, PSA, Subaru, Suzuki, Toyota, VW Group (Volkswagen, Audi, Skoda, SEAT, Porsche, Bentley) and Volvo. We also sell aluminum wheels to the United StatesEuropean aftermarket under the brands ATS, RIAL, ALUTEC and Mexico. Customers inANZIO. North America and Europe represent the principal marketmarkets for our products. Asproducts, 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 company operates as a single integrated business and, as such, has only one operating segment - automotive wheels.

6, “Business Segments.”

Presentation of Consolidated Financial Statements

The consolidated financial statements include the accounts of the companyCompany and its wholly owned subsidiaries. All intercompany transactions are eliminated in consolidation.

We have made a number

Accounting estimates are an integral part of the consolidated financial statements. These estimates require the use of judgments and assumptions related tothat affect the reportingreported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses to prepare these financial statements in conformity with U.S. GAAP as delineated by the FASB in its ASC. Generally, assets and liabilitiesperiods presented. We believe that the accounting estimates employed are subject to estimation and judgment include the allowance for doubtful accounts, inventory valuation, amortization of preproduction costs, impairment ofappropriate and the estimated useful lives of our long-lived assets, self-insurance portions of employee benefits, workers' compensation and general liability programs, fair value of stock-based compensation, income tax liabilities and deferred income taxes. Whileresulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ we believe suchfrom the original estimates, requiring adjustments to be reasonable.

Our fiscal year is the 52- or 53-week period ending generally on the last Sunday of the calendar year. The fiscal years 2016, 2015 and 2014 comprised the 52-week periods ended on December 25, 2016, December 27, 2015 and December 28, 2014, respectively. For convenience of presentation, all fiscal years are referred to as beginning as of January 1, and ending as of December 31, but actually reflect our financial position and results of operations for the periods described above.

these balances in future periods.

Cash and Cash Equivalents

Cash and cash equivalents generally consist of cash, certificates of deposit, and fixed deposits and money market funds with original maturities of three months or less. Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these investments. Certificates of deposit and fixed deposits whose original maturity is greater than three months and is one year or less are classified as short-term investments and certificates of deposit and fixed deposits whose maturity is greater than one year at the balance sheet date are classified as non-current assets in our consolidated balance sheets. The purchase of any certificates of deposit or fixed deposits that are classified as short-term investments or non-current assets appear in the investing section of our consolidated statements of cash flows. At times throughout the year and at year-end, cash balances held at financial institutions were in excess of federally insured limits.

Restricted Deposits

We purchase certificates of deposit that mature within twelve months and are used to secure or collateralize letters of credit securing our workers’ compensation obligations.investments. At December 31, 2016 and 2015,2018 certificates of deposit totaling $0.8 million and $1.0 million, respectively, were restricted in use (to collateralize letters of credit securing workers’ compensation obligations) and were classified as short-term investments on our consolidated balance sheet.

There were no certificates of deposit at December 31, 2019.  

Derivative Financial Instruments and Hedging Activities

In order to hedge exposure related to fluctuations in foreign currency rates and the cost of certain commodities used in the manufacture of our products, we periodically may purchase derivative financial instruments such as forward contracts, options or collars to offset or mitigate the impact of such fluctuations. Programs to hedge currency rate exposure may address ongoing transactions including, foreign-currency-denominated receivables and payables, as well as specific transactions related to purchase obligations. Programs to hedge exposure to commodity cost fluctuations would be based on underlying physical consumption of such commodity. At December 31, 2016 and 2015, we held forward currency exchange contracts discussed below.

We account for our derivative instruments as either assets or liabilities and carry them at fair value.

For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument (including changes in time value for forward contracts) is reported as a component of accumulated other comprehensive income ("AOCI") in shareholders’ equity and reclassified into income in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized in current income. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. For forward exchange contracts designated as cash flow hedges, changes in the time value are included in the definition of hedge effectiveness. Accordingly, any gains or losses related to this component are reported as a component of AOCI in shareholders’ equity and reclassified into income in the same period or periods during which the hedged transaction affects earnings. Derivatives that do not qualify or have not been designated as hedges are adjusted to fair value through current income. SeeRefer to Note 4, "Derivative5, “Derivative Financial Instruments"Instruments” for additional information pertaining to our derivative instruments.

We enter into contracts to purchase certain commodities used in the manufacture of our products, such as aluminum, natural gas and other raw materials. These contracts are considered to be derivative instruments under U.S. GAAP. However, upon entering into these contracts, we expect to fulfill our purchase commitments and take full delivery of the contracted quantities of these commodities during the normal course of business. Accordingly, under U.S. GAAP,GAAP; however, these purchase contracts are not accounted for as derivatives because they qualify for the normal purchase normal sale exception under U.S. GAAP, unless there is a change inexemption.

42

---

Accounts Receivable

Accounts receivable primarily consists of amounts that are due and payable from our customers for the facts or circumstances that causes management to believe that these commitments would not be used insale of aluminum wheels. We evaluate the normal coursecollectability of business. See Note 18, "Risk Management" for additional information pertaining to these purchase commitments.

Non-Cash Investing Activities

As of December 31, 2016, 2015receivables each reporting period and 2014, $4.0 million, $1.1 million and $6.4 million, respectively, of equipment had been purchased but not yet paid for and are included in accounts payable and accrued expenses in our consolidated balance sheets.

Accounts Receivable

We maintainrecord an allowance for doubtful accounts receivable based uponrepresenting our estimate of probable losses. Additions to the expected collectability of all trade receivables. The allowance is reviewed continuallyare charged to bad debt expense reported in selling, general and adjusted for amounts deemed uncollectible by management.

Inventories

administrative expense.

Inventory

Inventories, which are categorized as raw materials, work-in-process or finished goods, are stated at the lower of cost or marketnet realizable value. The cost of inventories is measured using the first-in, first-outFIFO (first-in, first-out) method or the average cost method. When necessary, management uses estimatesInventories are reviewed to determine if inventory quantities are in excess of net realizable value to record inventory reserves for obsolete and/forecasted usage or slow-moving inventory.if they have become obsolete. Aluminum is the primary material component in our inventories. Our aluminum requirements are supplied from twoCurrently our three primary vendors each accounting formake up more than 10 percent of our aluminum purchases during 2016in 2019, 2018 and 2015.

2017.

Property, Plant and Equipment

Property, plant and equipment are carried at cost, less accumulated depreciation. The cost of additions, improvements and interest during construction, if any, are capitalized. Our maintenance and repair costs are charged to expense when incurred. Depreciation is calculated generally on the straight-line method based on the estimated useful lives of the assets.

Classification
Classification	Expected Useful Life
Computer equipment		3 to 5 years
Production machinery and technical equipment	7	3 to 1020 years
Buildings	25	15 to 50 years
Other equipment, operating and office equipment		3 to 20 years

When property, plant and equipment is replaced, retired or disposed of, the cost and related accumulated depreciation are removed from the accounts. Property, plant and equipment no longer used in operations, which are generally insignificant in amount, are stated at the lower of costany resulting gain or estimated net realizable value. Gains and losses, if any, areloss is recorded as a component of operatingcost of sales or other income or expense.

Impairment of Long-Lived Assets

The carrying amount of long-lived assets to be held and used in the business is evaluated for impairment when events and circumstances warrant. If the carrying amount of a long-lived asset group is considered impaired, a loss is recorded based on the amount by which the carrying amount exceeds fair value. Fair value is determined primarily using anticipated cash flows.

Goodwill

Goodwill is not amortized but is tested for impairment on at least an annual basis. Impairment testing is required more often than annually if an event or circumstance indicates that an impairment is more likely than not to have occurred. If the disposition relatesnet book value of a reporting unit exceeds its fair value, an impairment loss is measured and recognized. We conduct our annual impairment testing as of December 31. Impairment charges, if any, related to goodwill are recorded as a separate charge included in income from operations. In the fourth quarter of 2019, we recognized a goodwill impairment charge of $99.5 million relating to our European reporting unit (refer to Note 10, “Goodwill and Other Intangible Assets”).

Intangible Assets

Intangible assets include both finite and indefinite-lived intangible assets. Finite-lived intangible assets consist of brand names, technology and customer relationships. Finite-lived intangible assets are amortized on a straight-line over their estimated useful lives (since the pattern in which the asset will be consumed cannot be reliably determined). Indefinite-lived intangible assets, excluding goodwill, consist of trade names associated with our aftermarket business.  Impairment charges, if any, related to intangible assets are recorded as a separate charge included in income from operations. In the fourth quarter of 2019, we recognized an operating asset. If a non-operating assetindefinite-lived intangible impairment charge of $2.7 million relating to trade names used in our European aftermarket business (refer to Note 10, “Goodwill and Other Intangible Assets”).

43

---

Foreign Currency Transactions and Translation

The assets and liabilities of foreign subsidiaries that use local currency as their functional currency are translated to U.S. dollars based on the current exchange rate prevailing at each balance sheet date and any resulting translation adjustments are included in accumulated other comprehensive income (loss). The assets and liabilities of foreign subsidiaries whose local currency is disposed of, any gainsnot their functional currency are remeasured from their local currency to their functional currency and then translated to U.S. dollars. Revenues and expenses are translated into U.S. dollars using the average exchange rates prevailing for each period presented.

Gains and losses arising from foreign currency transactions and the effects of remeasurement discussed in the preceding paragraph are recorded in other income or expense in the period of disposition or write down.

Preproduction Costs and Revenue Recognition Related to Long-Term Supply Arrangements

We incur preproduction engineering and tooling costs related to the products produced for our customers under long-term supply agreements. We expense all preproduction engineering costs for which reimbursement is not contractually guaranteed by the customer or which are in excess of the contractually guaranteed reimbursement amount. We amortize the cost of the customer-owned tooling over the expected life of the wheel program on a straight-line basis. Also, we defer any reimbursements made to us by our customer and recognize the tooling reimbursement revenue over the same period in which the tooling is in use. Changes in the facts and circumstances of individual wheel programs may accelerate the amortization of both the cost of customer-owned tooling and the deferred tooling reimbursement revenues. Recognized tooling reimbursement revenues, which totaled $8.0 million, $5.8 million and $8.2 million in 2016, 2015 and 2014, respectively, are included in net sales in the consolidated income statements. The following tables summarize the unamortized customer-owned tooling costs included in our other non-current assets, and the deferred tooling revenues included in accrued expenses and other non-current liabilities:

December 31,		2016				2015
(Dollars in Thousands)
Customer-Owned Tooling Costs
Preproduction costs		$	78,299			$	73,095
Accumulated amortization		(65,100		)		(58,632		)
Net preproduction costs		$	13,199			$	14,463
Deferred Tooling Revenue
Accrued expenses		$	5,419			$	2,908
Other non-current liabilities		2,593				1,266
Total deferred tooling revenue		$	8,012			$	4,174

Impairment of Long-Lived Assets and Investments

In accordance with ASC 360 entitled "Property, Plant and Equipment"(expense), management evaluates the recoverability and estimated remaining lives of long-lived assets. The company reviews long-lived assets for impairment whenever facts and circumstances suggest that the carrying value of the assets may not be recoverable or the useful life has changed.

When facts and circumstances indicate that there may have been a loss in value, management will also evaluate its cost method investments to determine whether there was an other-than-temporary impairment. If a loss in the value of the investment is determined to be other than temporary, then the decline in value is recognized as a loss. See Note 9, "Investment in Unconsolidated Affiliate" and Note 2, "Restructuring," for discussion of investment impairment.

Foreign Currency Transactions and Translation

We have wholly-owned foreign subsidiaries with operations in Mexico whose functional currency is the peso. In addition, we have operations with U.S. dollar functional currencies with transactions denominated in pesos and other currencies. These operations had monetary assets and liabilities that were denominated in currencies that were different than their functional currency and were translated into the functional currency of the entity using the exchange rate in effect at the end of each accounting period. Any gains and losses recorded as a result of the remeasurement of monetary assets and liabilities into the functional currency are reflected as transaction gains and losses and included in other expense, net in the consolidated income statements.net. We had foreign currency transaction lossesgains (losses) of $0.4$0.5 million, $1.2($1.0) million, and $1.0$12.9 million for the years ended December 31, 2016, 2015in 2019, 2018 and 2014, respectively, which2017, respectively.

Revenue Recognition

On January 1, 2018, we adopted ASU 2014-09, Topic ASC 606, “Revenue from Contracts with Customers.” Under this new standard, revenue is recognized when performance obligations under our contracts are included in other expense, net in the consolidated income statements. In addition, we have a minority investment in India that has a functional currency of the Indian rupee.

When our foreign subsidiaries translate their financial statements from the functional currency to the reporting currency, the balance sheet accounts are translated using the exchange rates in effect at the end of the accounting period and retained earnings is translated using historical rates. The income statement accounts are generally translated at the weighted average of exchange rates during the period and the cumulative effect of translation is recorded as a separate component of accumulated other comprehensive income (loss) in shareholders' equity, as reflected in the consolidated statements of shareholders' equity. The value of the Mexican peso decreased by 19 percent in relation to the U.S. dollar in 2016.

Revenue Recognition

Salessatisfied. Generally, this occurs upon shipment when control of products and any related costs are recognized when title and risk of loss transfers to our customers. At this point, revenue is recognized in an amount reflecting the purchaser,consideration we expect to be entitled to under the terms of our contract.

The Company maintains long term business relationships with our OEM customers and aftermarket distributors; however, there are no definitive long-term volume commitments under these arrangements. Volume commitments are limited to near-term customer requirements authorized under purchase orders or production releases generally uponwith delivery periods of less than a month. Sales do not involve any significant financing component since customer payment is generally due 40-60 days after shipment. Tooling reimbursementContract assets and liabilities consist of customer receivables and deferred revenues related to initialtooling.

At contract inception, the Company assesses goods and services promised in its contracts with customers and identifies a performance obligation for each promise to deliver a good or service (or bundle of goods or services) that is distinct. Principal performance obligations under our customer contracts consist of the manufacture and delivery of aluminum wheels, including production wheels, service wheels and replacement wheels. As a part of the manufacture of the wheels, we develop tooling reimbursed bynecessary to produce the wheels. Accordingly, tooling costs, which are explicitly recoverable from our customers, are deferredcapitalized as preproduction costs and recognizedamortized to cost of sales over the expectedaverage life of the vehicle wheel programprogram. Similarly, customer reimbursement for tooling costs is deferred and amortized to net sales over the average life of the vehicle wheel program.

In the normal course of business, the Company’s warranties are limited to product specifications and the Company does not accept product returns unless the item is defective as manufactured. Accordingly, warranty costs are treated as a cost of fulfillment subject to accrual, rather than a performance obligation. The Company establishes provisions for both estimated returns and warranties when revenue is recognized. In addition, the Company does not typically provide customers with the right to a refund but provides for product replacement.

Prices allocated to production, service and replacement wheels are based on prices established in our customer purchase orders which represent the standalone selling price. Prices for service and replacement wheels are commensurate with production wheels with adjustment for any special packaging. In addition, prices are subject to adjustment for changes in commodity prices for certain raw materials, aluminum and silicon, as well as production efficiencies and wheel weight variations from specifications used in pricing. These price adjustments are treated as variable consideration. Customer tooling reimbursement is generally based on quoted prices or cost not to exceed quoted prices.

We estimate variable consideration by using the “most likely” amount estimation approach. For commodity prices, initial estimates are based on the commodity index at contract inception. Changes in commodity prices are monitored and revenue is adjusted as changes in the commodity index occur. Prices incorporate the wheel weight price component based on product specifications. Weights are monitored, and prices are adjusted as variations arise. Price adjustments due to production efficiencies are generally recognized as and when negotiated with customers. Customer contract prices are generally adjusted quarterly to incorporate price adjustments.

Under the Company’s policies, shipping costs are treated as a straight line basis,cost of fulfillment. In addition, as discussed above.

Research and Development

Research and development costs (primarily engineeringpermitted under a practical expedient relating to disclosure of performance obligations, the Company does not disclose remaining performance obligations under its contracts since contract terms are substantially less than a year (generally less than one month). Our revenue recognition practices and related costs)transactions and balances are expensed as incurred and are includedfurther described in cost of sales in the consolidated income statements. Amounts expensed during each of the three years in the period ended 2016, 2015 and 2014 were $3.8 million, $2.6 million and $4.4 million, respectively.

Value-Added Taxes

Value-added taxes that are collected from customers and remitted to taxing authorities are excluded from sales and cost of sales.

Note 3, “Revenue.”

44

---

Stock-Based Compensation

We account for stock-based compensation using the estimated fair value recognition method in accordance with U.S. GAAP.method. We recognize these compensation costs net of the applicable forfeiture rate and recognize the compensation costson a straight-line basis for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the vesting term of three to four years. We estimate the forfeiture rate based on our historical experience. SeeRefer to Note 15 - Stock-Based Compensation19, “Stock-Based Compensation” for additional information concerning our share-basedstock-based compensation awards.

Income Taxes

We account for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between the tax basis and financial reporting basis of our assets and liabilities. We calculate current and deferred tax provisions based on estimates and assumptions that could differ from actual results reflected on the income tax returns filed during the following years. Adjustments based on filed returns are recorded when identified in the subsequent years.

The effect on deferred taxes for a change in tax rates is recognized in income in the period that the tax rate change is enacted. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion of the deferred tax assets will not be realized. A valuation allowance is provided for deferred income tax assets when, in our judgment, based upon currently available information and other factors, it is more likely than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. We believe that the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it is based, among other things, on an estimate of future taxable income in the U.S. and certain other jurisdictions, which is susceptible to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material.

In determining when to release the valuation allowance established against our net deferred income tax assets, we consider all available evidence, both positive and negative. Consistent with our policy, the valuation allowance against our net deferred income tax assets will not be reversed until such time as we have generated three years of cumulative pre-tax income and have reached sustained profitability, which we define as two consecutive one year periods of pre-tax income.

We account for uncertain tax positions utilizing a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis, which is more-likely-than-not to be realized upon ultimate settlement with tax authorities. If a position does not meet the more-likely-than-not threshold for recognition in step one, no benefit is recorded until the first subsequent period in which the more likely than not standard is met, the issue is resolved with the taxing authority, or the statute of limitations expires. Positions previously recognized are derecognized when we subsequently determine the position no longer is more likely than not to be sustained. Evaluation of tax positions, their technical merits, and measurements using cumulative probability are highly subjective management estimates. Actual results could differ materially from these estimates.

Presently, we have not recorded a deferred tax liability for temporary differences related to investments in foreign subsidiaries that are essentially permanent in duration. These temporary differences may become taxable upon a repatriation of earnings from the subsidiaries or a sale or liquidation of the subsidiaries. At this time the companyCompany does not have any plans to repatriate income from its foreign subsidiaries.

Earnings Per Share

As summarized below, basic earnings per share is computed by dividing net income

Cash Paid for Interest and Taxes and Non-Cash Investing Activities

Cash paid for interest was $42.3 million, $43.8 million and $24.3 million for the period by the weighted average number of common shares outstanding for the period. For purposes of calculating diluted earnings per share, net income is divided by the total of the weighted average shares outstanding plus the dilutive effect of our outstanding stock options under the treasury stock method, which includes consideration of stock-based compensation required by U.S. GAAP.

Year Ended December 31,		2016				2015				2014
(Dollars in thousands, except per share amounts)
Basic Earnings Per Share
Reported net income		$	41,381			$	23,944			$	8,803
Weighted average shares outstanding		25,439				26,599				26,908
Basic earnings per share		$	1.63			$	0.90			$	0.33
Diluted Earnings Per Share
Reported net income		$	41,381			$	23,944			$	8,803
Weighted average shares outstanding		25,439				26,599				26,908
Weighted average dilutive stock options		100				34				112
Weighted average shares outstanding - diluted		25,539				26,633				27,020
Diluted earnings per share		$	1.62			$	0.90			$	0.33

The following potential shares of common stock were excluded from the diluted earnings per share calculations because they would have been anti-dilutive due to their exercise prices exceeding the average market prices for the respective periods: for the yearyears ended December 31, 2016 no options to purchase were excluded;2019, 2018 and 2017. Cash paid for income taxes was $9.0 million, $6.5 million and $11.1 million for the yearyears ended December 31, 2015 options to purchase 147,150 shares at prices ranging from $21.84 to $22.57;2019, 2018, and for the year ended2017.

As of December 31, 2014 options to purchase 985,677 shares at prices ranging from $22.57 to $43.22. In addition, the performance shares discussed in Note 15, "Stock-Based Compensation"2019, 2018 and 2017, $15.6 million, $10.3 million, and $15.1 million, respectively, of equipment had been purchased but not yet paid for and are not included in accounts payable and accrued expenses in our consolidated balance sheets.

45

---

New Accounting Standards

ASU 2016-02, Topic 842, “Leases.” Effective January 1, 2019, we adopted ASU 2016-02, ASC 842 using the diluted income per share because the performance metrics had not been met asoptional transition approach. Adoption of the year ended December 31, 2016.

New Accounting Pronouncements

In May 2014 the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This update outlines a single, comprehensive model for accounting for revenue from contracts with customers. We plan to adopt this update on January 1, 2018. The guidance permits two methodsstandard resulted in recognition of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). We anticipate adopting the standard using the modified retrospective method. There may be differences in timing of revenue recognition under the new standard compared to recognition under ASC 605 - Revenue Recognition.

In July 2015, the FASB issued an ASU entitled“Simplifying the Measurement of Inventory.” The ASU replaces the current lower of cost or market test with a lower of cost or net realizable value test when cost is determined on a first-in, first-out or average cost basis. The standard is effective for public entities for annual reporting periods beginning after December 15, 2016, and interim periods therein. It is to be applied prospectively and early adoption is permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations.

In February of 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"operating lease right-of-use (“ROU”). ASU 2016-02 requires an entity to recognize right-of-use assets and lease liabilities on its balance sheetof $18.2 million and disclose key information about leasing arrangements.$18.6 million, respectively, as well as a charge to eliminate previously deferred rent of $0.4 million, as of January 1, 2019. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are requiredalso 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. For public companies, 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 2016-02

2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” In January, 2018, the FASB issued ASU 2018-02 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 (loss) (“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 Act from AOCI.

ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350).” ASU 2017-04 amends the requirement that entities compare the implied fair value of goodwill with its carrying amount as part of a two-step goodwill impairment test under previously existing guidance. Under ASU 2017-04, in determining the amount of a goodwill impairment an entity will no longer calculate the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination (what is referred to as Step 2 under previously existing guidance). Under the new guidance, entities will perform their annual or interim goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds the fair value of the reporting unit, an impairment will be recognized equal to the excess of the carrying amount over fair value not to exceed the total amount of goodwill. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption,2019 with early adoption permitted. The Company early adopted this standard in conjunction with our annual goodwill impairment test conducted in the fourth quarter of 2019. Refer to Note 10, “Goodwill and Other Intangibles” for further discussion regarding the results of our annual goodwill impairment test for 2019.

Accounting Standards Issued But Not Yet Adopted

ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” In June 2016 the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13), which requires entities to use a new impairment model based on Current Expected Credit Losses (CECL) rather than incurred losses. Under CECL, estimated credit losses would incorporate relevant information about past events, current conditions and reasonable and supportable forecasts and any expected credit losses would be recognized at the time of sale. We are evaluating the impact this guidanceplan to adopt ASU 2016-13 on January 1, 2020. The Company does not expect that adoption will have any significant effect on our financial positionstatements or disclosures because we generally do not incur any significant credit losses due to the financial strength and statementcredit worthiness of operations.

our customers.

ASU 2018-13, “Fair Value Measurement.” In March 2016,August 2018, the FASB issued an ASU entitled "Stock Compensation“Fair Value Measurement (Topic 718)820): ImprovementsDisclosure Framework - Changes to Employee Share-Based Payment Accounting." The objective of the ASUDisclosure Requirements for Fair Value Measurement,” which is to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact this guidance will have on our financial position and statement of operations.

In August 2016, the FASB issued an ASU entitled "Statement of Cash Flows (Topic 740): Classification of Certain Cash Receipts and Cash Payments." The objective of the ASU is to address the diversity in practice in the presentation of certain cash receipts and cash payments in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact this guidance will have on our statement of cash flows.

In October 2016, the FASB issued an ASU entitled "Income Taxes (Topic 230): Intra-Entity Transfers of Assets Other than Inventory." The objective of the ASU isdesigned to improve the accounting for the income tax consequenceseffectiveness of intra-entity transfers of assets other than inventory. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact this guidance will have on our financial positiondisclosures by removing, modifying and statement of operations.

In November 2016, the FASB issued an ASU entitled "Statement of Cash Flows (Topic 230): Restricted Cash." The objective of the ASU isadding disclosures related to address the diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact this guidance will have on our statement of cash flows.

In January 2017, the FASB issued an ASU entitled "Intangibles - Goodwill and Other (Topic 350): 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 goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Thismeasurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. EarlyThe ASU allows for early adoption is permitted.in any interim period after issuance of the update. We are evaluating the impact this guidance will have on our financial positionstatement 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 after issuance of the update. We are evaluating the impact this new standard will have on our financial statement of operations.

disclosures.

46

---

NOTE 2 - RESTRUCTURING

During 2014, we completedACQUISITION

On May 30, 2017, the Company acquired 92.3 percent of the outstanding stock of UNIWHEELS AG (now referred to as our “Europe segment,” “Europe business”, “Europe operations” or “European operations”) for approximately $703.0 million (based on an exchange rate of 1.00 U.S. dollar = 3.74193 Polish Zloty) via a reviewtender offer. On June 30, 2017, the Company commenced the delisting and associated tender process for the remaining outstanding shares of initiativesUniwheels. Subsequently, Superior pursued a Domination and Profit and Loss Transfer Agreement (“DPLTA”) which became effective on January 17, 2018, with retroactive effect as of January 1, 2018. Under the DPLTA, the Company offered to reduce costspurchase any further tendered shares for cash consideration of Euro 62.18. This cash consideration may be subject to change based on appraisal proceedings that the minority shareholders of UNIWHEELS AG have initiated. Because the aggregate equity purchase price of the Acquisition (assuming an exchange rate of 1.00 U.S. dollar = 3.74193 Polish Zloty) was determined at the time of the initial tender offer, any increase in the resulting price must be reflected as a reduction of paid in capital (common stock). Each year beginning in 2019, the Company must pay an annual dividend of Euro 3.23 on any outstanding shares as long as the DPLTA is in effect. For any shares tendered prior to payment of the dividend each year, the Company must pay interest at a statutory rate, currently 4.12 percent, at the time the shares are redeemed. As of December 31, 2019, a total of 12,310,000 shares have been tendered and enhance our competitive position. Based on this review, we committedthe Company now owns 99.3 percent of the outstanding shares of Superior Industries Europe AG (formerly Uniwheels AG).     

As a result of the effectiveness of the DPLTA as of January 1, 2018, the carrying value of the non-controlling interest related to a plan to close operations at our Rogers, Arkansas facility,UNIWHEELS AG common shares outstanding of $51.9 million, which was completedpresented as a component of stockholders’ equity as of December 31, 2017, was reclassified to European non-controlling redeemable equity during the first quarter of 2018. The non-controlling interest shares may be tendered at any time and are, therefore, immediately redeemable and must be classified outside stockholders’ equity. For the period of time that the DPLTA is in effect, the non-controlling interest will continue to be presented in European non-controlling redeemable equity outside of stockholders’ equity in the consolidated balance sheets.

The Company’s consolidated financial statements include the results of our European operations subsequent to May 30, 2017. The Company’s consolidated financial statements reflect the purchase accounting adjustments in accordance with ASC 805 “Business Combinations”, whereby the purchase price was allocated to the assets acquired and liabilities assumed based upon their fair values on the acquisition date.

The following is the allocation of the purchase price:

(Dollars in thousands)
Estimated purchase price
Cash consideration		$	703,000
Non-controlling interest			63,200
Preliminary purchase price allocation
Cash and cash equivalents			12,296
Accounts receivable			60,580
Inventories			83,901
Prepaid expenses and other current assets			11,859
Total current assets			168,636
Property and equipment			259,784
Intangible assets			205,000
Goodwill			286,249
Other assets			32,987
Total assets acquired			952,656
Accounts payable			61,883
Other current liabilities			40,903
Total current liabilities			102,786
Other long-term liabilities			83,670
Total liabilities assumed			186,456
Net assets acquired		$	766,200

47

---

Acquired intangible assets were recorded at estimated fair value, as determined through the use of the income approach, specifically the relief from royalty and multi-period excess earnings methods. The major assumptions used in arriving at the estimated identifiable intangible asset values included estimates of future cash flows, discounted at an appropriate rate of return which are based on the weighted average cost of capital for both the Company and other market participants. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to our future cash flows. The estimated fair value of intangible assets and related useful lives as included in the purchase price allocation are as follows:

		Estimated Fair Value				Estimated Useful Life (in Years)
(Dollars in thousands)
Brand name		$	9,000			4-6
Technology			15,000			4-6
Customer relationships			167,000			7-11
Trade names			14,000			Indefinite
		$	205,000

Goodwill represents future economic benefits expected to be recognized from the Company’s expansion into the European wheel market, as well as expected future synergies and operating efficiencies. The purchase price allocation of goodwill, which was finalized in the second quarter of 2018, yielding an amount of $286.2 million, was allocated to the Europe segment. In the fourth quarter of 2014. 2019, we recognized a goodwill impairment charge of $99.5 million, as well as an indefinite-lived intangible impairment charge of $2.7 million, relating to our European reporting unit (refer to Note 10, “Goodwill and Other Intangible Assets”).

The action was undertakenfollowing unaudited combined pro forma information is for informational purposes only. The pro forma information is not necessarily indicative of what the combined Company’s results actually would have been had the acquisition been completed as of the beginning of the periods as indicated. In addition, the unaudited pro forma information does not purport to project the future results of the combined Company.

		Twelve Months Ended
		December 31, 2017
		Proforma
(Dollars in thousands)
Proforma combined sales		$	1,351,799
Proforma net income		$	17,692

NOTE 3 - REVENUE

In accordance with ASC 606, “Revenue from Contracts with Customers,” the Company disaggregates revenue from contracts with customers into our segments, North America and Europe. Revenues by segment for the year ended December 31, 2019 are summarized in order to reduce costsNote 6, “Business Segments”.

The opening and enhance our global competitive position. During 2016, we soldclosing balances of the Rogers facility for total proceeds of $4.3 million, resulting in a $1.4 million gain on sale, which is recordedCompany’s receivables and current and long-term contract liabilities are as a reduction to selling, general and administrative expensefollows (in thousands):

		December 31, 2019				December 31, 2018				Change
Customer receivables		$	68,283			$	97,566			$	(29,283	)
Contract liabilities—current			5,880				5,810				70
Contract liabilities—noncurrent			13,577				8,354				5,223

48

---

The changes in the consolidated income statements.

The total cost incurred as acontract liability balances primarily result offrom timing differences between our performance and customer payment while the Rogers facility closure was $15.9 million, of which $1.5 million, $6.0 million and $8.4 million was recognized as of December 31, 2016, 2015 and 2014, respectively. The following table summarizesdecline in customer receivables is primarily due to the Rogers, Arkansas plant closure costs and classificationdecline in the consolidated income statement forsales. During the years ended December 31, 2016, 20152019 and 2014:

	Year Ended December 31, 2016				Year Ended December 31, 2015				Year Ended December 31, 2014				Total Costs				Classification
(Dollars in thousands)
Accelerated and other depreciation of assets idled (1)	$	248			$	1,641			$	5,365			$	7,254			Cost of sales, Restructuring costs
Severance costs (2)	—				114				1,897				2,011				Cost of sales, Restructuring costs
Equipment removal and impairment, inventory written-down, lease termination and other costs (3)	1,210				4,257				1,167				6,634				Cost of sales, Restructuring costs
Total restructuring costs included in cost of sales	1,458				6,012				8,429				15,899
Gain on sale of the facility	(1,436		)		—				—				$	(1,436	)		Selling, general and administrative expense
	$	22			$	6,012			$	8,429			$	14,463

⁽¹⁾ Cost2018, the Company recognized tooling reimbursement revenue of sales includes accelerated depreciation due to shorter useful lives for assets to be retired after operations ceased at$10.7 million and $8.5 million, respectively, which had been deferred in prior periods and was previously included in the Rogers facility.

⁽²⁾The closure resulted in a reduction of workforce of approximately 500 employees and a shift in production to other facilities.

⁽³⁾We incurred other associated costs such as moving costs, impairment of assets and other closing costs. In 2016, the majoritycurrent portion of the costs related to closing, maintenance and other costs. In 2015, we determined that some of the assets would not ultimately be transferred to other facilities and recorded a $2.7 million impairment. In 2014, the majority of the restructuring costs related to inventory write-downs, moving costs and other costs.

Changes in the accrued expenses related to restructuring liabilities during the years ended December 31, 2016 and 2015 were less than $0.1 million.

In addition, other measures in 2014 were taken to reduce costs including the sale of the company's two aircraft. One airplane was sold for cash in September 2014, incurring a $0.2 million loss on sale and the other airplane was impaired $1.1 million at the end of 2014 and subsequently sold in February 2015. The impairment of $1.1 million was included in selling, general and administrative expense in the consolidated income statement forcontract liability (deferred revenue). During the year ended December 31, 2019 and 2018, the Company recognized revenue of $1.7 million and , 2014.$2.8 million, respectively,

from obligations satisfied in prior periods as a result of adjustments to pricing estimates for production efficiencies and other revenue adjustments.

NOTE 34 - FAIR VALUE MEASUREMENTS

The companyCompany applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis, while other assets and liabilities are measured at fair value on a nonrecurring basis, such as when we have an asset impairment. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 –- Quoted prices in active markets for identical assets or liabilities.

Level 2 –- Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 –- Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

The carrying amounts for cash and cash equivalents, investments in certificates of deposit, accounts receivable, accounts payable and accrued expenses approximate their fair values due to the short period of time until maturity.

Cash and Cash Equivalents

Included in cash and cash equivalents are highly liquid investments that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of change in value due to interest rate, quoted price or penalty on withdrawal. A debt security is classified as a cash equivalent if it meets these criteria and if it has a remaining time to maturity of three months or less from the date of acquisition. Amounts on deposit and available upon demand, or negotiated to provide for daily liquidity without penalty, are classified as cash and cash equivalents. Time deposits, certificates of deposit and money market accounts that meet the above criteria are reported at par value on our balance sheet and are excluded from the table below.

Derivative Financial Instruments

Our derivatives are over-the-counter customized derivative transactions and are not exchange traded. We estimate the fair value of these instruments using industry-standard valuation models such as a discounted cash flow. These models project future cash flows and discount the future amounts to a present value using market-based expectations for interest rates, foreign exchange rates, commodity prices and the contractual terms of the derivative instruments. The discount rate used is the relevant interbank deposit rate (e.g., LIBOR) plus an adjustment for non-performance risk. In certain cases, market data may not be available and we may use broker quotes and models (e.g., Black-Scholes) to determine fair value. This includes situations where there is lack of liquidity for a particular currency or commodity or when the instrument is longer dated.

The fair value measurements of the redeemable preferred stock embedded derivative are based upon Level 3 unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the liability – refer to “Note 5, Derivative Financial Instruments.”

Cash Surrender Value

The

We have an unfunded salary continuation plan, which was closed to new participants effective February 3, 2011. We purchased life insurance policies on certain participants to provide, in part, for future liabilities. In the second quarter of 2019, we terminated our life insurance policies in exchange for the cash surrender value of the life insurance policies is the sum of money the insurance company will pay to the company in the event the policy is voluntarily terminated before its maturity or the insured event occurs. Over the term of the life insurance contracts, the cash surrender value changes as a result of premium payments and investment income offset by investment losses, charges and miscellaneous fees. The amount of the asset recorded$7.6 million. We also received $0.6 million for the investment in the life insurance contracts is equal to the cash surrender value which is the amount that will be realized under the contract as of the balance sheet date if the insured event occurs.

death benefit claims.  

The following tables categorize items measured at fair value at December 31, 20162019 and 2015:

2018:

																					Fair Value Measurement at Reporting Date Using
					Fair Value Measurement at Reporting Date Using
					Quoted Prices				Significant Other				Significant
					in Active Markets				Observable				Unobservable
					for Identical Assets				Inputs				Inputs
December 31, 2016					(Level 1)				(Level 2)				(Level 3)
December 31, 2019																					Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
(Dollars in thousands)
Assets
Certificates of deposit	$	750			$	—			$	750			$	—
Cash surrender value	7,480				—				7,480				—
Derivative contracts	13				—				13				—				$	21,973			$	—			$	21,973			$	—
Total	8,243				—				8,243				—					21,973				—				21,973				—
Liabilities
Derivative contracts	24,773				—				24,773				—					8,709				—				8,709				—
Embedded derivative liability																		3,916				—				—				3,916
Total	$	24,773			$	—			$	24,773			$	—			$	12,625			$	—			$	8,709			$	3,916

						Fair Value Measurement at Reporting Date Using
December 31, 2018						Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
(Dollars in thousands)
Assets
Certificates of deposit		$	750			$	—			$	750			$	—
Cash surrender value			8,057				—				8,057				—
Derivative contracts			4,218				—				4,218				—
Total			13,025				—				13,025				—
Liabilities
Derivative contracts			8,836				—				8,836
Embedded derivative liability			3,134				—				—				3,134
Total		$	11,970			$	—			$	8,836			$	3,134

The following table summarizes the changes during 2019, 2018 and 2017 in level 3 fair value measurement of the embedded derivative liability relating to the redeemable preferred stock issued May 22, 2017 in connection with the acquisition of our European operations:

January 1, 2017 – December 31, 2019
(Dollars in thousands)
Beginning fair value – January 1, 2017		$	—
Change in fair value of redeemable preferred stock    embedded derivative liability			4,685
Ending fair value – December 31, 2017			4,685
Change in fair value of redeemable preferred stock    embedded derivative liability			(3,480	)
Effect of redeemable preferred stock modification			1,929
Ending fair value – December 31, 2018			3,134
Change in fair value of redeemable preferred stock    embedded derivative liability			782
Ending fair value – December 31, 2019		$	3,916

Debt Instruments

The carrying values of the Company’s debt instruments vary from their fair values. The fair values were determined by reference to transacted prices of these securities (Level 2). The estimated fair value, as well as the carrying value, of the Company’s debt instruments are shown below (in thousands):

		December 31, 2019				December 31, 2018
(Dollars in thousands)
Estimated aggregate fair value		$	606,093			$	624,943
Aggregate carrying value (1)			630,635				684,922

(1)	Long-term debt excluding the impact of unamortized debt issuance costs.

					Fair Value Measurement at Reporting Date Using
					Quoted Prices				Significant Other				Significant
					in Active Markets				Observable				Unobservable
					for Identical Assets				Inputs				Inputs
December 31, 2015					(Level 1)				(Level 2)				(Level 3)
(Dollars in thousands)
Assets
Certificates of deposit	$	950			$	—			$	950			$	—
Cash surrender value	6,923				—				6,923				—
Derivative contracts	113				—				113				—
Total	7,986				—				7,986				—
Liabilities
Derivative contracts	14,159				—				14,159				—
Total	$	14,159			$	—			$	14,159			$	—

NOTE 45 - DERIVATIVE FINANCIAL INSTRUMENTS

Derivative Instruments and Hedging Activities

We use derivatives to partially offset our business exposure to foreign currency, interest rates, aluminum and other commodity risk. We may enter into forward contracts, option contracts, swaps, collars or other derivative instruments to offset some of the risk on expected future cash flows and on certain existing assets and liabilities. However, we may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures.

50

---

There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign currency exchange rates.

rates, interest rates, and aluminum and natural gas commodity prices.

To help protect gross margins from fluctuations in foreign currency exchange rates, certain of our subsidiaries, whose functional currency is the U.S. dollar or the Euro, hedge a portion of their forecasted foreign currency costs. Generally, wecosts denominated in the Mexican Peso and Polish Zloty, respectively. We may hedge portions of our forecasted foreign currency exposure associated with costs, typically for up to 3648 months.

We record all derivatives in the consolidated balance sheets at fair value. Our accounting treatment for these instruments is based on the hedge designation. The effective portions of cash flow hedges that are designated as hedging instruments are recorded in AOCIAccumulated Other Comprehensive (Loss) Income (“AOCI”) until the hedged item is recognized in earnings. The ineffective portions of cash flow hedges are recordedearnings, at which point accumulated gains or losses will be recognized in cost of sales.earnings and classified with the underlying hedged transaction. Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates. AllThe Company has derivatives werethat are designated as hedging instruments at December 31, 2016 and 2015.

Deferred gains and losses associated with cash flow hedges of foreign currency costs are recognizedas well as derivatives that did not qualify for designation as hedging instruments.

Redeemable Preferred Stock Embedded Derivative

We have determined that the conversion option embedded in our redeemable preferred stock is required to be accounted for separately from the redeemable preferred stock as a componentderivative liability. Separation of costthe conversion option as a derivative liability is required because its economic characteristics are considered more akin to an equity instrument and therefore the conversion option is not considered to be clearly and closely related to the economic characteristics of sales in the sameredeemable preferred stock. The economic characteristics of the redeemable preferred stock are considered more akin to a debt instrument due to the fact that the shares are redeemable at the holder’s option, the redemption value is significantly greater than the face amount, the shares carry a fixed mandatory dividend and the stock price necessary to make conversion more attractive than redemption ($56.324) is significantly greater than the price at the date of issuance ($19.05), all of which lead to the conclusion that redemption is more likely than conversion.

We also have determined that the embedded early redemption option upon the occurrence of a redemption event must also be bifurcated and accounted for separately from the redeemable preferred stock, because the debt host contract involves a substantial discount (face of $150.0 million as compared to the redemption value of $300.0 million) and exercise of the early redemption option would accelerate the holder’s option to redeem the shares (refer to Note 12, “Redeemable Preferred Stock”).

Accordingly, we have recorded an embedded derivative liability representing the combined fair value of the right of holders to receive common stock upon conversion of redeemable preferred stock at any time (the “conversion option”) and the right of the holders to exercise their early redemption option upon the occurrence of a redemption event (the “early redemption option”). The embedded derivative liability is adjusted to reflect fair value at each period as the related cost is recognized. Our foreign currency transactions hedgedend with cash flow hedges as of December 31, 2016, are expected to occur within 1 month to 36 months.

Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in AOCI associated with such derivative instruments are reclassified immediately into other expense. Any subsequent changes in fair value recorded in the “Change in fair value of such derivative instruments are reflectedredeemable preferred stock embedded derivative” financial statement line item of the Company’s consolidated income statements (refer to Note 4, “Fair Value Measurements”).

A binomial option pricing model is used to estimate the fair value of the conversion and early redemption options embedded in other expense unless they are re-designated as hedgesthe redeemable preferred stock. The binomial model utilizes a “decision tree” whereby future movement in the Company’s common stock price is estimated based on a volatility factor. The binomial option pricing model requires the development and use of assumptions. These assumptions include estimated volatility of the value of our common stock, assumed possible conversion or early redemption dates, an appropriate risk-free interest rate, risky bond rate and dividend yield.

The expected volatility of the Company’s common stock is estimated based on historical volatility. The assumed base case term used in the valuation model is the period remaining until September 14, 2025 (the earliest date at which the holder may exercise its unconditional redemption option). A number of other transactions.

We hadscenarios incorporate earlier redemption dates to address the possibility of early redemption upon the occurrence of a redemption event. The risk-free interest rate is based on the yield on the U.S. Treasury zero coupon yield curve with a remaining term equal to the expected term of the conversion and early redemption options. The significant assumptions utilized in the Company’s valuation of the embedded derivative at December 31, 2019 are as follows: valuation scenario terms between 2.00 and 5.71 years, volatility of 64 percent, risk-free rate of 1.6 percent to 1.7 percent related to the respective assumed terms, a risky bond rate of 19.5 percent and no gains or losses recognized in other expense for foreign currency forward and option contracts not designated as hedging instruments during 2016, 2015 and 2014.

dividend yield.

51

---

The following tables display the fair value of derivatives by balance sheet line item:item at December 31, 2019 and December 31, 2018:

		December 31, 2019
		Other Current Assets				Other Non-current Assets				Accrued Liabilities				Other Non-current Liabilities
(Dollars in thousands)
Foreign exchange forward contracts designated as    hedging instruments		$	7,808			$	12,821			$	60			$	100
Foreign exchange forward contracts not    designated as hedging instruments			1,196				—				554				—
Aluminum forward contracts designated as    hedging instruments			60				—				127				—
Natural gas forward contracts designated as    hedging instruments			81				7				1,312				727
Interest rate swap contracts designated as hedging    instruments			—				—				2,304				3,525
Embedded derivative liability			—				—				—				3,916
Total derivative financial instruments		$	9,145			$	12,828			$	4,357			$	8,268

		December 31, 2018
		Other Current Assets				Other Non-current Assets				Accrued Liabilities				Other Non-current Liabilities
(Dollars in thousands)
Foreign exchange forward contracts designated as    hedging instruments		$	2,599			$	1,011			$	659			$	6,202
Foreign exchange forward contracts not    designated as hedging instruments			333				—				207				—
Aluminum forward contracts designated as    hedging instruments			—				—				927				—
Cross currency swap not designated as hedging    instrument			—				—				227				—
Natural gas forward contracts designated as    hedging instruments			275				—				355				—
Interest rate swap contracts designated as hedging    instruments			—				—				131				128
Embedded derivative liability			—				—				—				3,134
Total derivative financial instruments		$	3,207			$	1,011			$	2,506			$	9,464

December 31, 2016	Other Current Assets			Accrued Expenses			Other Non-current Liabilities
(Dollars in thousands)
Foreign exchange forward contracts and collars designated as hedging instruments	$	13		$	10,076		$	14,697
Total derivative financial instruments	$	13		$	10,076		$	14,697

December 31, 2015	Other Current Assets			Accrued Expenses			Other Non-current Liabilities
(Dollars in thousands)
Foreign exchange forward contracts and collars designated as hedging instruments	$	113		$	9,629		$	4,530
Total derivative financial instruments	$	113		$	9,629		$	4,530

The following tables summarizetable summarizes the notional amount and estimated fair value of our derivative financial instruments:

		December 31, 2019								December 31, 2018
		Notional U.S. Dollar Amount				Fair Value				Notional U.S. Dollar Amount				Fair Value
(Dollars in thousands)
Foreign currency forward contracts and collars    designated as hedging instruments		$	449,181			$	20,469			$	467,253			$	(3,251	)
Foreign exchange forward contracts not designated    as hedging instruments			73,491				642				45,905				126
Aluminum forward contracts designated as    hedging instruments			9,405				(67	)			10,810				(927	)
Cross currency swap not designated as hedging    instrument			—				—				12,151				(227	)
Natural gas forward contracts designated as hedging    instruments			5,816				(1,951	)			2,165				(80	)
Interest rate swap contracts designated as hedging    instruments			260,000				(5,829	)			90,000				(259	)
Total derivative financial instruments		$	797,893			$	13,264			$	628,284			$	(4,618	)

December 31, 2016	Notional U.S. Dollar Amount			Fair Value
(Dollars in thousands)
Foreign currency forward contracts and collars designated as hedging instruments	$	160,461		$	24,760
Total derivative financial instruments	$	160,461		$	24,760

December 31, 2015	Notional U.S. Dollar Amount			Fair Value
(Dollars in thousands)
Foreign exchange forward contracts and collars designated as hedging instruments	$	162,590		$	14,046
Total derivative financial instruments	$	162,590		$	14,046

52

---

Notional amounts are presented on a grossnet basis. The notional amounts of the derivative financial instruments do not represent amounts exchanged by the parties and, therefore, are not a direct measure of our exposure to the financial risks described above. The amounts exchanged are calculated by reference to the notional amounts and by other terms of the derivatives, such as interest rates, foreign currency exchange rates or commodity volumes and prices.

The following tables providesummarize the impactgain or loss recognized in AOCI as of derivative instruments designated as cash flow hedges on our consolidated income statement:December 31, 2019, 2018 and 2017, the amounts reclassified from AOCI into earnings and the amounts recognized directly into earnings for the years ended December 31, 2019, 2018 and 2017:

Year ended December 31, 2019		Amount of Gain or (Loss) Recognized in AOCI on Derivatives				Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income				Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts		$	13,156			$	3,746			$	4,320
Total		$	13,156			$	3,746			$	4,320

Year ended December 31, 2018		Amount of Gain or (Loss) Recognized in AOCI on Derivatives				Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income				Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
(Dollars in thousands)
Derivative Contracts		$	5,293			$	728			$	(406	)
Total		$	5,293			$	728			$	(406	)

Year ended December 31, 2017		Amount of Gain or (Loss) Recognized in AOCI on Derivatives (Effective Portion)				Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)				Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
(Dollars in thousands)
Derivative Contracts		$	7,603			$	(4,539	)		$	(538	)
Total		$	7,603			$	(4,539	)		$	(538	)

Year Ended December 31, 2016	Amount of Gain or (Loss) Recognized in AOCI on Derivatives, net of tax (Effective Portion)			Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)			Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
(Dollars in thousands)
Foreign exchange forward contracts and collars	$	(6,812	)	$	(13,597	)	$	(156	)
Total	$	(6,812	)	$	(13,597	)	$	(156	)

Year Ended December 31, 2015	Amount of Gain or (Loss) Recognized in AOCI on Derivatives, net of tax (Effective Portion)			Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)			Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
(Dollars in thousands)
Foreign exchange forward contracts and collars	$	(4,524	)	$	(9,960	)	$	19
Total	$	(4,524	)	$	(9,960	)	$	19

NOTE 56 - BUSINESS SEGMENTS

In accordance with the requirements of ASC Topic 280, “Segment Reporting,” we have concluded that our North American and European businesses represent separate operating segments in view of significantly different markets, customers and products within each of these regions. Each operating segment has discrete financial information which is evaluated regularly by the Company’s CEO in determining resource allocation and assessing performance. Within each of these regions, markets, customers, products and production processes are similar and production can be readily transferred between production facilities. Moreover, our business within each region leverages common systems, processes and infrastructure. Accordingly, North America and Europe comprise the Company’s reportable segments for purposes of segment reporting.

(Dollars in thousands)		Net Sales												Income from Operations
		2019				2018				2017				2019				2018				2017
North America		$	704,320			$	800,383			$	732,418			$	16,713			$	29,702			$	9,808
Europe			668,167				701,444				375,637				(66,772	)			56,103				11,710
		$	1,372,487			$	1,501,827			$	1,108,055			$	(50,059	)		$	85,805			$	21,518

(Dollars in thousands)		Depreciation and Amortization												Capital Expenditures
		2019				2018				2017				2019				2018				2017
North America		$	38,845			$	33,588			$	35,931			$	22,464			$	37,476			$	47,493
Europe			61,877				61,468				33,404				41,830				40,221				23,444
		$	100,722			$	95,056			$	69,335			$	64,294			$	77,697			$	70,937

The company's CEO is the chief operating decision maker ("CODM") because he has final authority over performance assessment and resource allocation decisions. The CODM evaluates both consolidated and disaggregated financial

(Dollars in thousands)
		Property, Plant, and Equipment, net								Goodwill and Intangible Assets
		2019				2018				2019				2018
North America		$	237,372			$	249,791			$	—			$	—
Europe			291,910				282,976				321,910				459,803
		$	529,282			$	532,767			$	321,910			$	459,803

(Dollars in thousands)		Total Assets
		2019				2018
North America		$	484,689			$	484,682
Europe			827,178				966,934
		$	1,311,867			$	1,451,616

Geographic information for each of the company's business units in deciding how to allocate resources and assess performance. Each manufacturing facility manufactures the same products, ships products to the same group of customers, utilizes the same cast manufacturing process and, as a result, production can generally be transferred among our facilities. Accordingly, we operate as a single integrated business and, as such, have only one operating segment - automotive wheels.

Net sales by geographic location:

Year Ended December 31,		2019				2018				2017
(Dollars in thousands)
Net sales:
U.S.		$	104,476			$	127,178			$	124,711
Mexico			599,844				673,205				607,707
Germany			245,805				279,631				155,227
Poland			422,362				421,813				220,410
Consolidated net sales		$	1,372,487			$	1,501,827			$	1,108,055

Geographic information
Net sales by geographic location is the following:
Year Ended December 31,		2016				2015				2014
(Dollars in thousands)
Net sales:
U.S.		$	120,395			$	177,198			$	261,478
Mexico		612,282				550,748				483,969
Consolidated net sales		$	732,677			$	727,946			$	745,447

Long Lived Assets
Long-lived assets includes property, plant and equipment, net, by geographic location as follows:
December 31,				2016				2015
(Dollars in thousands)
Property, plant and equipment, net:
U.S.				$	37,795			$	44,274
Mexico				189,608				190,372
Consolidated property, plant and equipment, net				$	227,403			$	234,646

NOTE 67 - ACCOUNTS RECEIVABLE

December 31,		2019				2018
(Dollars in thousands)
Trade receivables		$	71,150			$	101,864
Other receivables			8,503				7,083
			79,653				108,947
Allowance for doubtful accounts			(2,867	)			(4,298	)
Accounts receivable, net		$	76,786			$	104,649

		2019 Percent of Net Sales				2018 Percent of Net Sales				2017 Percent of Net Sales
GM			22	%			18	%			20	%
Ford			15	%			18	%			22	%
VW Group			13	%			12	%			9	%

December 31,		2016				2015
(Dollars in thousands)
Trade receivables		$	91,213			$	103,202
Other receivables		9,037				10,253
		100,250				113,455
Allowance for doubtful accounts		(919		)		(867		)
Accounts receivable, net		$	99,331			$	112,588

The following percentages of our consolidated net sales were made to Ford, GM, Toyota and Fiat Chrysler Automobiles: 2016 - 38 percent, 30 percent, 14 percent and 6 percent, respectively; 2015 - 44 percent, 24 percent, 14 percent and 8 percent, respectively; and 2014 - 44 percent, 24 percent, 12 percent and 10 percent, respectively.

The accounts receivable from GM, Ford and Toyota at December 31, 2016VW Group represented approximately 39 percent, 32 percent, 8 and 149 percent respectively of the total accounts receivables. The accounts receivable, from Ford, GM and Toyotarespectively, at December 31, 2015, represented approximately 352019 and 24 percent, 2711 percent, and 138 percent respectively of the total accounts receivables.

receivable, respectively, at December 31, 2018.

NOTE 78 - INVENTORIES

December 31,		2019				2018
(Dollars in thousands)
Raw materials		$	44,245			$	49,571
Work in process			40,344				42,886
Finished goods			83,881				83,121
Inventories, net		$	168,470			$	175,578

December 31,	2016				2015
(Dollars in thousands)
Raw materials	$	40,255			$	19,148
Work in process	21,447				21,063
Finished goods	21,135				21,558
Inventories	$	82,837			$	61,769

54

---

Service wheel and supplies inventory included in other non-current assets in the consolidated balance sheets totaled $6.5$10.6 million and $6.9$8.9 million at December 31, 20162019 and 2015,2018, respectively.   Included in raw materials were operating supplies and spare parts totaling $10.3 million and $9.2 million at December 31, 2016 and 2015, respectively.

NOTE 89 - PROPERTY, PLANT AND EQUIPMENT

December 31,		2019				2018
(Dollars in thousands)
Land and buildings		$	158,907			$	140,471
Machinery and equipment			856,961				769,451
Leasehold improvements and others			12,173				12,883
Construction in progress			30,179				67,559
			1,058,220				990,364
Accumulated depreciation			(528,938	)			(457,597	)
Property, plant and equipment, net		$	529,282			$	532,767

December 31,	2016				2015
(Dollars in thousands)
Land and buildings	$	67,915			$	73,803
Machinery and equipment	485,185				486,612
Leasehold improvements and others	4,868				4,204
Construction in progress	26,301				20,455
	584,269				585,074
Accumulated depreciation	(356,866		)		(350,428		)
Property, plant and equipment, net	$	227,403			$	234,646

Depreciation expense was $34.3$75.8 million, $34.5$68.8 million and $35.6$54.2 million for the years ended December 31, 2016, 20152019, 2018 and 2014,2017, respectively. In 2014, depreciationDepreciation expense includes $6.5 million of accelerated depreciation charges as a result of shortened estimated useful lives due to restructuring activities described in Note 2, "Restructuring".

NOTE 9 - INVESTMENT IN UNCONSOLIDATED AFFILIATE

On June 28, 2010, we executed a share subscription agreement (the "Agreement") with Synergies, a private aluminum wheel manufacturer based in Visakhapatnam, India, providing for our acquisition of a minority interest in Synergies. The total cash investment in Synergies amounted to $4.5 million, representing 12.6 percent of the outstanding equity shares of Synergies. Our Synergies investment is accounted for using the cost method. During 2011, a group of existing equity holders, including the company, made a loan of $1.5 million to Synergies for working capital needs. The company's share of this unsecured advance was $0.5 million. The remaining principal balance of the unsecured advance was paid in full during the first quarter of 2015.

In October 2014, a typhoon caused significant damage to the facilities and operations of Synergies, and in the fourth quarter of 2014, we tested the $4.5 million carrying value of our investment for impairment. Based on our evaluation, we determined there was an other-than-temporary impairment and wrote the investment down to its estimated fair value of $2.0 million, with the $2.5 million loss recognized in income for the year ended December 31, 2014. The valuation was based on an income approach using current financial forecast data, and rates and assumptions market participants would use in pricing2019 included accelerated depreciation of $7.6 million related to excess equipment arising from the investment. There was no further impairment in 2016 and 2015.

plan to reduce production at our Fayetteville, Arkansas manufacturing facility (refer to Note 23, “Restructuring”).

NOTE 10 - INCOME TAXESGOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and indefinite-lived intangible assets, such as certain trade names, are not amortized, but are instead evaluated for impairment annually at the end of the fiscal year, or more frequently if events or circumstances indicate that impairment may be more likely than not. We conducted the annual goodwill impairment testing as of December 31, 2019 using a quantitative approach.  Based on the results of our quantitative analysis, we recognized a non-cash goodwill impairment charge equal to the excess of the carrying value over the fair value of the European reporting unit at December 31, 2019 of $99.5 million. Additionally, we recognized a non-cash impairment charge of $2.7 million related to our aftermarket trade name indefinite-lived intangible asset which was primarily attributable to the decline in forecasted aftermarket revenues. Total impairment charges of $102.2 million have been recognized as a separate charge and included in income from operations.    

We utilized both an income and a market approach to determine the fair value of the European reporting unit as part of our goodwill impairment assessment. The income approach is based on projected debt-free cash flow, which is discounted to the present value using discount factors that consider the timing and risk of cash flows. The discount rate used is the weighted average of an estimated cost of equity and of debt (“weighted average cost of capital”). The weighted average cost of capital is adjusted as necessary to reflect risk associated with the business of the European reporting unit. Financial projections are based on estimated production volumes, product prices and expenses, including raw material cost, wages, energy and other expenses. Other significant assumptions include terminal value cash flow and growth rates, future capital expenditures and changes in future working capital requirements. The market approach is based on the observed ratios of enterprise value to earnings before interest, taxes, depreciation and amortization (EBITDA) of comparable, publicly traded companies. The market approach fair value is determined by multiplying historical and anticipated financial metrics of the European reporting unit by the EBITDA pricing multiples derived from comparable, publicly traded companies. A considerable amount of management judgment and assumptions are required in performing the quantitative impairment test, principally related to determining the fair value of the reporting unit.  While the Company believes its judgments and assumptions are reasonable, different assumptions could change the estimated fair value.

At December 31, 2019, we determined that the carrying value of the European reporting unit exceeded its fair value. The decline in fair value was due to lower forecasted industry production volumes included in our long-range plan (completed in the fourth quarter of 2019), as compared to our prior year long-range plan. This was primarily due to softening of the Western and Central European automotive market. Industry forecasts for Western and Central European production volumes in 2020 to 2023 are lower than prior year forecasts by approximately 6.0 percent, with the most significant decline in the outlook occurring in the fourth quarter of 2019. Similarly, EBITDA and cash flow for the European reporting unit declined as compared to the prior year long-range plan due to lower forecasted industry production volumes which adversely impacted fair value under both the income and market approaches. In determining the fair value, the Company weighted the income and market approaches, 75 percent and 25 percent, respectively. Significant assumptions used under the income approach included a weighted average cost of capital (WACC) of 10.0 percent and a long-term growth rate of 2.0 percent. In determining the WACC, management considered the level of risk inherent in the cash flow projections and current market conditions. The use of these unobservable inputs results in classification of the fair value estimate as a Level 3 measurement in the fair value hierarchy.

55

---

The Company’s finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. Following is a summary of the Company’s finite-lived and indefinite-lived intangible assets and goodwill as of December 31, 2019 and 2018.

Year Ended December 31, 2019		Gross Carrying Amount				Impairment				Accumulated Amortization				Currency Translation				Net Carrying Amount				Remaining Weighted Average Amortization Period
(Dollars in thousands)
Brand name		$	9,000				—			$	(4,778	)		$	110			$	4,332			3-4
Technology			15,000				—				(7,963	)			183				7,220			2-4
Customer relationships			167,000				—				(53,681	)			954				114,273			4-9
Total finite			191,000				—				(66,422	)			1,247				125,825
Trade names			14,000				(2,733	)			—				(14	)			11,253			Indefinite
Total intangibles		$	205,000			$	(2,733	)		$	(66,422	)		$	1,233			$	137,078

Year Ended December 31, 2019		Beginning Balance				Impairment				Currency Translation				Ending Balance
(Dollars in thousands)
Goodwill		$	291,434			$	(99,505	)		$	(7,097	)		$	184,832

Year Ended December 31, 2018		Gross Carrying Amount				Accumulated Amortization				Currency Translation				Net Carrying Amount				Remaining Weighted Average Amortization Period
(Dollars in thousands)
Brand name		$	9,000			$	(2,979	)		$	237			$	6,258			4-5
Technology			15,000				(4,964	)			394				10,430			3-5
Customer relationships			167,000				(33,468	)			3,823				137,355			5-10
Total finite			191,000				(41,411	)			4,454				154,043
Trade names			14,000				—				326				14,326			Indefinite
Total intangibles		$	205,000			$	(41,411	)		$	4,780			$	168,369

		Beginning Balance				Impairment				Currency Translation				Ending Balance
Year Ended December 31, 2018 (Dollars in thousands)
Goodwill		$	304,805				—			$	(13,371	)		$	291,434

Amortization expense for these intangible assets was $25.0 million, $26.3 million and $15.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. The anticipated annual amortization expense for these intangible assets is $24.5 million for 2020 to 2021, $21.7 million for 2022, $19.8 million for 2023 and 2024.

56

---

NOTE 11 - DEBT

A summary of long-term debt and the related weighted average interest rates is shown below:

		December 31, 2019 (Dollars in Thousands)
Debt Instrument		Total Debt				Debt Issuance Costs (1)				Total Debt, Net				Weighted Average Interest Rate
Term Loan Facility		$	371,800			$	(10,192	)		$	361,608				5.7	%
6.00% Senior Notes due 2025			243,074				(5,408	)			237,666				6.0	%
Other			12,693				—				12,693				2.2	%
Finance Leases			3,068				—				3,068				2.9	%
		$	630,635			$	(15,600	)			615,035
Less: Current portion											(4,010	)
Long-term debt										$	611,025

		December 31, 2018 (Dollars in Thousands)
Debt Instrument		Total Debt				Debt Issuance Costs (1)				Total Debt, Net				Weighted Average Interest Rate
Term Loan Facility		$	382,800			$	(13,078	)		$	369,722				6.3	%
6.00% Senior Notes due 2025			286,100				(7,366	)			278,734				6.0	%
Other			16,022				—				16,022				2.2	%
		$	684,922			$	(20,444	)			664,478
Less: Current portion											(3,052	)
Long-term debt										$	661,426

(1)	Unamortized portion

Senior Notes

On June 15, 2017, Superior issued Euro 250.0 million aggregate principal amount of 6.00% Senior Notes due June 15, 2025 (the “Notes”). Interest on the Notes is payable semiannually, on June 15 and December 15. Superior may redeem the Notes, in whole or in part, on or after June 15, 2020 at redemption prices of 103.000 percent and 101.500 percent of the principal amount thereof if the redemption occurs during the 12-month period beginning June 15, 2020 or 2021, respectively, and a redemption price of 100 percent of the principal amount thereof on or after June 15, 2022, in each case plus accrued and unpaid interest to, but not including, the applicable redemption date. In addition, the Company may redeem some or all of the Notes prior to June 15, 2020 at a price equal to 100.0 percent of the principal amount thereof plus a “make-whole” premium and accrued and unpaid interest, if any, up to, but not including, the redemption date. Prior to June 15, 2020, the Company may redeem up to 40 percent of the aggregate principal amount of the Notes using the proceeds of certain equity offerings at a certain redemption price. If we experience a change of control or sell certain assets, the Company may be required to offer to purchase the Notes from the holders. The Notes are senior unsecured obligations ranking equally in right of payment with all of its existing and future senior indebtedness and senior in right of payment to any subordinated indebtedness. The Notes are effectively subordinated in right of payment to the existing and future secured indebtedness of the Company, including the Senior Secured Credit Facilities (as defined below), to the extent of the assets securing such indebtedness.

During the year ended December 31, 2019 the Company opportunistically purchased Notes on the open market with face value of $36.8 million (33.0 million Euro) for $32.3 million. The associated carrying value of the Notes, net of allocable debt issuance costs, was $35.9 million, resulting in a net gain of $3.7 million, which was included in other (expense) income, net.

Guarantee

The Notes are unconditionally guaranteed by all material wholly-owned direct and indirect domestic restricted subsidiaries of the Company (the “Subsidiary Guarantors”), with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in adverse tax consequences.

57

---

Covenants

Subject to certain exceptions, the indenture governing the Notes contains restrictive covenants that, among other things, limit the ability of Superior and the Subsidiary Guarantors to: (i) incur additional indebtedness or issue certain preferred stock; (ii) pay dividends on, or make distributions in respect of, their capital stock; (iii) make certain investments or other restricted payments; (iv) sell certain assets or issue capital stock of restricted subsidiaries; (v) create liens; (vi) merge, consolidate, transfer or dispose of substantially all of their assets; and (vii) engage in certain transactions with affiliates. These covenants are subject to several important limitations and exceptions that are described in the indenture.

The indenture provides for customary events of default that include, among other things (subject in certain cases to customary grace and cure periods): (i) nonpayment of principal, premium, if any, and interest, when due; (ii) breach of covenants in the indenture; (iii) a failure to pay certain judgments; and (iv) certain events of bankruptcy and insolvency. If an event of default occurs and is continuing, the Bank of New York Mellon, London Branch (“the Trustee”) or holders of at least 30 percent in principal amount of the then outstanding Notes may declare the principal, premium, if any, and accrued and unpaid interest on all the Notes to be due and payable. These events of default are subject to several important qualifications, limitations and exceptions that are described in the indenture. At December 31, 2019, the Company was in compliance with all covenants under the indenture governing the Notes.

Senior Secured Credit Facilities

On March 22, 2017, Superior entered into a senior secured credit agreement (the “Credit Agreement”) with Citibank, N.A, as Administrative Agent, Collateral Agent and Issuing Bank, JP Morgan Chase N.A., Royal Bank of Canada and Deutsche Bank A.G. New York Branch as Joint Lead Arrangers and Joint Book Runners, and the other lenders party thereto (collectively, the “Lenders”). The Credit Agreement consisted of a $400.0 million senior secured term loan facility (the “Term Loan Facility”), which matures on May 23, 2024, and a $160.0 million revolving credit facility (the “Revolving Credit Facility”) maturing on May 23, 2022, together with the Term Loan Facility, the USD Senior Secured Credit Facilities (“USD SSCF”).

On June 29, 2018, the Company entered into an amendment to the Credit Agreement pursuant to which the interest rate under the Term Loan Facility was reduced to LIBOR plus 4.00 percent (from LIBOR plus 4.50 percent), subject to a LIBOR floor of 0.00 percent (in place of the previous LIBOR floor of 1.00 percent). Substantially all of the original loans under the Term Loan Facility were replaced with loans from existing lenders under terms that were not substantially different than those of the original loans. As a result, this transaction did not result in any debt extinguishment and the unamortized debt issuance costs associated with the original loans will continue to be amortized over the remaining term of the replacement loans (which is unchanged from the original term). Borrowings under the Term Loan Facility will bear interest at a rate equal to, at the Company’s option, either (a) LIBOR for the relevant interest period, adjusted for statutory reserve requirements, subject to a floor of 0.00 percent per annum, plus an applicable rate of 4.00 percent or (b) a base rate, subject to a floor of 2.00 percent per annum, equal to the highest of (1) the rate of interest in effect as publicly announced by the administrative agent as its prime rate, (2) the federal funds rate plus 0.50 percent and (3) LIBOR for an interest period of one month plus 1.00 percent, in each case, plus an applicable rate of 3.00 percent.

Borrowings under the Revolving Credit Facility initially bear interest at a rate equal to, at the Company’s option, either (a) LIBOR for the relevant interest period, adjusted for statutory reserve requirements, subject to a floor of 1.00 percent per annum, plus an applicable rate of 3.50 percent or (b) a base rate, equal to the highest of (1) the rate of interest in effect as publicly announced by the administrative agent as its prime rate, (2) the federal funds effective rate plus 0.50 percent and (3) LIBOR for an interest period of one month plus 1.00 percent, in each case, plus an applicable rate of 2.50 percent provided such rate may not be less than zero. The initial commitment fee for unused commitments under the Revolving Credit Facility shall be 0.50 percent. The applicable rates for borrowings under the Revolving Credit Facility and commitment fees for unused commitments under the Revolving Credit Facility are based upon the First Lien Net Leverage Ratio effective for the preceding quarter with LIBOR applicable rates between 3.50 percent and 3.00 percent, base rate applicable rates between 2.50 percent and 2.00 percent and commitment fees between 0.50 percent and 0.25 percent. Commitment fees are included in our consolidated financial statements line, interest expense, net.

As of December 31, 2019, the Company had repaid $28.2 million under the Term Loan Facility resulting in a balance of $371.8 million. As of December 31, 2019, the Company had no outstanding borrowings under the Revolving Credit Facility, had outstanding letters of credit of $3.6 million and had available unused commitments under the Revolving Credit Facility of $156.4 million.

58

---

Guarantees and Collateral Security

Our obligations under the Credit Agreement are unconditionally guaranteed by all material wholly-owned direct and indirect domestic restricted subsidiaries of the Company, with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in adverse tax consequences. The guarantees of such obligations, will be secured, subject to permitted liens and other exceptions, by substantially all of our assets and the Subsidiary Guarantors’ assets, including but not limited to: (i) a perfected pledge of all of the capital stock issued by each of the Company’s direct wholly-owned domestic restricted subsidiaries or any guarantor (subject to certain exceptions) and up to 65 percent of the capital stock issued by each direct wholly-owned foreign restricted subsidiary of the Company or any guarantor (subject to certain exceptions) and (ii) perfected security interests in and mortgages on substantially all tangible and intangible personal property and material fee-owned real property of the Company and the guarantors (subject to certain exceptions and exclusions).

Covenants

The Credit Agreement contains a number of restrictive covenants that, among other things, restrict, subject to certain exceptions, our ability to incur additional indebtedness and guarantee indebtedness, create or incur liens, engage in mergers or consolidations, sell, transfer or otherwise dispose of assets, make investments, acquisitions, loans or advances, pay dividends, distributions or other restricted payments, or repurchase our capital stock, prepay, redeem, or repurchase any subordinated indebtedness, enter into agreements which limit our ability to incur liens on our assets or that restrict the ability of restricted subsidiaries to pay dividends or make other restricted payments to us, and enter into certain transactions with our affiliates.

In addition, the Credit Agreement contains customary default provisions, representations and warranties and other covenants. The Credit Agreement also contains a provision permitting the Lenders to accelerate the repayment of all loans outstanding under the USD SSCF during an event of default. At December 31, 2019, the Company was in compliance with all covenants under the Credit Agreement.

European Debt

In connection with the acquisition of UNIWHEELS AG, the Company assumed $70.7 million of outstanding debt. At December 31, 2019, $12.7 million of debt remained outstanding relating to an equipment loan of which $3.0 million was classified as current.

During the second quarter of 2019, the Company amended its EUR Senior Secured Credit Facility (“EUR SSCF”), our European revolving credit facility, increasing the available borrowing limit from 30.0 million Euro to 45.0 million Euro and extending the term to May 22, 2022. At December 31, 2019, there was 44.6 million Euro of available funds under the EUR SSCF.  The EUR SSCF bears interest at Euribor (with a floor of zero) plus a margin (ranging from 1.55 percent to 3.0 percent based on the net debt leverage ratio of Superior Industries Europe AG and its wholly owned subsidiaries, collectively “Superior Europe AG”), currently 1.55 percent. The annual commitment fee for unused commitments (ranging from 0.50 percent to 1.05 percent based on the net debt leverage ratio of Superior Europe AG), is currently 0.50 percent per annum. In addition, a management fee is assessed equal to 0.07 percent of borrowings outstanding at each month end. The commitment and management fees are both included in interest expense, net. Superior Europe AG has pledged substantially all of its assets, including land and buildings, receivables, inventory, and other moveable assets (other than collateral associated with the equipment loan) as collateral under the EUR SSCF. On January 31, 2020, the available borrowing limit of the EUR SSCF was increased from Euro 45.0 million to Euro 60.0 million. All other terms of the EUR SSCF remained unchanged.

The EUR SSCF is subject to a number of restrictive covenants that, among other things, restrict, subject to certain exceptions, the ability of  Superior Europe AG to incur additional indebtedness and guarantee indebtedness, create or incur liens, engage in mergers or consolidations, sell, transfer or otherwise dispose of assets, make investments, acquisitions, loans or advances, pay dividends or distributions, or repurchase our capital stock, prepay, redeem, or repurchase any subordinated indebtedness, and enter into agreements which limit our ability to incur liens on our assets. At December 31, 2019, Superior Europe AG was in compliance with all covenants under the EUR SSCF.

During the fourth quarter of 2019, the Company entered into equipment loan agreements totaling $13.4 million (12.0 million Euro) which bear interest at 2.3 percent and mature on September 30, 2027. Interest and principal repayments are due quarterly. The funds will be used to finance certain property, plant and equipment at the Company’s Werdohl, Germany plant. The loans are secured with liens on the financed equipment and are subject to restrictive covenants that, among other things, restrict the ability of Superior Europe AG to reduce its ownership interest in Superior Industries Production Germany GmbH, its wholly-owned subsidiary and the borrower under the loan. At December 31, 2019, the Company had not yet drawn down on the loans. On January 15, 2020, the Company withdrew $11.9 million (10.6 million Euro) under the equipment loans, with the remaining available funds expected to be drawn in 2020. Quarterly installment payments of $479 thousand (427.7 thousand Euro) under the loan agreements will begin in December of 2020. At December 31, 2019, the Company was in compliance with all covenants under the loans.

59

---

NOTE 12 - REDEEMABLE PREFERRED STOCK

During 2017, we issued 150,000 shares of Series A (140,202 shares) and Series B (9,798 shares) Perpetual Convertible Preferred Stock, par value $0.01 per share to TPG Growth III Sidewall, L.P. (“TPG”) for an aggregate purchase price of $150.0 million. On August 30, 2017, the Series B shares were converted into Series A redeemable preferred stock, the “redeemable preferred stock” after approval by our shareholders. The redeemable preferred stock has an initial stated value of $1,000 per share, par value of $0.01 per share and liquidation preference over common stock.

The redeemable preferred stock is convertible into shares of our common stock equal to the number of shares determined by dividing the sum of the stated value and any accrued and unpaid dividends by the conversion price of $28.162. The redeemable preferred stock accrues dividends at a rate of 9 percent per annum, payable at our election either in-kind or in cash and is also entitled to participate in dividends on common stock in an amount equal to that which would have been due had the shares been converted into common stock.

We may mandate conversion of the redeemable preferred stock if the price of the common stock exceeds $84.49. TPG may redeem the shares upon the occurrence of any of the following events (referred to as a “redemption event”): a change in control, recapitalization, merger, sale of substantially all of the Company’s assets, liquidation or delisting of the Company’s common stock. In addition, as originally issued, TPG has the right, at its option, to unconditionally redeem the shares at any time after May 23, 2024, subsequently extended to September 14, 2025 (the “redemption date”). We may, at our option, redeem in whole at any time all of the shares of redeemable preferred stock outstanding. At redemption by either party, the redemption value will be the greater of two times the initial face value ($150.0 million) and any accrued unpaid dividends or dividends paid-in-kind, currently $300.0 million, or the product of the number of common shares into which the redeemable preferred stock could be converted (5.3 million shares currently) and the then current market price of the common stock. We have determined that the conversion option and the redemption option exercisable upon occurrence of a “redemption event” which are embedded in the redeemable preferred stock must be accounted for separately from the redeemable preferred stock as a derivative liability (as more fully described under Note 5, “Derivative Financial Instruments”).

Since the redeemable preferred stock may be redeemed at the option of the holder, but is not mandatorily redeemable, the redeemable preferred stock has been classified as mezzanine equity and initially recognized at fair value of $150.0 million (the proceeds on the date of issuance) less issuance costs of $3.7 million, resulting in an initial value of $146.3 million. This amount had been further reduced by $10.9 million assigned to the embedded derivative liability at date of issuance, resulting in an adjusted initial value of $135.5 million. The difference between the adjusted initial value of $135.5 million and the redemption value of $300 million was being accreted over the seven-year period from the date of issuance through May 23, 2024 (the original date at which the holder had the unconditional right to redeem the shares, deemed to be the earliest likely redemption date) using the effective interest method. The accretion to the carrying value of the redeemable preferred stock is treated as a deemed dividend, recorded as a charge to retained earnings and deducted in computing earnings per share (analogous to the treatment for stated and participating dividends paid on the redeemable preferred shares).

On November 7, 2018, the Company filed a Certificate of Correction to the Certificate of Designations for the preferred stock, which became effective upon filing and corrected the redemption date to September 14, 2025. This resulted in a modification of the redeemable preferred stock. As a result of the modification, the carrying value of the redeemable preferred stock decreased $17.2 million (which was credited to retained earnings, treated as a deemed dividend and added back to compute earnings per share) and the period for accretion of the carrying value to the redemption value has been extended to September 14, 2025. The accretion has been adjusted to amortize the excess of the redemption value over the carrying value over the period through September 14, 2025. The accumulated accretion net of the modification adjustment as of December 31, 2019 is $25.5 million resulting in an adjusted redeemable preferred stock balance of $161.0 million.

60

---

NOTE 13 - EUROPEAN NON-CONTROLLING REDEEMABLE EQUITY

On January 17, 2018, the Company entered into a Domination and Profit and Loss Transfer agreement (“DPLTA”) retroactively effective as of January 1, 2018. As a result, non-controlling interests with a carrying value of $51.9 million were reclassified from stockholders’ equity to mezzanine equity as of January 1, 2018 because non-controlling interests with redemption rights (not within the Company’s control) are considered redeemable and must be classified outside shareholders’ equity. In addition, the carrying value of the non-controlling interests must be adjusted to redemption value since the shares are currently redeemable. The following table summarizes the European non-controlling redeemable equity activity for the two year period ended December 31, 2019:

Balance at December 31, 2017		$	—
Reclassification of non-controlling interests			51,943
Redemption value adjustment			3,625
Dividends accrued			1,512
Dividends paid			(964	)
Translation adjustment			(3,219	)
Purchase of shares			(39,048	)
Balance at December 31, 2018			13,849
Dividends accrued			566
Dividends paid			(848	)
Translation adjustment			(361	)
Purchase of shares			(6,681	)
Balance at December 31, 2019		$	6,525

NOTE 14 - EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income (loss) attributable to Superior, after adjusting for redeemable preferred stock dividend and accretion, European non-controlling redeemable equity dividends and, with respect to 2018, the preferred stock modification (consisting of the preferred stock reduction of $17.2 million, net of the increase in the embedded derivative liability of $1.9 million), by the weighted average number of common shares outstanding. For purposes of calculating diluted earnings per share, the weighted average shares outstanding includes the dilutive effect of outstanding stock options and time and performance based restricted stock units under the treasury stock method. The redeemable preferred shares discussed in Note 12, “Redeemable Preferred Stock” are not included in the diluted earnings per share because the conversion would be anti-dilutive.

Year Ended December 31,		2019				2018				2017
(Dollars in thousands, except per share amounts)
Basic Earnings Per Share:
Reported net income (loss) attributable to Superior		$	(96,460	)		$	25,961			$	(6,203	)
Less: Redeemable preferred stock dividends and accretion			(30,977	)			(32,462	)			(18,912	)
Add: Preferred stock modification			—				15,257				—
Less: European non-controlling redeemable equity dividend			(566	)			(1,512	)			—
Basic numerator		$	(128,003	)		$	7,244			$	(25,115	)
Basic earnings (loss) per share		$	(5.10	)		$	0.29			$	(1.01	)
Weighted average shares outstanding-Basic			25,099				24,994				24,929
Diluted Earnings Per Share:
Reported net income (loss) attributable to Superior		$	(96,460	)		$	25,961			$	(6,203	)
Less: Redeemable preferred stock dividends and accretion			(30,977	)			(32,462	)			(18,912	)
Add: Preferred stock modification			—				15,257				—
Less: European non-controlling redeemable equity dividend			(566	)			(1,512	)			—
Diluted numerator		$	(128,003	)		$	7,244			$	(25,115	)
Diluted earnings (loss) per share		$	(5.10	)		$	0.29			$	(1.01	)
Weighted average shares outstanding-Basic			25,099				24,994				24,929
Dilutive effect of common share equivalents			—				161				—
Weighted average shares outstanding-Diluted			25,099				25,155				24,929

Income

NOTE 15 - INCOME TAXES

Income/(loss) before income taxes from domestic and international jurisdictions is comprised of the following:

Year Ended December 31,		2019				2018				2017
(Dollars in thousands)
Income/(loss) before income taxes:
Domestic		$	(60,170	)		$	(44,058	)		$	(63,716	)
Foreign			(32,867	)			76,310				64,582
		$	(93,037	)		$	32,252			$	866

Year Ended December 31,		2016				2015				2014
(Dollars in thousands)
Income before income taxes:
Domestic		$	18,499			$	25,069			$	8,328
Foreign		36,222				10,214				7,374
		$	54,721			$	35,283			$	15,702

The provisionbenefit/(provision) for income taxes is comprised of the following:

Year Ended December 31,		2019				2018				2017
(Dollars in thousands)
Current taxes
Federal		$	3,834			$	3,714			$	6,121
State			(146	)			127				(390	)
Foreign			(10,615	)			(11,180	)			(12,564	)
Total current taxes			(6,927	)			(7,339	)			(6,833	)
Deferred taxes
Federal			(3,174	)			(919	)			(4,387	)
State			1,014				521				1,492
Foreign			5,664				1,446				2,853
Total deferred taxes			3,504				1,048				(42	)
Income tax benefit (provision)		$	(3,423	)		$	(6,291	)		$	(6,875	)

Year Ended December 31,		2016				2015				2014
(Dollars in thousands)
Current taxes
Federal		$	(5,017	)		$	(10,900	)		$	(2,976	)
State		450				481				(453		)
Foreign		(10,639		)		(2,099		)		(8,660		)
Total current taxes		(15,206		)		(12,518		)		(12,089		)
Deferred taxes
Federal		(1,199		)		(961		)		657
State		(332		)		(576		)		(109		)
Foreign		3,397				2,716				4,642
Total deferred taxes		1,866				1,179				5,190
Income tax provision		$	(13,340	)		$	(11,339	)		$	(6,899	)

The following is a reconciliation of the U.S. federal tax rate to our effective income tax rate:

Year Ended December 31,		2019				2018				2017
Statutory rate			(21.0	)%			(21.0	)%			(35.0	)%
State tax provisions, net of federal income    tax benefit			(2.7	)			6.4				263.4
Tax credits			(6.6	)			1.3				88.9
Foreign income taxes at rates other than    the statutory rate			(17.7	)			16.8				1,206.6
Valuation allowance and other			6.9				(28.0	)			(138.0	)
Changes in tax liabilities, net			0.3				(0.6	)			(11.3	)
Share based compensation			1.8				(1.0	)			(61.5	)
Transaction costs			—				—				(372.2	)
US Tax Reform implementation			—				10.9				(1,918.7	)
US tax on non-US income			6.7				(16.1	)			—
Non taxable income			(2.4	)			16.3				152.6
Impairment of goodwill			34.0				—				—
Other			4.4				(4.5	)			31.3
Effective income tax rate			3.7	%			(19.5	)%			(793.9	)%

Year Ended December 31,	2016			2015			2014
Statutory rate	(35.0	)%		(35.0	)%		(35.0	)%
State tax provisions, net of federal income tax benefit	(6.3	)		3.8			(0.5	)
Permanent differences	(0.8	)		(1.5	)		(5.3	)
Tax credits	0.6			0.9			2.8
Foreign income taxes at rates other than the statutory rate	11.7			2.3			(0.5	)
Valuation allowance and other	5.1			(5.6	)		(8.4	)
Changes in tax liabilities, net	0.5			6.4			4.2
Share based compensation	(1.2	)		(4.4	)		—
Other	1.0			1.0			(1.2	)
Effective income tax rate	(24.4	)%		(32.1	)%		(43.9	)%

Our effective income tax rate for 2016 was 24.4 percent. The effective tax rate was lower than the U.S. federal statutory rate primarily as a result of income in jurisdictions where the statutory rate is lower than the U.S. rate and tax benefits due to the release of tax liabilities related to uncertain tax positions.

Our effective income tax rate for 2015 was 32.1 percent. The effective tax rate was lower than the U.S. federal statutory rate primarily as a result of net decreases in the liability for uncertain tax positions partially offset by the reversal of deferred tax assets related to share-based compensation shortfalls.

Our effective income tax rate for 2014 was 43.9 percent. The effective tax rate was higher than the U.S. federal statutory rate primarily as a result of valuation allowances established for foreign deferred tax assets and various permanent differences including non-deductible expenses related to recent tax law changes in Mexico.

62

---

Tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

December 31,		2019				2018
(Dollars in thousands)
Deferred income tax assets:
Accrued liabilities		$	4,695			$	8,117
Hedging and foreign currency losses			2,386				(1,163	)
Deferred compensation			8,018				8,021
Inventory reserves			4,609				3,984
Net loss carryforwards and credits			38,342				51,552
Interest carryforwards			19,632				11,269
Competent authority deferred tax assets and    other foreign timing differences			3,954				6,749
Other			782				(3,921	)
Total before valuation allowance			82,418				84,608
Valuation allowance			(22,879	)			(16,576	)
Net deferred income tax assets			59,539				68,032
Deferred income tax liabilities:
Intangibles, property, plant and equipment    and other			(33,301	)			(44,591	)
Deferred income tax liabilities			(33,301	)			(44,591	)
Net deferred income tax assets		$	26,238			$	23,441

December 31,		2016				2015
(Dollars in thousands)
Deferred income tax assets:
Accrued liabilities		$	6,120			$	3,981
Hedging and foreign currency losses		9,475				8,469
Deferred compensation		11,723				11,833
Inventory reserves		3,563				3,079
Net loss carryforwards and credits		3,123				5,891
Competent authority deferred tax assets and other foreign timing differences		5,135				4,836
Other		462				(683		)
Total before valuation allowance		39,601				37,406
Valuation allowance		(3,123		)		(5,891		)
Net deferred income tax assets		36,478				31,515
Deferred income tax liabilities:
Property, plant and equipment		(11,268		)		(14,011		)
Deferred income tax liabilities		(11,268		)		(14,011		)
Net deferred income tax assets		$	25,210			$	17,504

The classification of our net deferred tax asset is shown below:

December 31,		2019				2018
(Dollars in thousands)
Long-term deferred income tax assets		$	38,607			$	42,105
Long-term deferred income tax liabilities			(12,369	)			(18,664	)
Net deferred tax asset		$	26,238			$	23,441

December 31,		2016				2015
(Dollars in thousands)
Long-term deferred income tax assets		$	28,838			$	25,598
Long-term deferred income tax liabilities		(3,628		)		(8,094		)
Net deferred tax asset		$	25,210			$	17,504

Realization of any of our deferred tax assets at December 31, 20162019 is dependent on the companyCompany generating sufficient taxable income in the future. The determination of whether or not to record a full or partial valuation allowance on our deferred tax assets is a critical accounting estimate requiring a significant amount of judgment on the part of management. In determining when to release the valuation allowance established against our deferred income tax assets, we consider all available evidence, both positive and negative. We perform our analysis on a jurisdiction by jurisdiction basis at the end of each reporting period. The decreaseincrease in the valuation allowance of $2.8$6.3 million relates to the reduction of Stateinterest expense carryforwards and state net operating loss carryforwards the companyCompany is not more likely than not to utilize prior to expiration.

The Tax Cut and Jobs Act (“the Act”) was enacted on December 22, 2017. The Act contains significant changes to corporate taxation, including the reduction of the corporate tax rate from 35 percent to 21 percent, a one-time transition tax on offshore earnings at reduced tax rates regardless of whether earnings are repatriated, the elimination of U.S. tax on foreign dividends (subject to certain important exceptions), new tax on U.S. shareholders of certain foreign subsidiaries earnings — Global Intangible Low-Tax Income (“GILTI”), limitations on deductibility of interest expense, immediate deductions for certain new investments and the modification or repeal of many business deductions and credits.

The Company had recorded a provisional amount of $16.6 million expense for enactment-date income tax effects of the Act at December 31, 2017. Following the guidance in SAB 118, at December 31, 2018, the Company has completed the accounting for all enactment-date income tax effects of the Act and recorded a benefit of $3.9 million as an adjustment to the provisional amounts.

As of December 31, 20162019, we have cumulative tax effected U.S. state and Germany NOL carryforwards of $49.1$12.2 million that expire in the years 20172020 to 2032.2038. Also, we have $0.3$26.0 million of state tax credit carryforwards, primarily in Poland, which expire in the years 2021 to 2024.

In general, it is our practice2026.

63

---

The transition tax substantially eliminated the basis difference on foreign subsidiaries that existed previously for purposes of accounting standards codification topic 740. However, there are limited other taxes that could continue to apply such as foreign withholding and intention to reinvest the earnings of the operations of our non-U.S. subsidiaries. As of December 25, 2016, wecertain state taxes. Taxes have not made a provision for U.S. or additional foreign withholding taxes. Thebeen provided on basis differencedifferences in our non-U.S. subsidiariesinvestments of $227 million that result from undistributed earnings of approximately $168.9 million as these earnings are considereddeemed indefinitely reinvested in the non-U.S. subsidiaries. Determinationreinvested. Quantification of the deferred income tax liability, on theif any, associated with indefinitely reinvested basis differences is not practicable.

We account for our uncertain tax positions in accordance with U.S. GAAP. A reconciliation of the beginning and ending amounts of these tax benefits is as follows:

Year Ended December 31,		2019				2018				2017
(Dollars in thousands)
Beginning balance		$	31,036			$	33,054			$	3,446
Increases (decreases) due to foreign currency translations			(632	)			(2,018	)			—
Increases (decreases) as a result of positions    taken during:			—				—				—
Prior periods			(36	)			—				—
Current period			—				—				29,773
Expiration of applicable statutes of limitation			—				—				(165	)
Ending balance		$	30,368			$	31,036			$	33,054

Year Ended December 31,		2016				2015				2014
(Dollars in thousands)
Beginning balance		$	7,318			$	7,193			$	9,462
Increases (decreases) due to foreign currency translations		—				—				(244		)
Increases (decreases) as a result of positions taken during:
Prior periods		(3,872		)		1,238				(2,553		)
Current period		—				1,798				956
Settlements with taxing authorities		—				—				—
Expiration of applicable statutes of limitation		—				(2,911		)		(428		)
Ending balance (1)		$	3,446			$	7,318			$	7,193

⁽¹⁾ Excludes $1.8 million, $2.1 million and $6.4 million of potential interest and penalties associated with uncertain tax positions in 2016, 2015 and 2014, respectively.

Our policy regarding interest and penalties related to uncertain tax positions is to record interest and penalties as an element of income tax expense. The balance sheets at December 31, 2016At the end of 2019, 2018 and 2015 include2017, the liability for uncertain tax positions, cumulativeCompany had liabilities of $3.9 million, $3.3 million and $2.4 million of potential interest and penalties accrued on the liabilities totaling $5.3 million and $7.2 million, respectively. During 2016, we reversed certain liabilities related to various jurisdictions in the amount of $3.9 million and a net benefit for penalties and interest of $0.3 million.associated with uncertain tax positions. Included in the unrecognized tax benefits of $5.3 million is $1.7$2.6 million that, if recognized, would favorably affect our annual effective tax rate. Within the next twelve-month period we expect ano decrease in unrecognized tax benefits of $0.1 million.

We conduct business internationally and, as a result, one or more of our subsidiaries files incomebenefits.

Income tax returns are filed in U.S. federal, U.S. statemultiple jurisdictions and certain foreign jurisdictions. Accordingly, in the normal course of business, we are subject to examination by taxingtax authorities throughoutin various jurisdictions where the world,Company operates. The Company has open tax years from 2014 to 2018 with various significant tax jurisdictions, including but not limited to Mexico, the Netherlands, Costa Rica, India, Cyprus andongoing tax audits in the U.S. We are no longer under examination byfor 2015 to 2017 and Germany for 2017 and 2018

NOTE 16 - LEASES

Effective January 1, 2019, we adopted ASU 2016-02, ASC 842, “Leases,” the taxing authority regarding any U.S. federal income tax returns for years before 2013 whilenew lease accounting standard, using the years open for examination under various stateoptional transition approach resulting in recognition of operating lease right-of-use (“ROU”) assets and local jurisdictions vary. In 2014,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.

The Company determines whether an arrangement is or contains a lease at the Internal Revenue Service ("IRS") completed its auditinception of the 2011 tax year of Superior Industries Internationalarrangement. Operating leases are included in other non-current assets, accrued expenses and subsidiaries.

Total income tax payments net of refunds were $21.9 millionother non-current liabilities in 2016, $12.6 millionour consolidated balance sheets. Finance leases are included in 2015 and $9.9 million in 2014.

NOTE 11 - LEASES AND RELATED PARTIES

We lease certain land, facilitiesproperty, plant and equipment, net, short-term debt and long-term debt (less current portion) in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. Since we generally do not have access to the interest rate implicit in the lease, the Company uses our incremental borrowing rate (for fully collateralized debt) at the inception of the lease in determining the present value of the lease payments. The implicit rate is, however, used where readily available. Lease expense under long-term operating leases expiring at various dates through 2026. Total lease expense for all operating leases amounted to $1.9 million in 2016, 2015 and 2014. During 2015, we moved our headquarters from Van Nuys, California to Southfield, MI.

Our former headquarters in Van Nuys, California is leased fromrecognized on a straight-line basis over the Louis L. Borick Foundation (the "Foundation"). The Foundation is controlled by Mr. Steven J. Borick, the former Chairman and CEOterm of the company, as Presidentlease. Certain of our leases contain both lease and Directornon-lease components, which are accounted for separately.

The Company has operating and finance leases for office facilities, a data center and certain equipment. The remaining terms of the Foundation.

The lease provided for annual lease payments of approximately $427,000, through March 2015. In November 2014, the lease was amendedour leases range from over one year to just under nine years. Certain leases include options to extend the lease term for up to ten years, as well as options to terminate both of which have been excluded from March 2015 to March 2017,the term of the lease since exercise of these options is not reasonably certain.

64

---

Lease expense, cash flow, operating and to reduce the amount of office spacefinance lease assets and annual rent. As amended, beginning April 2015, the annualliabilities, average lease payment is approximately $225,000. The future minimum lease payments thatterm and average discount rate are payable to the Foundation for the Van Nuys administrative office lease total $0.1 million. Total lease payments to these related entities were $0.2 million, $0.3 million and $0.4 million for 2016, 2015 and 2014, respectively. We also have a lease for our headquarters in Southfield, Michigan from October 2015 to September 2026 which is with an unrelated party.as follows:

		December 31, 2019
		Twelve Months Ended
Lease Expense
Finance lease expense:
Amortization of right-of-use assets		$	1,691
Interest on lease liabilities			83
Operating lease expense			3,509
Total lease expense		$	5,283
Cash Flow Components
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from finance leases		$	83
Operating cash outflows from operating leases			3,463
Financing cash outflows from finance leases			1,230
Right-of-use assets obtained in exchange for new finance lease liabilities, net of terminations and disposals			2,573
Right-of-use assets obtained in exchange for operating lease liabilities (including adoption impact of $18.2 million) net of terminations and disposals			18,961
		December 31, 2019
Balance Sheet Information
Operating leases:
Other non-current assets		$	15,201
Accrued liabilities		$	(2,949	)
Other non-current liabilities			(13,282	)
Total operating lease liabilities		$	(16,231	)
Finance leases:
Property and equipment gross		$	4,821
Accumulated depreciation			(2,118	)
Property and equipment, net		$	2,703
Current portion of long-term debt		$	(1,023	)
Long-term debt			(2,045	)
Total finance lease liabilities		$	(3,068	)
Lease Term and Discount Rates
Weighted-average remaining lease term - finance leases (years)		4.1
Weighted-average remaining lease term - operating leases (years)		6.4
Weighted-average discount rate - finance leases			2.9	%
Weighted-average discount rate - operating leases			3.9	%

The following are summarized

65

---

Summarized future minimum payments under all leases:our leases are as follows:

		December 31,
		2019
		Finance Leases				Operating Leases
Lease Maturities (in thousands)
2020		$	1,175			$	3,508
2021			908				3,034
2022			502				2,505
2023			128				2,185
2024			123				2,030
Thereafter			434				4,941
Total			3,270				18,203
Less: Imputed interest			(202	)			(1,972	)
Total lease liabilities, net of interest		$	3,068			$	16,231
Summarized future minimum payments for our leases under ASC 840 are as follows:
		December 31,
		2018
		Operating Leases
Lease Maturities (in thousands)
2019		$	4,249
2020			3,232
2021			2,870
2022			2,635
2023			2,346
Thereafter			7,647
Total		$	22,979

Year Ended December 31,		Operating Leases
(Dollars in thousands)
2017		$	769
2018		700
2019		429
2020		424
2021		377
Thereafter		1,791
		$	4,490

Purchase Agreement

In the first quarter of 2015, we entered into an agreement to purchase a subscription to online software provided by New Generation Software Inc. (“NGS”).  Our Senior Vice President, Business Operations, is a board member

The 2018 disclosure includes certain non-lease components that have been excluded from our ASC 842 accounting and passive investor and our Vice President of Information Technology is also a passive investor in NGS.  We made payments to NGS of $243,000 and $351,000 during the 2016 and 2015 fiscal year, respectively.  The transaction was entered into in the ordinary course of business and is an arms-length transaction. 

disclosures for 2019.

NOTE 1217 - RETIREMENT PLANS

We have an unfunded salary continuation plan covering certain directors, officers and other key members of management. We purchase life insurance policies on certain participants to provide in part for future liabilities. Cash surrender value of these policies, totaling $7.5 million and $6.9 million at December 31, 2016 and 2015, respectively, are included in other non-current assets in the company's consolidated balance sheets. Subject to certain vesting requirements, the plan provides for a benefit based on final average compensation, which becomes payable on the employee'semployee’s death or upon attaining age 65,, if retired. The plan was closed to new participants effective February 3, 2011.2011. We have measuredpurchased life insurance policies on certain participants to provide in part for future liabilities. Cash surrender value of these policies, totaling $8.1 million, are included in other non-current assets in the plan assets and obligationsCompany’s condensed consolidated balance sheets at December 31, 2018. In the second quarter of 2019, we terminated our salary continuation planlife insurance policies in exchange for all periods presented.

the cash surrender value of $7.6 million. We also received $0.6 million for death benefit claims.

The following table summarizes the changes in plan assets and plan benefit obligations:

Year Ended December 31,		2016				2015				2019				2018
(Dollars in thousands)
Change in benefit obligation
Beginning benefit obligation		$	28,399			$	30,047			$	26,953			$	29,759
Service cost		—				44
Interest cost		1,216				1,230					1,144				1,086
Actuarial gain		(464		)		(1,372		)
Actuarial (gain) loss											4,295				(2,486	)
Benefit payments		(1,539		)		(1,550		)			(1,391	)			(1,406	)
Ending benefit obligation		$	27,612			$	28,399			$	31,001			$	26,953

Year Ended December 31,		2019				2018
(Dollars in thousands)
Change in plan assets
Fair value of plan assets at beginning of year		$	—			$	—
Employer contribution			1,391				1,406
Benefit payments			(1,391	)			(1,406	)
Fair value of plan assets at end of year		$	—			$	—
Funded status		$	(31,001	)		$	(26,953	)
Amounts recognized in the consolidated    balance sheets consist of:
Accrued expenses		$	(1,478	)		$	(1,392	)
Other non-current liabilities			(29,523	)			(25,561	)
Net amount recognized		$	(31,001	)		$	(26,953	)
Amounts recognized in accumulated other    comprehensive loss consist of:
Net actuarial loss		$	8,940			$	4,799
Prior service cost			(1	)			(1	)
Net amount recognized, before tax effect		$	8,939			$	4,798
Weighted average assumptions used to    determine benefit obligations:
Discount rate			3.3	%			4.4	%
Rate of compensation increase			3.0	%			3.0	%

Year Ended December 31,		2016				2015
(Dollars in thousands)
Change in plan assets
Fair value of plan assets at beginning of year		$	—			$	—
Employer contribution		1,539				1,550
Benefit payments		(1,539		)		(1,550		)
Fair value of plan assets at end of year		$	—			$	—
Funded Status		$	(27,612	)		$	(28,399	)
Amounts recognized in the consolidated balance sheets consist of:
Accrued expenses		(1,177		)		(1,524		)
Other non-current liabilities		(26,435		)		(26,875		)
Net amount recognized		$	(27,612	)		$	(28,399	)
Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss		$	5,692			$	6,492
Prior service cost		(1		)		(1		)
Net amount recognized, before tax effect		$	5,691			$	6,491
Weighted average assumptions used to determine benefit obligations:
Discount rate		4.4		%		4.4		%
Rate of compensation increase		3.0		%		3.0		%

Components of net periodic pension cost are described in the following table:

Year Ended December 31,		2019				2018				2017
(Dollars in thousands)
Components of net periodic pension cost:
Interest cost		$	1,144			$	1,086			$	1,189
Amortization of actuarial loss			209				438				369
Net periodic pension cost		$	1,353			$	1,524			$	1,558
Weighted average assumptions used to determine net    periodic pension cost:
Discount rate			4.4	%			3.7	%			4.4	%
Rate of compensation increase			3.0	%			3.0	%			3.0	%

Year Ended December 31,		2016				2015				2014
(Dollars in thousands)
Components of net periodic pension cost:
Service cost		$	—			$	44			$	84
Interest cost		1,216				1,230				1,171
Amortization of actuarial loss		335				535				328
Net periodic pension cost		$	1,551			$	1,809			$	1,583
Weighted average assumptions used to determine net periodic pension cost:
Discount rate		4.4		%		4.2		%		4.8		%
Rate of compensation increase		3.0		%		3.0		%		3.0		%

The decrease in the 2016 net periodic pension cost compared to the 2015 cost was primarily due to decreased amortization of actuarial losses and decreased service cost from terminations and retirements. The increase in the 2015 net periodic pension cost compared to the 2014 cost was primarily due to increased amortization of actuarial losses offset by decreased service cost from terminations and retirements.

Benefit payments during the next ten years, which reflect applicable future service, are as follows:

Year Ended December 31,		Amount
(Dollars in thousands)
2020		$	1,502
2021		$	1,478
2022		$	1,518
2023		$	1,497
2024		$	1,535
Years 2025 to 2029		$	8,870

Year Ended December 31,	Amount
(Dollars in thousands)
2017	$	1,203
2018	$	1,429
2019	$	1,405
2020	$	1,461
2021	$	1,433
Years 2022 to 2026	$	8,012

The following is an estimate of the components of net periodic pension cost in 2017:2020:

Estimated Year Ended December 31,		2020
(Dollars in thousands)
Interest cost			1,004
Amortization of actuarial loss			289
Estimated 2020 net periodic pension cost		$	1,293

Estimated Year Ended December 31,	2017
(Dollars in thousands)
Service cost	$	—
Interest cost	1,189
Amortization of actuarial loss	270
Estimated 2017 net periodic pension cost	$	1,459

67

---

Other Retirement Plans

We also contribute to employee retirement savings plans in the U.S. and Mexico that cover substantially all of our employees.employees in those countries. The employer contribution totaled $1.4 million, $1.5 million, $1.8 million and $2.0$1.7 million for the three years ended December 31, 2016, 20152019, 2018 and 2014,2017, respectively.

NOTE 1318 - ACCRUED EXPENSES

December 31,		2019				2018
(Dollars in thousands)
Payroll and related benefits		$	25,048			$	23,503
Insurance reserves			840				1,120
Taxes, other than income taxes			12,096				8,115
Current portion of derivative liability			4,357				2,506
Dividends and interest			1,247				4,197
Deferred tooling revenue			5,880				5,810
Current portion of executive retirement liabilities			1,478				1,392
Professional fees			2,216				4,750
Warranty liability			143				437
Other			7,540				13,832
Accrued liabilities		$	60,845			$	65,662

December 31,		2016				2015
(Dollars in thousands)
Payroll and related benefits		$	12,766			$	13,538
Current portion of derivative liability		10,076				9,629
Dividends		5,127				4,964
Taxes, other than income taxes		7,325				7,354
Deferred tooling revenue		5,419				2,908
Current portion of executive retirement liabilities		1,177				1,524
Other		4,425				6,297
Accrued liabilities		$	46,315			$	46,214

NOTE 14 - LINE OF CREDIT

On December 19, 2014, we entered into a senior secured credit agreement (the "Credit Agreement") with J.P. Morgan Securities LLC, JPMorgan Chase Bank, N.A. (“JPMCB”) and Wells Fargo Bank, National Association (together with JPMCB, the “Lenders”).

The Credit Agreement consists of a senior secured revolving credit facility in an initial aggregate principal amount of $100.0 million (the “Facility”). In addition, the company is entitled to request, subject to certain terms and conditions and the agreement of the Lenders, an increase in the aggregate revolving commitments under the Facility or to obtain incremental term loans in an aggregate amount not to exceed $50.0 million, which currently is uncommitted to by any Lenders. As of December 31, 2016, the company had $97.2 million of availability under the Facility after giving effect to $2.8 million in outstanding letters of credit. 

The Credit Agreement expires on December 19, 2019 and borrowings under the Facility accrue interest at (i) a London interbank offered rate plus a margin of between 0.75 percent and 1.25 percent based on the total leverage ratio of Superior and its subsidiaries on a consolidated basis, (ii) a rate based on JPMCB’s prime rate plus a margin of between 0.00 percent and 0.25 percent based on the total leverage ratio of the company and its subsidiaries on a consolidated basis or (iii) a combination thereof. Commitment fees are 0.2 percent on the unused portion of the facility. The commitment fees are included in our consolidated financial statements line, interest income, net.

Generally, all amounts under the Facility are guaranteed by certain of the U.S. subsidiaries of the company and are secured by a first priority security interest in and lien on the personal property of the company and the U.S. guarantors (as defined in the Credit Agreement) and a pledge of and first perfected security interest in the equity interests of the company’s existing and future U.S. subsidiaries and 65 percent of the equity interests in certain non-U.S. direct material subsidiaries of the company and the U.S. guarantors under the Facility.

The Credit Agreement contains certain customary restrictive covenants, including, among others, financial covenants requiring the maintenance of a maximum total leverage ratio and a minimum fixed charge coverage ratio, and also includes, without limitation, covenants, in each case with certain exceptions and allowances, limiting the ability of the company and its subsidiaries to incur indebtedness, grant liens, make investments, dispose of assets, make certain restrictive payments, make optional payments and modifications of subordinated debt instruments, enter into certain transactions with affiliates, enter into swap agreements, make capital expenditures or make changes to its lines of business. At December 31, 2016, we were in compliance with all covenants contained in the Credit Agreement. At December 31, 2016 and 2015, we had no borrowings under this facility other than the outstanding letters of credit referred to above.

The Credit Agreement contains customary default provisions, representations and warranties and restrictive covenants.  The Credit Agreement also contains a provision permitting the lenders to accelerate the repayment of all loans outstanding under the Facility during an event of default.

NOTE 1519 - STOCK-BASED COMPENSATION

Equity Incentive Plan

Our 2018 Equity Incentive Plan (the “Plan”) was approved by stockholders in May 2018 and amended and restated the 2008 Equity Incentive Plan. The Plan

Our 2008 Equity Incentive Plan, as amended (the "Plan"), authorizes us to issue up to 3.54.35 million shares of common stock, along with non-qualified stock options, stock appreciation rights, restricted stock and performance units to our officers, key employees, non-employee directors and consultants. At December 31, 2016,2019, there were 1.81.6 million shares available for future grants under this Plan. No more than 600,0001.2 million shares may be used under the Plan as “full value” awards, which include restricted stock and performance stock units. It is our policy to issue shares from authorized but not issued shares upon the exercise of stock options.

During the first quarter of 2015, the company implemented a long term incentive program for the benefit of certain members of company management. The program was designed to strengthen employee retention and to provide a more structured incentive program to stimulate improvement in future company results. Per

Under the terms of the program,Plan, each year eligible participants wereare granted in 2015 and 2016, time value restricted stock units (“RSUs”), vesting ratably over a three yearthree-year time period, and performance restricted stock units (“PSUs”), with a three yearthree-year cliff vesting. Upon vesting, each restricted stock award is exchangeable for one share of the company’sCompany’s common stock, with accrued dividends. The PSUs are categorized further into three individual categories whose vesting is contingent upon

Other Awards

On May 16, 2019 the achievement of certain targets as follows:

40% ofCompany granted the PSUs vest upon certain Return on Invested Capital targets for 2016following equity awards to Majdi B. Abulaban, our President and 2015 units

40% of the PSUs vest upon certain Cumulative EPS targets for 2016 units

40% of the PSUs vest upon certain EBITDA margin targets for 2015 units

20% of the PSUs vest upon certain market based Shareholder Return targets for 2016 and 2015 units.

Other Awards

During 2014, we granted 132,455 restricted shares, including 50,000 shares vesting April 30, 2017, and 82,455 shares vesting on December 31, 2016 under anChief Executive Employment Agreement (the "Employment Agreement"). The fair value of each of these restricted shares was $19.44. These grants were made outside of the Plan as inducement grantsOfficer, in connection with his entering into employment with the appointmentCompany and the 2019 Inducement Grant Plan (the “Inducement Plan”): (i) an initial award consisting of our current CEO(a) 666,667 PSUs at target, vesting in three approximately equal installments, to the extent the performance metrics are satisfied, during each of three performance periods and company President. Beginning(b) 333,333 RSUs, vesting in 2015,approximately equal installments on February 28, 2020, 2021 and 2022; (ii) a 2019-2021 PSU grant, with the CEOtarget number of 316,832 PSUs, which will vest to the extent the performance metrics are satisfied; and (iii) a 2019 RSU grant of 158,416 RSUs, vesting in approximately equal installments on February 28, 2020, 2021 and 2022. The PSU awards may be granted restricted stock unit awards each year under Superior's 2008 Equity Incentive Plan, or any successor equity plan. Underearned at up to 200 percent of target depending on the CEO's Employment Agreement, time-vested restricted stock units will be granted each year with cliff vesting atlevel of achievement of the third fiscal year end following grant. The CEO will alsoperformance metrics.

		Equity Incentive Awards
		Restricted Stock Units				Weighted Average Grant Date Fair Value				Performance Shares				Weighted Average Grant Date Fair Value				Options				Weighted Average Exercise Price
Balance at December 31, 2018			183,726			$	17.26				296,523			$	19.10				59,000			$	18.33
Granted			1,083,999				4.88				1,548,098				6.01				—				—
Settled			(103,681	)			17.12				(31,081	)			22.81				—				—
Forfeited or expired			(116,788	)			8.92				(264,747	)			11.92				(8,750	)			15.30
Balance at December 31, 2019			1,047,256			$	5.39				1,548,793			$	7.17				50,250			$	18.86
Vested or expected to vest at December 31, 2019			933,826			$	5.44				1,340,263			$	6.20				50,250			$	18.86

be granted performance-vested restricted stock units each year, vesting based on company performance goals established by the independent

Stock-based compensation committee during the three fiscal years following the grant.

We have elected to adopt the alternative transition method for calculating the initial pool of excess tax benefitsexpense was $5.7 million, $2.1 million and to determine the subsequent impact of the tax effects of employee stock-based compensation awards that are outstanding on shareholders' equity and the consolidated statements of cash flows.

Options

Options are granted at not less than fair market value on the date of grant and expire no later than ten years after the date of grant. Options and restricted shares granted under this Plan generally require no less than a three year ratable vesting period. Stock option activity in 2016 and 2015 are summarized in the following table:

	Outstanding			Weighted Average Exercise Price				Remaining Contractual Life in Years		Aggregate Intrinsic Value
Balance at December 31, 2014	1,819,444			$	20.28
Granted	—			$	—
Exercised	(420,642	)		$	17.29
Canceled	(117,269	)		$	21.80
Expired	(905,500	)		$	22.05
Balance at December 31, 2015	376,033			$	18.89			3.6		$	452,128
Granted	—			—
Exercised	(86,908	)		$	18.77
Canceled	(24,750	)		$	21.51
Expired	(32,750	)		$	17.56
Balance at December 31, 2016	231,625			$	18.88
Options vested or expected to vest at December 31, 2016	231,625			$	18.88			3.1		$	1,845,263
Exercisable at December 31, 2016	231,625			$	18.88			3.1		$	1,845,263

We received cash proceeds of $1.6 million $7.3 million and $7.4 million from stock options exercised in 2016, 2015 and 2014, respectively. The total intrinsic value of options exercised was $0.7 million and $0.8 million, duringfor the years ended December 31, 20162019, 2018 and 2015,2017, respectively. Upon the exercise of stock options and the issuance of restricted stock awards, it is our policy to only issue shares from authorized common stock.

The aggregate intrinsic value represents the total pretax difference between the closing stock price on the last trading day of the reporting period and the option exercise price, multiplied by the number of in-the-money options. This is the amount that would have been received by the option holders had they exercised and sold their options on that day. This amount varies based on changes in the fair market value of our common stock. The closing price of our common stock on the last trading day of our fiscal year was $26.85.

Stock options outstanding at December 31, 2016 and 2015 are summarized in the following tables:

Range of Exercise Prices									Options Outstanding at 12/31/2016			Weighted Average Remaining Contractual Life (in Years)		Weighted Average Exercise Price				Options Exercisable at 12/31/2016			Weighted Average Exercise Price
$	15.17		—		$	16.54			54,625			3.0		$	15.68			54,625			$	15.68
$	16.55		—		$	17.58			36,000			5.5		$	16.95			36,000			$	16.95
$	17.59		—		$	20.20			54,000			2.3		$	18.16			54,000			$	18.16
$	20.21		—		$	22.21			51,000			1.4		$	21.84			51,000			$	21.84
$	22.22		—		$	22.57			36,000			4.4		$	22.57			36,000			$	22.57
									231,625			3.1		$	18.88			231,625			$	18.88

Range of Exercise Prices									Options Outstanding at 12/31/2015			Weighted Average Remaining Contractual Life (in Years)		Weighted Average Exercise Price				Options Exercisable at 12/31/2015			Weighted Average Exercise Price
$	15.17		—		$	16.54			84,250			4.0		$	15.74			84,250			$	15.74
$	16.55		—		$	17.63			89,833			3.6		$	17.23			89,833			$	17.23
$	17.64		—		$	20.20			61,500			3.1		$	18.21			61,500			$	18.21
$	20.21		—		$	22.17			79,250			2.4		$	21.84			79,250			$	21.84
$	22.18		—		$	22.57			61,200			5.4		$	22.55			61,200			$	22.55
									376,033			3.6		$	18.89			376,033			$	18.89

Restricted Stock Awards

Restricted stock awards, or “full value” awards, generally vest ratably over no less than a three year period. Shares of restricted stock granted under the Plan are considered issued and outstanding at the date of grant, have the same dividend and voting rights as other outstanding common stock, are subject to forfeiture if employment terminates prior to vesting, and are expensed ratably over the vesting period. Dividends paid on the restricted shares granted under the Plan are non-forfeitable if the restricted shares do not ultimately vest. Restricted stock activity in 2016 and 2015 are summarized in the following table:

	Number of Awards			Weighted Average Grant Date Fair Value				Weighted Average Remaining Amortization Period (in Years)
Balance at December 31, 2014	252,476			$	18.93
Granted	23,814			$	18.31
Vested	(65,293	)		$	18.61
Canceled	(18,704	)		$	18.56
Balance at December 31, 2015	192,293			$	19.20			1.7
Granted	—			$	—
Vested	(42,546	)		$	18.47
Canceled	(5,452	)		$	18.75
Balance at December 31, 2016	144,295			$	19.43			0.5

Restricted Stock Units

Restricted stock unit activity in 2016 and 2015 are summarized in the following table:

	Number of Awards			Weighted Average Grant Date Fair Value				Weighted Average Remaining Amortization Period (in Years)
Balance at December 31, 2014	—			$	—
Granted	54,428			$	18.78
Vested	—			$	—
Canceled	(1,105	)		$	18.78
Balance at December 31, 2015	53,323			$	18.78			2.1
Granted	84,200			$	23.71
Vested	(7,227	)		$	18.78
Canceled	(2,729	)		$	18.78
Balance at December 31, 2016	127,567			$	22.03			1.7

Restricted Performance Stock Units

Restricted performance stock unit activity in 2016 and 2015 are summarized in the following table:

	Number of Awards			Weighted Average Grant Date Fair Value				Weighted Average Remaining Amortization Period (in Years)
Balance at December 31, 2014	—			$	—
Granted	109,354			$	18.78
Vested	—			$	—
Canceled	(2,707	)		$	18.78
Balance at December 31, 2015	106,647			$	18.78			2.0
Granted	127,139			$	23.14
Vested	—			$	—
Canceled	(6,593	)		$	19.92
Balance at December 31, 2016	227,193			$	21.72			1.6

Stock Based Compensation

Stock-based compensation expense related to our equity incentive plans in accordance with U.S. GAAP was allocated as follows:

Year Ended December 31,		2016				2015				2014
(Thousands of dollars)
Cost of sales		$	472			$	370			$	113
Selling, general and administrative expenses		3,218				2,437				2,202
Stock-based compensation expense before income taxes		3,690				2,807				2,315
Income tax benefit		(1,361		)		(1,044		)		(740		)
Total stock-based compensation expense after income taxes		$	2,329			$	1,763			$	1,575

As of December 31, 2016 a total of $3.7 million of unrecognizedUnrecognized stock-based compensation expense related to non-vested awards of $7.7 million is expected to be recognized over a weighted average period of approximately 1.6 years. There were no significant capitalized stock-based compensation costs at December 31, 2016 or 2015.

1.8 years.

NOTE 1620 - COMMON STOCK REPURCHASE PROGRAMS

In October 2014, our Board of Directors approved a stock repurchase program (the "2014 Repurchase Program") which authorized the repurchase of up to $30.0 million of our common stock. Under the 2014 Repurchase Program, we repurchased common stock from time to time on the open market or in private transactions. Shares repurchased under the 2014 Repurchase Program during 2015 totaled 1,056,954 shares at a cost of $19.6 million. The 2014 Repurchase Program was completed in the beginning of 2016, with purchases of 585,970 shares for a cost of $10.3 million. The repurchased shares described above were either canceled and retired or added to treasury stock after the reincorporation in Delaware in 2015.

In January of 2016, our Board of Directors approved another stock repurchase program (the “2016 Repurchase Program”), authorizing the repurchase of up to $50.0 million of common stock.  Under the 2016 Repurchase Program, we may repurchase common stock from time to time on the open market or in private transactions. The timing and extent of the repurchases under the 2016 Repurchase Program will depend upon market conditions and other corporate considerations in our sole discretion. During 2016, we repurchased 454,718 shares of company stock at a cost of $10.4 million under the 2016 Repurchase Program. In aggregation of the 2014 Repurchase Program and 2016 Repurchase Program we purchased $20.7 million in company stock during 2016.

NOTE 17 - QUARTERLY FINANCIAL DATA (UNAUDITED)

(Dollars in thousands, except per share amounts)

		First				Second				Third				Fourth
Year 2016		Quarter				Quarter				Quarter				Quarter				Year
Net sales		$	186,065			$	182,709			$	175,580			$	188,323			$	732,677
Gross profit		$	27,715			$	29,540			$	10,981			$	17,968			$	86,204
Income from operations		$	18,722			$	19,540			$	5,250			$	11,090			$	54,602
Income before income taxes		$	19,022			$	19,247			$	4,910			$	11,542			$	54,721
Income tax (provision) benefit		$	(4,558	)		$	(6,082	)		$	1,064			$	(3,764	)		$	(13,340	)
Net income		$	14,464			$	13,165			$	5,974			$	7,778			$	41,381
Income per share:
Basic		$	0.56			$	0.52			$	0.24			$	0.31			$	1.63
Diluted		$	0.56			$	0.52			$	0.23			$	0.31			$	1.62
Dividends declared per share		$	0.18			$	0.18			$	0.18			$	0.18			$	0.72

		First				Second				Third				Fourth
Year 2015		Quarter				Quarter				Quarter				Quarter				Year
Net sales		$	173,729			$	183,940			$	175,656			$	194,621			$	727,946
Gross profit		$	11,222			$	19,920			$	16,484			$	23,591			$	71,217
Income from operations		$	3,669			$	11,039			$	8,059			$	13,527			$	36,294
Income before income taxes		$	3,572			$	10,734			$	7,615			$	13,362			$	35,283
Income tax (provision) benefit		$	762			$	(4,200	)		$	(2,669	)		$	(5,232	)		$	(11,339	)
Net income		$	4,334			$	6,534			$	4,946			$	8,130			$	23,944
Income per share:
Basic		$	0.16			$	0.24			$	0.19			$	0.31			$	0.90
Diluted		$	0.16			$	0.24			$	0.19			$	0.31			$	0.90
Dividends declared per share		$	0.18			$	0.18			$	0.18			$	0.18			$	0.72

NOTE 18 - RISK MANAGEMENT

We are subject to various risks and uncertainties in the ordinary course of business due, in part, to the competitive global nature of the industry in which we operate, changing commodity prices for the materials used in the manufacture of our products and the development of new products.

The functional currency of certain foreign operations in Mexico is the Mexican peso.  The settlement of accounts receivable and accounts payable for our operations in Mexico requires the transfer of funds denominated in the Mexican peso, the value of which decreased 19 percent in relation to the U.S. dollar in 2016. Foreign currency transaction losses totaled $0.4 million, $1.2 million and $1.0 million in 2016, 2015 and 2014, respectively. All transaction gains and losses are included in other expense, net in the consolidated income statements.

As it relates to foreign currency translation gains and losses, however, since 1990, the Mexican peso has experienced periods of relative stability followed by periods of major declines in value. The impact of these changes in value relative to our Mexico operations resulted in a cumulative unrealized translation loss at December 31, 2016 of $105.2 million. Translation gains and losses are included in other comprehensive income in the consolidated statements of comprehensive income (loss).

COMMITMENTS AND CONTINGENCIES

Purchase Commitments

When market conditions warrant, we may also enter into purchase commitments to secure the supply of certain commodities used in the manufacture of our products, such as aluminum, natural gas and other raw materials. At December 31, 2016, we did notPrices under our aluminum contracts are based on a market index,  the London Mercantile Exchange (LME), and regional premiums for processing, transportation and alloy components which are adjusted quarterly for purchases in the ensuing quarter. Changes in aluminum prices are generally passed through to our OEM customers and adjusted on a quarterly basis. Certain of our purchase agreements include volume commitments, however any excess commitments are generally negotiated with suppliers and those which have any purchase commitmentsoccurred in place for the delivery of aluminum, natural gas or other raw materials in 2017.

past have been carried over to future periods.  

Contingencies

We are party to various legal and environmental proceedings incidental to our business. Certain claims, suits and complaints arising in the ordinary course of business have been filed or are pending against us. Based on facts now known, we believe all such matters are adequately provided for, covered by insurance, are without merit and/or involve such amounts that would not materially adversely affect our consolidated results of operations, cash flows or financial position.

NOTE 21 - RECEIVABLES SECURITIZATION

The Company sells certain customer trade receivables on a non-recourse basis under factoring arrangements with designated financial institutions. These transactions are accounted for as sales and cash proceeds are included in cash provided by operating activities. Factoring arrangements incorporate customary representations and warranties, including representations as to validity of amounts due, completeness of performance obligations and absence of commercial disputes. During the year ended December 31, 2019 and 2018, the Company sold trade receivables totaling $334.1 million and $276.8 million, respectively, and incurred factoring fees of $1.0 million and $0.9 million, respectively, which are included in other (expense) income, net. The collective limit under our factoring arrangements was $117.3 million as of December 31, 2019 and $80.9 million as of December 31, 2018. As of December 31, 2019, $49.6 million of receivables had been factored under the arrangements. As of  December 31, 2018, $53.8 million of receivables had been factored under the arrangements.

NOTE 22 - RELATED PARTIES

Purchase Agreement

In the first quarter of 2015, we entered into an agreement to purchase a subscription to online software provided by NGS Inc. Our former Senior Vice President, Business Operations and our Vice President of Information Technology are passive investors in NGS. We made payments to NGS of $479,520, $479,520, and $376,920 during 2019, 2018 and 2017, respectively. The transaction was entered into in the ordinary course of business and is an arms-length agreement.

NOTE 23 - RESTRUCTURING

During the third quarter of 2019, the Company initiated a plan to significantly reduce production and manufacturing operations at its Fayetteville, Arkansas location. As a result, the Company recognized a non-cash charge of $13.0 million in cost of sales, comprised of (1) $7.6 million of accelerated depreciation for excess equipment, (2) $3.2 million relating to the write-down of certain supplies inventory to net salvage value, (3) $1.6 million of employee severance and (4) $0.6 million of accelerated amortization of right of use assets under operating leases. In  addition, relocation costs for redeployment of machinery and equipment of $1.8 million were recognized in the fourth quarter of 2019.  Additional relocation costs are expected to be incurred over the next 12-18 months. As of December 31, 2019, $1.1 million of the restructuring severance accrual remains and is expected to be paid in full by the end of the second quarter of 2020.   

69

---

NOTE 24 - QUARTERLY FINANCIAL DATA (UNAUDITED)

(Dollars in thousands, except per share amounts)

Year 2019		First Quarter				Second Quarter				Third Quarter				Fourth Quarter				Year
Net sales		$	357,693			$	352,499			$	352,014			$	310,281			$	1,372,487
Gross profit		$	33,122			$	39,995			$	16,047			$	26,898			$	116,062
Income (loss) from operations		$	18,639			$	24,031			$	(243	)		$	(92,486	)		$	(50,059	)
Consolidated income (loss) before income taxes		$	6,893			$	14,811			$	(11,416	)		$	(103,325	)		$	(93,037	)
Income tax (provision) benefit		$	(4,943	)		$	(7,541	)		$	4,785			$	4,276			$	(3,423	)
Consolidated net income (loss)		$	1,950			$	7,270			$	(6,631	)		$	(99,049	)		$	(96,460	)
Earnings (loss) per share
Basic		$	(0.24	)		$	(0.04	)		$	(0.57	)		$	(4.25	)		$	(5.10	)
Diluted		$	(0.24	)		$	(0.04	)		$	(0.57	)		$	(4.25	)		$	(5.10	)
Dividends declared per share		$	0.09			$	0.09			$	-			$	-			$	0.18

Year 2018		First Quarter				Second Quarter				Third Quarter				Fourth Quarter				Year
Net sales		$	386,448			$	388,944			$	347,612			$	378,823			$	1,501,827
Gross profit		$	49,991			$	53,559			$	23,673			$	36,304			$	163,527
Income from operations		$	27,634			$	31,270			$	7,688			$	19,213			$	85,805
Consolidated income (loss) before income taxes		$	13,687			$	12,930			$	(7,714	)		$	13,349			$	32,252
Income tax (provision) benefit		$	(3,370	)		$	(4,795	)		$	7,051			$	(5,177	)		$	(6,291	)
Consolidated net income (loss)		$	10,317			$	8,135			$	(663	)		$	8,172			$	25,961
Earnings (loss) per share
Basic		$	0.07			$	(0.02	)		$	(0.37	)		$	0.61			$	0.29
Diluted		$	0.07			$	(0.02	)		$	(0.37	)		$	0.61			$	0.29
Dividends declared per share		$	0.09			$	0.09			$	0.09			$	0.09			$	0.36

70

---

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTSACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls

The company'sCompany’s management, with the participation of the CEOour Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the company'sCompany’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2016.2019. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our CEOChief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 20162019 our disclosure controls and procedures were effective.

Management's

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Rule 13a-15(f) under the Exchange Act, internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The company'sCompany’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the companyCompany are being made only in accordance with authorizations of management and directors of the company;Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company'sCompany’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changing conditions, or that the degree of compliance with policies or procedures may deteriorate.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company'sCompany’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management performed an assessment of the effectiveness of the company'sCompany’s internal control over financial reporting as of December 31, 20162019 based upon criteria established in the 2013Internal Control --- Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, management determined that our internal control over financial reporting was effective as of December 31, 20162019 based on the criteria in the 2013 Internal Control --- Integrated Framework issued by COSO.

The effectiveness of the company'sCompany’s internal control over financial reporting as of December 31, 20162019 has been audited by Deloitte and Touche LLP, an independent registered public accounting firm, as stated in their report, which is included in this Annual Report.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the most recent fiscal quarter ended December 31, 20162019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B - OTHER INFORMATION

None.

PART III

71

---

PART III

ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Except as set forth herein, the information required by this Item is incorporated by reference to our 2017 Annual2020 Proxy Statement.

Executive Officers - The names of corporate executive officers as of fiscal year end who are not also Directors are listed at the end of Part I of this Annual Report. Information regarding executive officers who are Directors is contained in our 2017 Annual2020 Proxy Statement under the caption “Proposal No. 1 - Election of Directors.” Such information is incorporated herein by reference. With the exception of the CEO, allAll executive officers are appointed annually by the Board of Directors and serve at the will of the Board of Directors. For a description of the CEO’sChief Executive Officer’s employment agreement, see “Executive Compensation and Related Information - Compensation Discussion and Analysis” in our 2017 Annual2020 Proxy Statement, which is incorporated herein by reference.

Code of Ethics - Included on our website, www.supind.com, under “Investors,“Investor Relations,” is our Code of Conduct, which, among others, applies to our CEO, Chief Financial Officer and Chief Accounting Officer. Copies of our Code of Conduct are available, without charge, from Superior Industries International, Inc., Shareholder Relations, 26600 Telegraph Road, Suite 400, Southfield, MIMichigan 48033.

ITEM 11 - EXECUTIVE COMPENSATION

Information relating to Executive Compensation is set forth under the captions “Compensation of Directors” and “Executive Compensation and Related Information - Compensation Discussion and Analysis” in our 2017 Annual2020 Proxy Statement, which is incorporated herein by reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information related to Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters is set forth under the caption “Voting Securities and Principal Ownership” in our 2017 Annual2020 Proxy Statement. Also see Note 15, "Stock19, “Stock Based Compensation"Compensation” in the Notes to the Consolidated Financial Statements in Item 8, "Financial“Financial Statements and Supplementary Data"Data” of this Annual Report.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information related to Certain Relationships and Related Transactions is set forth under the caption, “Certain Relationships and Related Transactions,” in our 2017 Annual2020 Proxy Statement, and in Note 11, "Leases and Related Parties"22, “Related Parties” in the Notes to the Consolidated Financial Statements in Item 8, "Financial“Financial Statements and Supplementary Data"Data” of this Annual Report.

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information related to Principal Accountant Fees and Services is set forth under the caption “Proposal No. 53 - Ratification of Independent Registered Public Accounting Firm - Principal Accountant Fees and Services” in our 2017 Annual2020 Proxy Statement and is incorporated herein by reference.

72

---

PART IV

ITEM 15 -– EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES

(a)
(a)	The following documents are filed as a part of this report:

1.	Financial Statements: See the “Index to the Consolidated Financial Statements and Financial Statement Schedule” in Item 8 of this Annual Report.

2.	Financial Statement Schedule

Schedule II – Valuation and Qualifying Accounts for the Years Ended December 31, 2016, 20152019, 2018 and 2014

3.	Exhibits

2017

3.

Exhibits

2.1
2.1	Undertaking Agreement, and Plandated as of Merger ofMarch 23, 2017, between Superior Industries International, Inc., a Delaware corporation and Uniwheels Holding (Malta) Ltd. (Incorporated by reference to Exhibit 2.1 toof the Registrant'sRegistrant’s Current Report on Form 8-K filed May 21, 2015)March  24, 2017).
3.1     2.2	Combination Agreement, dated March 23, 2017, between Superior Industries International, Inc. and Uniwheels AG (Incorporated by reference to Exhibit 2.2 of the Registrant’s Current Report on Form 8-K filed March 24, 2017).
3.1	Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed May 21, 2015).
3.2	Amended and Restated By-Laws of the Registrant effective as of October  25, 20162017 (Incorporated by reference to Exhibit 3.23.1 to Registrant’s Current Report on Form 8-K filed May 21, 2015)October 30, 2017).
4.1     3.3	Certificate of Designations, Preferences and Rights of Series A Perpetual Convertible Preferred Stock and Series B Perpetual Preferred Stock of Superior Industries International, Inc. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed May 26, 2017).
3.4	Certificate of Correction, filed in the State of Delaware on November 7, 2018 (Incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018).
4.1	Form of Superior Industries International, Inc.'s’s Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Registrant'sRegistrant’s Current Report on Form 8-K filed May 21, 2015).
10.1     4.2	2003 Equity Incentive Plan Indenture, dated as of June 15, 2017, among Superior Industries International, Inc., the Registrantsubsidiaries of Superior identified therein, The Bank of New York Mellon SA/NV, Luxembourg Branch, as registrar and transfer agent and The Bank of New York Mellon acting through its London Branch, as trustee (Incorporated by reference to Exhibit 99.14.1 to Registrant'sthe Registrant’s Current Report on Form S-8 dated July 28, 2003. Registration No. 333-107380)8-K filed June 20, 2017). *
10.2 4.3	Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.**
10.1	Salary Continuation Plan of The Registrant, amended and restated as of November 14, 2008 (Incorporated by reference to Exhibit 10.12 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008).*
10.3   10.2	2008 Equity Incentive Plan of the Registrant (Incorporated by reference to Exhibit A to Registrant’s Definitive Proxy Statement on Schedule 14A filed on April 28, 2008).*
10.4   10.3	2008 Equity Incentive Plan Notice of Stock Option Grant and Agreement (Incorporated by reference to Exhibit 10.2 to Registrant’s Form S-8 filed November 10, 2008. Registration No. 333-155258).*
10.5   10.4	Employment letter between the Registrant and Kerry A. Shiba, Senior Vice President and Chief Financial Officer (Incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the period ended September 26, 2010).*
10.6	Form of Notice of Grant and Restricted Stock Agreement pursuant to Registrant'sRegistrant’s 2008 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8‑K filed May 20, 2010).*
10.7	Second Amendment to Sublease Agreement dated April 1, 2010 by and among The Louis L. Borick Trust and The Nita Borick Management Trust and Registrant (Incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed March 25, 2010).
10.8	2010 Employee Incentive Plan of the Registrant (Incorporated by reference to exhibit 10.14 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2010).*
10.9	Superior Industries International, Inc. Annual Incentive Performance Plan (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated March 24, 2011)filed May 20, 2010).*
10.10   10.5	Superior Industries International, Inc. CEO Annual Incentive Performance Plan (Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated March 24, 2011).*
10.11	Superior Industries International, Inc. Executive Change in Control Severance Plan (Incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K dated March 24, 2011).*
10.12   10.6	Amended and Restated 2008 Equity Incentive Plan of the Registrant (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed May 23, 2013).*

73

---

10.7

10.13	Form of Restricted Stock Unit Agreement under the Superior Industries International, Inc. Amended and Restated Executive Employment2008 Equity Incentive Plan (Incorporated by reference to Exhibit 10.24 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015).*
10.8	Form of Performance Based Restricted Stock Unit Agreement dated August 10, 2016, betweenunder the RegistrantSuperior Industries International, Inc. Amended and Donald J. Stebbins.Restated 2008 Equity Incentive Plan (Incorporated by reference to Exhibit 10.25 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015).*
10.9	Form of Non-Employee Director Restricted Stock Unit Agreement under the Superior Industries International, Inc. Amended and Restated 2008 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q filed on July 29, 2016).*
10.10	Superior Industries International, Inc. Annual Incentive Performance Plan (Incorporated by reference to Annex A to Registrant’s Definitive Proxy Statement on Schedule 14-A filed on March 25, 2016).*
10.11	2018 Equity Incentive Plan of the Registrant (Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018).*
10.12	Form of Restricted Stock Unit Agreement under the Superior Industries International, Inc. 2018 Equity Incentive Plan (Incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018).*
10.13	Form of Performance Based Restricted Stock Unit Agreement under the Superior Industries International, Inc. 2018 Equity Incentive Plan (Incorporated by reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2018).*
10.14	Offer Letter of Employment, dated July 28, 2017 between Superior Industries International, Inc. and Joanne Finnorn (Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017).*
10.15	Offer Letter Offer Letter of Employment, dated August 23, 2018, between Superior Industries International, Inc. and Matti Masanovich (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K dated August 11, 2016)filed September 14, 2018).*
10.14   10.17	Indemnification Agreement, dated March 23, 2017, between Superior Industries International, Inc. and Uniwheels Holding (Malta) Ltd. (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed March 24, 2017).
10.18	Investment Agreement, dated March 22, 2017, between Superior Industries International, Inc., and TPG Growth III Sidewall, L.P. (Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed March 24, 2017).
10.19	Investor Rights Agreement, dated as of May 22, 2017, by and between Superior Industries International, Inc. and TPG Growth III Sidewall, L.P. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 26, 2017).
10.20	English Translation of the Domination and Profit Transfer Agreement between Superior Industries International Germany AG and UNIWHEELS AG, dated December 5, 2017 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed December 11, 2017).
10.21	Credit agreementAgreement dated December 19, 2014 between Superior Industries International, Inc. and JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed December 23, 2014).
10.15   10.22	Amendment No. 1 to the Credit Agreement dated as of March 3, 2015, by and among Superior Industries International, Inc., the Lenders from time to time a party thereto and JP Morgan Chase Bank, N.A. as Administrative Agent (Incorporated by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2015).
10.16   10.23	Consent and Amendment No. 2 dated as of October 14, 2015 to the Credit Agreement dated as of December 19, 2014, by and among Superior Industries International, Inc., the Lenders from time to time party thereto and JP Morgan Chase Bank, N.A., as Administrator (Incorporated by reference to Exhibit 10.2 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2015).
10.17   10.24	Form of Restricted Stock Unit Credit Agreement, under thedated March 22, 2017, among Superior Industries International, Inc. Amended, Citibank, N.A., as Administrative Agent, and Restated 2008 Equity Incentive Planthe Lenders party thereto. (Incorporated by reference to Exhibit 10.24 to Registrant's Annual10.3 of the Registrant’s Current Report on Form 10-K for the year ended December 31, 2015)8-K filed March 24, 2017).***

74

---

10.18   10.25	Form of Performance Based Restricted Stock Unit First Amendment to Credit Agreement, under thedated May 23, 2017, among Superior Industries International, Inc. Amended, the subsidiaries of Superior identified therein, Citibank, N.A., as Administrative Agent, and Restated 2008 Equity Incentive Planthe Lenders party thereto. (Incorporated by reference to Exhibit 10.24 to Registrant's Annual10.1 of the Registrant’s Current Report on Form 10-K for the year ended December 31, 2015)8-K filed June 20, 2017).*
10.19   10.26	Second Amendment to Credit Agreement, dated May 31, 2017, among Superior Industries International, Inc., the subsidiaries of Superior identified therein, Citibank, N.A., as Administrative Agent, and the Lenders party thereto. (Incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed June 20, 2017).
10.27	Third Amendment to Credit Agreement, dated June 15, 2017, among Superior Industries International, Inc., the subsidiaries of Non-Employee Director Restricted Stock UnitSuperior identified therein, Citibank, N.A., as Administrative Agent, and the Lenders party thereto. (Incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed June 20, 2017).
10.28	Fourth Amendment to Credit Agreement, underdated June 29, 2018, among Superior Industries International, Inc., the subsidiaries of Superior identified therein, Citibank, N.A., as Administrative Agent, and the Lenders party thereto. (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed June 29, 2018).
10.29	Executive Employment Agreement, dated March 28, 2019, between Superior Industries International, Inc. Amended and Restated 2008 Equity IncentiveMajdi B. Abulaban, including forms of award agreements to be granted under the Inducement Plan (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated April 1, 2019).*
10.30	Retention Award Letter, dated August 8, 2019, between Matti Masanovich and Superior Industries International, Inc. (Incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q filed on July 29, 2016)for the quarter ended September 30, 2019).*
10.20   10.31	Retention Award Letter, dated August 8, 2019, between Joanne Finnorn and Superior Industries International, Inc.*, **
10.32	Management Board Member Service Contract, dated September 26, 2019, between Superior Industries Europe AG and Andreas Meyer (Incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019).*
10.33	Amendment Agreement, dated October 30, 2019, to the Management Board Member Service Contract, dated September 26, 2019, between Superior Industries Europe AG and Andreas Meyer(Incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019).*
10.34	Offer Letter of Employment, dated September 17, 2019, between Superior Industries International, Inc. Annual Incentive performanceand Kevin Burke.*, **
10.35	Superior Industries International, Inc. 2019 Inducement Grant Plan (Incorporated by reference to Annex AExhibit 4.3 to Registrant's Definitive Proxythe Registrant’s Registration Statement on Schedule 14-A filed on March 28, 2016)Form S-8 dated August 8, 2019).*
11 10.36	Retention Award Letter, dated December 13, 2019, between Parveen Kakar and Superior Industries International, Inc.* (Incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed December 16, 2019.
11	Computation of Earnings Per Share (contained in Note 114 – Summary of Significant Accounting PoliciesEarnings Per Share in the Notes to Consolidated Financial Statements in Item 8 – Financial Statements and Supplementary Data of this Annual Report on Form 10-K).
21	List of Subsidiaries of the Company (filed herewith).Company.**
23	Consent of Deloitte and Touche LLP, our Independent Registered Public Accounting Firm (filed herewith).Firm.**
31.1	Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (filed herewith).2002.**
31.2	Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (filed herewith).2002.**
32   32.1	Certification of Donald J. Stebbins,Majdi B. Abulaban, President and Chief Executive Officer, and President, and Kerry A. Shiba,Matti M. Masanovich , Executive Vice President and Chief Financial Officer, Pursuant to 18 U.S.C. Section  1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101	Interactive data file (furnished electronically herewith pursuant to Rule 406T of Regulation S-T).
101.INS	XBRL Instance Document.****
101.SCH	XBRL Taxonomy Extension Schema Document.****
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.****
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.****
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.****
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.****

*

*	Indicates management contract or compensatory plan or arrangement.

**

**	Filed herewith.

***	Certain schedules and exhibits to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.

****	Submitted electronically with the report.

76

---

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

ANNUAL REPORT ON FORM 10-K

Schedule II

VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31, 2016, 20152019, 2018 AND 2014

2017

(Dollars in thousands)

						Additions
		Balance at Beginning of Year				Charge to Costs and Expenses				Other				Deductions From Reserves				Balance at End of Year
2019
Allowance for doubtful accounts receivable		$	4,298			$	919			$	56			$	(2,406	)		$	2,867
Valuation allowances for deferred tax assets		$	16,576			$	6,822			$	—			$	(519	)		$	22,879
2018
Allowance for doubtful accounts receivable		$	2,325			$	2,311			$	—			$	(338	)		$	4,298
Valuation allowances for deferred tax assets		$	7,634			$	9,036			$	—			$	(94	)		$	16,576
2017
Allowance for doubtful accounts receivable		$	919			$	1,127			$	1,162			$	(883	)		$	2,325
Valuation allowances for deferred tax assets		$	3,123			$	1,005			$	3,506			$	—			$	7,634

						Additions
		Balance at Beginning of Year				Charge to Costs and Expenses				Other Comprehensive Income (Loss)				Deductions From Reserves				Balance at End of Year
2016
Allowance for doubtful accounts receivable		$	867			$	403			$	—			$	(351	)		$	919
Valuation allowances for deferred tax assets		$	5,891			$	698			$	—			$	(3,466	)		$	3,123
2015
Allowance for doubtful accounts receivable		$	514			$	380			$	—			$	(27	)		$	867
Valuation allowances for deferred tax assets		$	3,911			$	1,980			$	—			$	—			$	5,891
2014
Allowance for doubtful accounts receivable		$	910			$	(426	)		$	—			$	30			$	514
Valuation allowances for deferred tax assets		$	3,398			$	473			$	40			$	—			$	3,911

77

---

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

ANNUAL REPORT ON FORM 10-K

ITEM 16- FORM 10-K SUMMARY

None.

78

---

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

ANNUAL REPORT ON FORM 10-K

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.

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

(Registrant)

By	/s/ Majdi B. Abulaban		February 28, 2020
	Majdi B. Abulaban
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
(Registrant)
	By	/s/ Donald J. Stebbins		March 3, 2017
		Donald J. Stebbins
		President and Chief Executive Officer and President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Majdi B. Abulaban and Matti M. Masanovich as his or her true and lawful attorneys-in-fact (with full power to each of them to act alone), with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this Annual Report on Form 10-K, and to file the same, with the exhibits thereto, and other documents in connection herewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agent, full power and authority to do and perform each and every act and thing required and necessary to be done in and about the foregoing as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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 capacity and on the dates indicated.

/s/ Donald J. StebbinsMajdi B. Abulaban Majdi B. Abulaban	President and Chief Executive Officer and President	March 3, 2017
Donald J. Stebbins	(Principal Executive Officer)	February 28, 2020
/s/ Kerry A. ShibaMatti M. Masanovich Matti M. Masanovich	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	March 3, 2017 February 28, 2020
Kerry A. Shiba	(Principal Financial Officer)
/s/ Scot S. BowieMichael J. Hatzfeld Jr. Michael J. Hatzfeld Jr.	Vice President of Finance and Corporate Controller (Principal Accounting Officer)	March 3, 2017 February 28, 2020
Scot S. Bowie	(Principal Accounting Officer)
/s/ Margaret S. Dano	Chairman of the Board	March 3, 2017
Margaret S. Dano
/s/ Michael R. Bruynesteyn	Director	March 3, 2017
Michael R. Bruynesteyn	Director	February 28, 2020
/s/ Jack A. HockemaRichard J. Giromini Richard J. Giromini	Director	March 3, 2017 February 28, 2020
Jack A. Hockema
/s/ Paul J. Humphries	Director	March 3, 2017
Paul J. Humphries	Director	February 28, 2020
/s/ Ransom A. Langford Ransom A. Langford	Director	February 28, 2020
/s/ James S. McElya	Director	March 3, 2017
James S. McElya	Director	February 28, 2020
/s/ Timothy C. McQuay	Director	March 3, 2017
Timothy C. McQuay	Director	February 28, 2020
/s/ Ellen B. Richstone	Director	March 3, 2017
Ellen B. Richstone	Director	February 28, 2020
/s/ Francisco S. Uranga	Director	March 3, 2017
Francisco S. Uranga	Director	February 28, 2020

79