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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

[X]   Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

or

[  ]   Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

Commission file number 1-6615

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

Registrant’s Telephone Number, Including Area Code: (818) 781-4973

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES  [X]   NO [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES [X]  NO [  ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.

REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2003

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements

Consolidated Condensed Statements of Income
(Unaudited)
(Thousands of dollars, except per share data)

See notes to consolidated condensed financial statements.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements (Continued)

Consolidated Condensed Balance Sheets
(Thousands of dollars, except per share data)

See notes to consolidated condensed financial statements.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements (Continued)

Consolidated Condensed Statements of Cash Flow
(Unaudited)
(Thousands of dollars)

See notes to consolidated condensed financial statements.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.

PART I

FINANCIAL INFORMATION

ITEM 1. Financial Statements (Continued)

Consolidated Condensed Statement of Shareholders’ Equity
(Unaudited)
(Thousands of dollars, except per share data)

See notes to consolidated condensed financial statements.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Notes To Consolidated Condensed Financial Statements
September 30, 2003
(Unaudited)

Note 1 - Nature of Operations

Headquartered in Van Nuys, California, our principal business is the design and manufacture of motor vehicle parts for sale to original equipment manufacturers (OEM) on an integrated one-segment basis. We are one of the largest suppliers of cast and forged aluminum wheels to the world’s leading automobile and light truck manufacturers, with wheel manufacturing operations in the United States, Mexico and Hungary. Including the products shipped by our fifty percent owned joint venture in Hungary, customers in North America represent our principal market, with approximately 16% of our products being delivered to international customers’ assembly operations in North America, Europe and Asia.

We are also making steady progress in building our position in the growing market for aluminum suspension and related underbody components to compliment our OEM aluminum wheel business. In 1999, we acquired a dedicated manufacturing facility in Heber Springs, Arkansas, to accommodate our aluminum components manufacturing operations, which we expanded to accommodate the potential sales volume of the components business. We have won contracts to manufacture numerous suspension and underbody components for certain 2003 through 2009 model year vehicles. Based upon currently forecasted customer requirements, these contracts will accumulate to approximately $35 million in annual revenue. Products that we manufacture include upper and lower control arm bracket assemblies, suspension brackets and knuckles. The future success of this business is highly dependent on our ability to obtain additional contract awards, which in part depends on industry conversion to lighter aluminum components. The start-up costs of the components business were expensed as incurred and reported as a separate line item in the statement of income through the end of 2002. Beginning with the first quarter of 2003, the operations of the aluminum component business are no longer considered in start-up and are included in the determination of gross profit. This change decreased gross profit by $3.0 million for the three months ended September 30, 2003 and $8.2 million for the nine months ended September 30, 2003.

General Motors Corporation and Ford Motor Company together represented approximately 83% of our total sales through the first nine months of 2003 and 87% of our annual sales in 2002. Although the loss of all or a substantial portion of our sales to either or both of these two customers would have a significant adverse impact on our financial results (unless the lost volume could be replaced), we do not believe this represents a material risk in short term periods due to excellent long-term relationships with both, including multi-year supply arrangements. In addition, these arrangements, which are for more than 150 different wheel programs with various divisions of these two customers, expire on differing dates. We also manufacture aluminum wheels for DaimlerChrysler, Audi, BMW, Isuzu, Jaguar, Land Rover, Mazda, MG Rover, Mitsubishi, Nissan, Subaru, Toyota and Volkswagen.

The availability and demand for aluminum wheels and components are both subject to unpredictable factors, such as changes in the general economy, the automobile industry, the price of gasoline and consumer interest rates. The raw materials used in producing our products are readily available and are obtained through numerous suppliers with whom we have established trade relations.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Notes To Consolidated Condensed Financial Statements (Continued)
September 30, 2003
(Unaudited)

Note 2 - Presentation of Consolidated Condensed Financial Statements

During interim periods, we follow the accounting policies set forth in our Annual Report to Shareholders and apply appropriate interim financial reporting standards for a fair presentation in conformity with accounting principles generally accepted in the United States of America, as indicated below. Users of financial information produced for interim periods in 2003 should read this Form 10-Q in conjunction with our Management’s Discussion and Analysis of Financial Condition and Results of Operations, the consolidated financial statements and notes to consolidated financial statements included in our 2002 Annual Report to Shareholders.

Interim financial reporting standards require us to make estimates that are based on assumptions regarding the outcome of future events and circumstances not known at that time, including the use of estimated effective tax rates. Inevitably, some assumptions, including customer production schedules based on demand for passenger cars and light trucks, may not materialize, unanticipated events or circumstances may occur which vary from those estimates and such variations may significantly affect our future results.

In our opinion, the accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the Securities and Exchange Commission’s requirements of Form 10-Q and contain all adjustments, of a normal and recurring nature, which are necessary for a fair presentation of i) the consolidated condensed statements of income for the three and nine months ended September 30, 2003 and 2002, ii) the consolidated condensed balance sheets at September 30, 2003 and December 31, 2002, iii) the consolidated condensed statements of cash flows for the nine months ended September 30, 2003 and 2002, and iv) the consolidated condensed statement of shareholders’ equity for the nine months ended September 30, 2003.

Note 3 - New Accounting Standards

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations”. The Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. The Statement requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. Adoption of this new accounting standard on January 1, 2003 did not have a material effect on our consolidated condensed financial statements.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”. SFAS No. 145 requires gains and losses from extinguishment of debt to be reported as part of recurring operations, unless the transaction is considered unusual or infrequent, in which case the transaction would be classified as an extraordinary item. This standard also eliminates an inconsistency between the accounting for sale-leaseback transactions and certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS No. 145 became effective for transactions occurring after May 15, 2002. Adoption of this new accounting standard did not have a material effect on our consolidated condensed financial statements.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Notes To Consolidated Condensed Financial Statements (Continued)
September 30, 2003
(Unaudited)

Note 3 - New Accounting Standards (Continued)

In June 2002, the FASB issued SFAS No. 146, “Accounting for Exit or Disposal Activities”. SFAS No. 146 addresses significant issues regarding the recognition, measurement and reporting of costs that are associated with exit and disposal activities, including restructuring activities that are currently accounted for pursuant to the guidance that the Emerging Issues Task Force (EITF) has set forth in EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. SFAS No. 146 became effective for exit or disposal activities that were initiated after December 31, 2002. Adoption of this new accounting standard on January 1, 2003 did not have a material effect on our consolidated condensed financial statements.

In November 2002, the FASB issued FASB Interpretation (FIN) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 clarifies the requirements of SFAS No. 5, “Accounting for Contingencies,” relating to the guarantor’s accounting for and disclosure of certain guarantees issued. The initial recognition and measurement provisions of the interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. The disclosure requirements of the interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. Adoption of this new accounting standard on January 1, 2003 did not have a material effect on our consolidated condensed financial statements.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — an amendment of FASB Statement No. 123”. SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation”, to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, SFAS No. 148 amends Accounting Principles Board Opinion No. 28, “Interim Financial Reporting”, to require disclosure about those effects in interim financial information. The additional disclosure requirements of this Statement are reflected in Note 11 to these consolidated condensed financial statements.

In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities.” FIN No. 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or in which equity investors do not bear the residual economic risks. The interpretation applies to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the fiscal year or interim period ending after December 15, 2003, to variable interest entities in which an enterprise holds a variable interest that was acquired before February 1, 2003. We do not anticipate the adoption of this new accounting interpretation will have a material effect on our consolidated condensed financial statements.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Notes To Consolidated Condensed Financial Statements (Continued)
September 30, 2003
(Unaudited)

Note 3 - New Accounting Standards (Continued)

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. The new guidance amends SFAS No. 133 for decisions made: (a) as part of the Derivatives Implementation Group process that effectively required amendments to SFAS No. 133, (b) in connection with other FASB projects dealing with financial instruments, and (c) regarding implementation issues raised in relation to the application of the definition of a derivative, particularly regarding the meaning of an “underlying” and the characteristics of a derivative that contains financing components. The amendments set forth in SFAS No. 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 (with a few exceptions) and for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. This new accounting standard did not have a material effect on our consolidated condensed financial statements.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. This Statement is effective for financial instruments entered into or modified after November 5, 2003. We do not anticipate the adoption of this new accounting standard to have a material effect on our consolidated condensed financial statements.

Note 4 - Revenue Recognition

Sales of products and any related costs are recognized when title transfers to the purchaser, generally upon shipment. Adjustments for discounts and rebates to customers, which are deducted from gross sales, are provided for in the same period the related sales are recorded. Project development revenues for tooling and certain related costs that are reimbursed by our customers are recognized as such related costs and expenses are incurred and recoverability is probable, generally upon issuance of a customer purchase order.

Note 5 - Earnings Per Share

Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding for the period of 26,683,000 and 26,581,000 for the three months ended September 30, 2003 and 2002, and 26,649,000 and 26,305,000 for the nine months ended September 30, 2003 and 2002, respectively. 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 (“common stock equivalents”) of 384,000 and 469,000 for the three months ended September 30, 2003 and 2002, and 358,000 and 569,000 for the nine months ended September 30, 2003 and 2002, respectively. Accordingly, the total weighted average shares outstanding plus common stock equivalents used for calculating diluted earnings per share was 27,067,000 and 27,050,000 for the three months ended September 30, 2003 and 2002, and 27,007,000 and 26,874,000 for the nine months ended September 30, 2003 and 2002, respectively.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Notes To Consolidated Condensed Financial Statements (Continued)
September 30, 2003
(Unaudited)

Note 6 - Risk Management

We are subject to various risks and uncertainties in the ordinary course of business due, in part, to the competitive 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, such as our aluminum suspension and related underbody components.

When market conditions warrant, we will enter into contracts to purchase certain commodities used in the manufacture of our products, such as aluminum, natural gas and environmental emission credits. Any such commodity commitments are expected to be purchased and used over a reasonable period of time, in the normal course of business. Accordingly, pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, they are not accounted for as a derivative. We currently have several purchase agreements for the delivery of aluminum and natural gas through 2006. As of September 30, 2003, the contract value and fair value of these purchase commitments approximated $105 million and $102 million, respectively. However, in November 2003, all aluminum purchase commitments beyond 2003 were liquidated at a price that approximated contract value. Excluding these liquidated purchase commitments as of September 30, 2003, the contract value and fair value of the remaining purchase commitments approximated $54 million and $53 million, respectively. As of December 31, 2002, the contract value and fair value of all purchase commitments held at that time approximated $162 million and $149 million, respectively. Percent changes in the market prices of these commodities will impact the fair value by the same percentage. We do not hold or purchase any aluminum or natural gas forward contracts for trading purposes.

We have foreign operations in Mexico and Hungary that on occasion require the transfer of funds denominated in their respective functional currencies — the Mexican Peso and the Euro, which was converted from the German Deutsche Mark (DM) on January 1, 2002, according to the European Union (EU) established fixed conversion rate. This conversion was in accordance with the established EU agreement with eleven of fifteen member countries to establish a common economic currency for the EU.

Our primary risk exposure relating to derivative financial instruments results from the periodic use of foreign currency forward contracts to offset the impact of currency rate fluctuations with regard to foreign denominated receivables, payables or purchase obligations. As of September 30, 2003, we held open foreign currency Euro forward contracts totaling $26.2 million to satisfy such future obligations, with an unrealized gain of $2.8 million. As of December 31, 2002, we held open foreign currency Euro forward contracts totaling $22.3 million, with an unrealized gain of $4.6 million. In accordance with the requirements of SFAS No. 133, any unrealized gains and losses are included in other comprehensive income (loss) in shareholders’ equity until the actual contract settlement date. Percent changes in the Euro/U.S. Dollar exchange rate will impact the unrealized gain/loss by the same percentage of the current market value.

Note 7 - Financial Presentation

Certain prior year amounts have been reclassified to conform to the 2003 financial statement presentation.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Notes To Consolidated Condensed Financial Statements (Continued)
September 30, 2003
(Unaudited)

Note 8 - Accounts Receivable
(Thousands of dollars)

Note 9 - Inventories
(Thousands of Dollars)

Inventories, which include material, labor and factory overhead, are stated at the lower of cost or market, using the first-in, first-out (FIFO) method of valuation.

Note 10 - Property, Plant and Equipment
(Thousands of Dollars)

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Notes To Consolidated Condensed Financial Statements (Continued)
September 30, 2003
(Unaudited)

Note 10 - Property, Plant and Equipment (Continued)

Depreciation expense was $7.9 million and $7.6 million for the three months ended September 30, 2003 and 2002, respectively, and $23.4 million and $22.6 million for the nine months ended September 30, 2003 and 2002, respectively.

Note 11 - Stock-Based Compensation

The company accounts for its stock option plans under the recognition and measurement principles (the “intrinsic value” method) of APB Opinion No. 25. If we had elected to recognize stock-based compensation expense based on the fair value of options granted as prescribed by SFAS No. 123, net income and earnings per share would have been reduced to the proforma amounts indicated below.

(Thousands of dollars, except earnings per share data)

Note 12 - 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.

When market conditions warrant, we will also enter into contracts to purchase certain commodities used in the manufacture of our products, such as aluminum, natural gas and environmental emission credits. Any such commodity commitments are expected to be delivered and used over a reasonable period of time, in the normal course of business. We do not hold or purchase any such contracts for trading purposes, as described in Note 6 to these consolidated condensed financial statements.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I – FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Results of Operations

In the third quarter of 2003, our consolidated net sales were virtually the same as in the third quarter a year ago at $187.4 million. Wheel revenues decreased $2.2 million, or 1.2%, to $184.3 million from $186.5 million in the 2002 period, while wheel shipments for the same period decreased 2.0% from a year ago. Consolidated net sales in 2003 included $3.1 million of aluminum suspension component sales, which prior to 2003 had been included in a separate line item in the statement of income, but are now included in the determination of gross profit. Our average selling price increased less than 1.0%, as a slight increase in the pass-through price of aluminum to our customers and the continuing shift in mix to larger wheel sizes offset the price reductions that our customers required during the period.

Our consolidated net sales for the first nine months of 2003 increased $23.7 million, or 4.1%, to $609.6 million from $585.9 million for the same period last year. Wheel revenues increased $17.8 million, or 3.1%, to $600.6 million compared to $582.8 million in the 2002 period, while wheel shipments for the same period remained approximately the same over the prior year. Our average selling price increased 2.5%, as a 1.7% increase in the pass-through price of aluminum to our customers and the continuing shift in mix to larger wheel sizes offset customer price reductions during the period.

Shipments to Ford and General Motors totaled 85% of total unit shipments in the 2003 periods versus 86% in the quarter and year-to-date periods in 2002. The remaining shipments were to DaimlerChrysler and to international customers, principally in North America. The 2.0% decrease in aluminum wheel shipments for the third quarter compares favorably to a decrease of 12.3% in production of light trucks and passenger cars by the “Big Three” auto manufacturers, indicating further gains in market share. For the model year 2002, according to Ward’s Communications, an auto industry publication, aluminum wheel installation rates on light trucks and passenger cars in the U.S. rose to 60.8% compared to 57.4% in 2001.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I – FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Results of Operations (Continued)

Gross profit for the quarter decreased $12.6 million, or 39.5%, to $19.4 million, or 10.3% of net sales, from $32.0 million, or 17.1% of net sales, for the same period a year ago. Gross profit for the first nine months decreased $15.4 million, or 15.3%, to $85.7 million, or 14.1% of net sales, from $101.1 million, or 17.3% of net sales, for the same period a year ago. Beginning with the first quarter of 2003, the operating results of the aluminum suspension components business are no longer shown as a separate line item in the statement of income and are being included in the determination of gross profit. This change reduced our gross margin by $3.0 million in the third quarter and $8.2 million for the first nine months of 2003, or 1.8% of net sales in the quarter and 1.5% for the year-to-date. Other factors impacting gross margin were a 9% reduction in production in our U.S. plants during a period when three of the plants were being expanded, extra costs and inefficiencies related to these plant expansions, additional costs and delays related to a record number of new wheel program launches, and continued customer price reductions. Additionally, the difference between the market price and the fixed price of aluminum delivered during the 2003 periods pursuant to our aluminum contracts negatively impacted gross margin. See Note 6 to the consolidated condensed financial statements for details pertaining to these contracts.

Selling, general and administrative expenses for the third quarter of 2003 were $5.7 million, or 3.1% of net sales compared to $5.6 million, or 3.0% of net sales in 2002. For the nine-month periods ended September 30, selling, general and administrative expenses were unchanged at $17.2 million, or 2.8% of net sales in 2003, and 2.9% of net sales in 2002. Higher wages, repair and maintenance expenses and professional fees in the 2003 periods were offset by lower bonus accruals, which are based on profitability, and selling expenses.

In 2002, costs associated with our aluminum automotive components business, which were shown as a separate line item in the statement of income, totaled $2.2 million and $6.0 million in the third quarter and for the first nine months, respectively.

The resulting operating income for the third quarter decreased $10.5 million, or 43.5%, to $13.7 million from $24.2 million in the same period a year ago. Accordingly, the operating income margin for the third quarter of 2003 was 7.3% of net sales compared to 12.9% of net sales in the same period in 2002. In the first nine months of 2003, operating income decreased to $68.5 million, or 11.2% of net sales, from $78.0 million, or 13.3% of net sales, in the same period a year ago.

Equity earnings of joint ventures are represented principally by our share of the equity earnings of our fifty- percent-owned joint venture in Hungary. For the third quarter 2003, our share of joint ventures’ net income decreased slightly to $1.9 million, and for the first nine months of 2003 increased $2.1 million to $6.6 million from $4.5 million in the same period in 2002. These increases were due principally to favorable currency exchange rates.

Interest income decreased for the third quarter to $0.5 million, compared to $0.9 million in 2002. In the first nine months of 2003, interest income decreased to $2.2 million from $2.4 million a year ago, due primarily to a decrease in interest rates on cash invested.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I – FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Results of Operations (Continued)

As a result of the above, net income for the quarter decreased $7.0 million, or 39.4%, to $10.7 million, or 5.7% of net sales, from $17.7 million, or 9.4% of net sales last year. Diluted earnings per share for the third quarter of 2003 was $0.40, a decrease of 38.5% from the $0.65 per diluted share in the same period a year ago.

For the first nine months of 2003, net income decreased $5.1 million, or 9.2%, to $50.7 million, or 8.3% of net sales, from $55.8 million, or 9.5% of net sales last year. Diluted earnings per share for the first nine months of 2003 was $1.88, compared to $2.08 per diluted share in the same period a year ago, a 9.6% decrease.

Financial Condition, Liquidity and Capital Resources

Net cash provided by operating activities decreased $14.2 million to $44.7 million for the nine months ended September 30, 2003, from $58.9 million for the same period a year ago, due principally to the $5.1 million decrease in net income and to an unfavorable change in working capital requirements of $9.1 million. A favorable change in accounts receivable of $19.4 million, due principally to the timing of receipt of a payment from a major customer, was offset by unfavorable changes in accounts payable, accrued expenses and income taxes payable. The changes in accounts payable and accrued expenses were due to the timing of payments related to the various plant expansions, and to lower compensation and related fringe benefit accruals in the 2003 periods, respectively. The unfavorable change in income taxes payable was due to a lower than normal liability at the beginning of 2002, due to the significant decrease in earnings experienced in 2001.

The principal investing activities during the nine months ended September 30, 2003 were funding $53.5 million of capital expenditures and acquiring $26.3 million of marketable securities. However, offsetting the above expenditures was $84.9 million of proceeds from the sale of investments. Similar investing activities during the same period a year ago included acquiring $55.2 million of marketable securities and funding $31.0 million of capital expenditures. Of the $22.5 million increase in capital expenditures, $14.2 million was related to the expansion of three of our U. S. wheel facilities, $5.7 million for additional equipment in our second wheel plant in Chihuahua, Mexico, and the balance for ongoing improvements to our other facilities.

Financing activities during the nine months ended September 30, 2003 included the payment of cash dividends on our common stock totaling $10.3 million, the repurchase of company common stock for $4.0 million, partially offset by proceeds from the exercise of company stock options of $6.1 million. Similar financing activities during the same period a year ago were proceeds from the exercise of company stock options of $18.3 million, cash dividend payments of $9.0 million, and the repurchase of company common stock for $3.2 million.

Working capital and the current ratio at September 30, 2003 were $279.4 million and 3.9:1, respectively, compared to $271.8 million and 3.8:1, respectively, at December 31, 2002. Cash and short-term investments as of September 30, 2003 were $137.8 million compared to $155.2 million at December 31, 2002. Our cash position is forecasted to be more than sufficient to fund our working capital and capital investment requirements for the remainder of 2003 and the foreseeable future.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I – FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Critical Accounting Policies

We identified the most critical accounting policies upon which our financial position, results of operations and cash flows depend, as being those policies that involve the most complex or subjective decisions or assessments used in the preparation of our financial statements. These accounting policies, which are related to risk management, revenue recognition, inventory valuation and commodity contract commitments, are stated in the notes to consolidated condensed financial statements, in our 2002 Annual Report to Shareholders and at relevant sections in this management’s discussion and analysis.

New Accounting Standards

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations”. The Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. The Statement requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. Adoption of this new accounting standard on January 1, 2003 did not have a material effect on our consolidated condensed financial statements.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”. SFAS No. 145 requires gains and losses from extinguishment of debt to be reported as part of recurring operations, unless the transaction is considered unusual or infrequent, in which case the transaction would be classified as an extraordinary item. This standard also eliminates an inconsistency between the accounting for sale-leaseback transactions and certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS No. 145 became effective for transactions occurring after May 15, 2002. Adoption of this new accounting standard did not have a material effect on our consolidated condensed financial statements.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Exit or Disposal Activities”. SFAS No. 146 addresses significant issues regarding the recognition, measurement and reporting of costs that are associated with exit and disposal activities, including restructuring activities that are currently accounted for pursuant to the guidance that the Emerging Issues Task Force (EITF) has set forth in EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. SFAS No. 146 became effective for exit or disposal activities that were initiated after December 31, 2002. Adoption of this new accounting standard on January 1, 2003 did not have a material effect on our consolidated condensed financial statements.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I – FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations

New Accounting Standards (Continued)

In November 2002, the FASB issued FASB Interpretation (FIN) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN No. 45 clarifies the requirements of SFAS No. 5, “Accounting for Contingencies,” relating to the guarantor’s accounting for and disclosure of certain guarantees issued. The initial recognition and measurement provisions of the interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. The disclosure requirements of the interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. Adoption of this new accounting standard on January 1, 2003 did not have a material effect on our consolidated condensed financial statements.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — an amendment of FASB Statement No. 123”. SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation”, to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation. Finally, SFAS No. 148 amends Accounting Principles Board Opinion No. 28, “Interim Financial Reporting”, to require disclosure about those effects in interim financial information. The additional disclosure requirements of this Statement are reflected in Note 11 to these consolidated condensed financial statements.

In January 2003, the FASB issued FIN No. 46, “Consolidation of Variable Interest Entities.” FIN No. 46 clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or in which equity investors do not bear the residual economic risks. The interpretation applies to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the fiscal year or interim period ending after December 15, 2003, to variable interest entities in which an enterprise holds a variable interest that was acquired before February 1, 2003. We do not anticipate the adoption of this new accounting interpretation will have a material effect on our consolidated condensed financial statements.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. The new guidance amends SFAS No. 133 for decisions made: (a) as part of the Derivatives Implementation Group process that effectively required amendments to SFAS No. 133, (b) in connection with other FASB projects dealing with financial instruments, and (c) regarding implementation issues raised in relation to the application of the definition of a derivative, particularly regarding the meaning of an “underlying” and the characteristics of a derivative that contains financing components. The amendments set forth in SFAS No. 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. SFAS No. 149 is generally effective for contracts entered into or modified after June 30, 2003 (with a few exceptions) and for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. This new accounting standard did not have a material effect on our consolidated condensed financial statements.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I – FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations

New Accounting Standards (Continued)

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. This Statement is effective for financial instruments entered into or modified after November 5, 2003. We do not anticipate the adoption of this new accounting standard to have a material effect on our consolidated condensed financial statements.

Risk Management

We are subject to various risks and uncertainties in the ordinary course of business due, in part, to the competitive 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, such as our aluminum suspension and related underbody components.

When market conditions warrant, we will enter into contracts to purchase certain commodities used in the manufacture of our products, such as aluminum, natural gas and environmental emission credits. Any such commodity commitments are expected to be purchased and used over a reasonable period of time, in the normal course of business. Accordingly, pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, they are not accounted for as a derivative. We currently have several purchase agreements for the delivery of aluminum and natural gas through 2006. As of September 30, 2003, the contract value and fair value of these purchase commitments approximated $105 million and $102 million, respectively. However, in November 2003, all aluminum purchase commitments beyond 2003 were liquidated at a price that approximated contract value. Excluding these liquidated purchase commitments as of September 30, 2003, the contract value and fair value of the remaining purchase commitments approximated $54 million and $53 million, respectively. As of December 31, 2002, the contract value and fair value of all purchase commitments held at that time approximated $162 million and $149 million, respectively. Percent changes in the market prices of these commodities will impact the fair value by the same percentage. We do not hold or purchase any aluminum or natural gas forward contracts for trading purposes.

We have foreign operations in Mexico and Hungary that on occasion require the transfer of funds denominated in their respective functional currencies — the Mexican Peso and the Euro, which was converted from the German Deutsche Mark (DM) on January 1, 2002, according to the European Union (EU) established fixed conversion rate. This conversion was in accordance with the established EU agreement with eleven of fifteen member countries to establish a common economic currency for the EU.

Our primary risk exposure relating to derivative financial instruments results from the periodic use of foreign currency forward contracts to offset the impact of currency rate fluctuations with regard to foreign denominated receivables, payables or purchase obligations. As of September 30, 2003, we held open foreign currency Euro forward contracts totaling $26.2 million to satisfy such future obligations, with an

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I – FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Risk Management (Continued)

unrealized gain of $2.8 million. As of December 31, 2002, we held open foreign currency Euro forward contracts totaling $22.3 million, with an unrealized gain of $4.6 million. In accordance with the requirements of SFAS No. 133, any unrealized gains and losses are included in other comprehensive income (loss) in shareholders’ equity until the actual contract settlement date. Percent changes in the Euro/U.S. Dollar exchange rate will impact the unrealized gain/loss by the same percentage of the current market value.

Inflation

Inflation did not have a material impact on our results of operations or financial condition for the second quarter of 2003.

Forward-Looking Statements and Risk Factors

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. We may from time to time make written or oral statements that are “forward-looking,” including statements contained in this report and other filings with the Securities and Exchange Commission and reports and other public statements to our shareholders. These statements may, for example, express expectations or projections about future actions or results that we may anticipate but, due to developments beyond our control, do not materialize. Actual results could differ materially because of issues and uncertainties such as those listed below, which, among others, should be considered in evaluating our financial outlook. We assume no obligation to update publicly any forward-looking statements.

•		Multi-Year Supply Agreements with Key Customers. Ford Motor Company (Ford) and General Motors Corporation (GM) were our only customers accounting for more than 10 percent of consolidated net sales in 2002. GM and Ford together represented approximately 87% of our annual sales in 2002 and 89% of total sales in 2001. The loss of all or a substantial portion of our sales to either or both of these two customers would have a significant adverse impact on our financial results (unless the lost volume could be replaced), although we do not believe this represents a material risk in short term periods due to excellent long-term relationships with both, including multi-year supply arrangements. In addition, these arrangements, which are for more than 150 different wheel programs with various divisions of these two customers, expire on differing dates.
•		Decline in Production of Passenger Cars and Light Trucks. A significant decline in the production of passenger cars and/or light trucks by automobile manufacturers would adversely affect our revenue and if such decline continues for a sustained period, would have a significant adverse impact on our financial results.
•		Competition. We continue to experience increased competition in our domestic and international markets. Many of our competitors have excess capacity and because of their financial condition may place intense pricing pressure in our market place. These competitive pressures may result in decreased sales volumes and price reductions resulting in lower revenues, gross margin and operating income.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I – FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations

Forward-Looking Statements (Continued)

•		New Component Products. We have made a significant investment in research, development and marketing for the automotive suspension and underbody components business. Significant revenue from these investments may not be achieved for a number of years, if at all. The future success of this business is highly dependent on our ability to obtain additional contract awards, which in part depends on industry conversion to lighter aluminum components.
•		Litigation. We are subject to a variety of claims and lawsuits, including product liability and other matters. While we believe that none of the litigation matters in which we are currently involved will have a material impact on our financial position or results of operations, it is possible that, even though we believe we have adequate insurance coverage or are likely to prevail on the merits, one or more of these matters could be resolved in a manner that would ultimately have a material impact on our financial condition, and could negatively impact our revenues, operating margins and net income.
•		International Operations. We manufacture our products in Mexico and Hungary and sell our products throughout the world. Unfavorable changes in foreign cost structures, trade protection laws, policies and other regulatory requirements affecting trade and investments, social, political, labor, or economic conditions in a specific country or region, including foreign exchange rates, difficulties in staffing and managing foreign operations and foreign tax consequences, among other factors, could have a negative effect on the company’s business and results of operations.
•		Other. Other issues and uncertainties include:

	•		Changes in U.S., global or regional economic conditions, currency exchange rates, war or significant terrorist acts, or political instability in major markets, all of which may affect automobile sales, which in turn could cause our customers to cancel orders, as has happened in the past;
	•		Periodic or sustained shortages of natural gas and other energy sources that may impact our performance and profitability;
	•		Changes in commodity prices of the materials used in our products, or substantial increases in material costs that may impact the demand for aluminum wheels;
	•		Changes in the laws, regulations, policies, or other activities of governments, agencies, and similar organizations where such actions may affect our ability to produce products at a competitive price;
	•		Adverse weather conditions or natural disasters, such as earthquakes, tornados and hurricanes, which may, among other things, impair production at our manufacturing facilities;
	•		Our ability to attract or retain key employees to operate our manufacturing facilities and corporate office;
	•		Success of our strategic and operating plans to properly direct the company, including obtaining new contracts for our suspension and underbody components business; and,
	•		International, political and military developments that may affect automobile production and sales.

This list of factors that may affect future performance and the accuracy of forward-looking statements is by no means complete. Additional factors that may affect future performance and the accuracy of forward-looking statements are contained in our 2002 Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I – FINANCIAL INFORMATION

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to various risks and uncertainties in the ordinary course of business due, in part, to the competitive 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, such as our aluminum suspension and related underbody components.

When market conditions warrant, we will enter into contracts to purchase certain commodities used in the manufacture of our products, such as aluminum, natural gas and environmental emission credits. Any such commodity commitments are expected to be purchased and used over a reasonable period of time, in the normal course of business. Accordingly, pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, they are not accounted for as a derivative. We currently have several purchase agreements for the delivery of aluminum and natural gas through 2006. As of September 30, 2003, the contract value and fair value of these purchase commitments approximated $105 million and $102 million, respectively. However, in November 2003, all aluminum purchase commitments beyond 2003 were liquidated at a price that approximated contract value. Excluding these liquidated purchase commitments as of September 30, 2003, the contract value and fair value of the remaining purchase commitments approximated $54 million and $53 million, respectively. As of December 31, 2002, the contract value and fair value of all purchase commitments held at that time approximated $162 million and $149 million, respectively. Percent changes in the market prices of these commodities will impact the fair value by the same percentage. We do not hold or purchase any aluminum or natural gas forward contracts for trading purposes.

We have foreign operations in Mexico and Hungary that on occasion require the transfer of funds denominated in their respective functional currencies — the Mexican Peso and the Euro, which was converted from the German Deutsche Mark (DM) on January 1, 2002, according to the European Union (EU) established fixed conversion rate. This conversion was in accordance with the established EU agreement with eleven of fifteen member countries to establish a common economic currency for the EU.

Our primary risk exposure relating to derivative financial instruments results from the periodic use of foreign currency forward contracts to offset the impact of currency rate fluctuations with regard to foreign denominated receivables, payables or purchase obligations. As of September 30, 2003, we held open foreign currency Euro forward contracts totaling $26.2 million to satisfy such future obligations, with an unrealized gain of $2.8 million. As of December 31, 2002, we held open foreign currency Euro forward contracts totaling $22.3 million, with an unrealized gain of $4.6 million. In accordance with the requirements of SFAS No. 133, any unrealized gains and losses are included in other comprehensive income (loss) in shareholders’ equity until the actual contract settlement date. Percent changes in the Euro/U.S. Dollar exchange rate will impact the unrealized gain/loss by the same percentage of the current market value.

Item 4. Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2003. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that, as of September 30, 2003, our disclosure controls and procedures were (1) designed to ensure that material information relating to us, including our consolidated subsidiaries, is made known to our chief executive officer and chief financial officer by others within those entities, particularly during the period in which this report was being prepared and (2) effective, in that they provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
PART I – FINANCIAL INFORMATION

Item 4. Controls and Procedures (Continued)

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended September 30, 2003 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

a)

Exhibits:

b)

Reports on Form 8-K:

               The company filed a Current Report on Form 8-K on July 22, 2003 that included:

               The company filed a Current Report on Form 8-K on September 4, 2003 that included:

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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