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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~if any,~~ every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding as of ~~October 30, 2019: 25,128,158~~May 1, 2020: 25,591,930

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018			March 31, 2020			March 31, 2019
NET SALES	$	352,014		$	347,612		$	1,062,206		$	1,123,004		$	301,112		$	357,693
Cost of sales		335,967			323,939			973,042			995,781			277,951			324,571
GROSS PROFIT		16,047			23,673			89,164			127,223			23,161			33,122
Selling, general and administrative expenses		16,290			15,985			46,737			60,631			12,535			14,483
Impairment of goodwill and indefinite-lived intangibles														193,641			—
INCOME (LOSS) FROM OPERATIONS		(243	)		7,688			42,427			66,592			(183,015	)		18,639
Interest expense, net		(11,807	)		(12,378	)		(35,532	)		(37,417	)		(11,850	)		(11,873	)
Other income (expense), net		1,676			(3,238	)		3,716			(6,796	)
Change in fair value of redeemable preferred stock embedded derivative		(1,042	)		214			(323	)		(3,476	)
INCOME (LOSS) BEFORE INCOME TAXES		(11,416	)		(7,714	)		10,288			18,903
Income tax (provision) benefit		4,785			7,051			(7,699	)		(1,114	)
NET INCOME (LOSS)	$	(6,631	)	$	(663	)	$	2,589		$	17,789
Other income, net														1,323			127
CONSOLIDATED INCOME (LOSS) BEFORE INCOME TAXES														(193,542	)		6,893
Income tax benefit (provision)														3,460			(4,943	)
NET INCOME (LOSS) ATTRIBUTABLE TO SUPERIOR													$	(190,082	)	$	1,950
LOSS PER SHARE – BASIC	$	(0.57	)	$	(0.37	)	$	(0.84	)	$	(0.32	)	$	(7.84	)	$	(0.24	)
LOSS PER SHARE – DILUTED	$	(0.57	)	$	(0.37	)	$	(0.84	)	$	(0.32	)	$	(7.84	)	$	(0.24	)

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

Three Months Ended

Nine Months Ended

September 30,
2019

September 30,
2018

September 30,
2019

September 30,
2018

Net income (loss)

$
(6,631
)

$
(663)

$
2,589

$
17,789

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss), net of tax

(22,143
)

4,313

(21,459
)

(10,016
)
Change in unrecognized gains (losses) on derivative instruments:

Change in fair value of derivatives

(10,406
)

22,018

(1,862
)

17,124

Tax (provision) benefit

2,104

(4,495
)

342

(3,680
)
Change in unrecognized gains (losses) on
derivative instruments, net of tax

(8,302
)

17,523

(1,520
)

13,444

Defined benefit pension plan:

Amortization of actuarial loss

50

147

155

324

Tax provision

(11
)

(23
)

(33
)

(69
)
Pension changes, net of tax

39

124

122

255

Other comprehensive income (loss), net of tax

(30,406
)

21,960

(22,857
)

3,683

Comprehensive income (loss)

$
(37,037
)

$
21,297

$
(20,268
)

$
21,472

	Three Months Ended
	March 31, 2020			March 31, 2019
Net income (loss) attributable to Superior	$	(190,082	)	$	1,950
Other comprehensive income (loss), net of tax:
Foreign currency translation loss		(35,533	)		(7,349	)
Change in unrecognized gains (losses) on derivative instruments:
Change in fair value of derivatives		(58,426	)		6,414
Tax benefit (provision)		13,129			(1,488	)
Change in unrecognized gains (losses) on derivative instruments, net of tax		(45,297	)		4,926
Defined benefit pension plan:
Actuarial gains on pension obligations, net of curtailments and amortization		72			52
Tax (provision)		(17	)		(11	)
Pension changes, net of tax		55			41
Other comprehensive loss, net of tax		(80,775	)		(2,382	)
Comprehensive loss attributable to Superior	$	(270,857	)	$	(432	)

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

	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	49,308		$	47,464		$	282,163		$	77,927
Short-term investments		—			750
Accounts receivable, net		131,790			104,649			70,243			76,786
Inventories, net		162,079			175,578			169,864			168,470
Income taxes receivable		2,151			6,791			4,431			4,630
Other current assets		20,832			35,189			28,119			26,375
Total current assets		366,160			370,421			554,820			354,188
Property, plant and equipment, net		516,892			532,767			503,213			529,282
Deferred income tax assets, net		42,329			42,105			52,305			38,607
Goodwill		278,543			291,434			—			184,832
Intangibles, net		142,689			168,369			117,980			137,078
Other non-current assets		56,749			46,520			55,476			67,880
Total assets	$	1,403,362		$	1,451,616		$	1,283,794		$	1,311,867
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	124,402		$	107,274		$	138,774		$	123,112
Short-term debt		3,300			3,052			56,853			4,010
Accrued expenses		71,230			65,662			79,991			60,845
Income taxes payable		1,441			2,475			166			3,148
Total current liabilities		200,373			178,463			275,784			191,115
Long-term debt (less current portion)		614,682			661,426			752,991			611,025
Embedded derivative liability		3,457			3,134
Non-current income tax liabilities		9,583			9,046			7,058			6,523
Deferred income tax liabilities, net		15,465			18,664			8,041			12,369
Other non-current liabilities		65,768			49,306			99,988			71,640
Commitments and contingent liabilities (Note 18)		—			—
Commitments and contingent liabilities (Note 17)								—			—
Mezzanine equity:
Preferred stock, $0.01 par value
Authorized - 1,000,000 shares
Issued and outstanding – 150,000 shares outstanding at September 30, 2019 and December 31, 2018		156,682			144,463
Issued and outstanding – 150,000 shares outstanding at March 31, 2020 and December 31, 2019								165,397			160,980
European non-controlling redeemable equity		9,136			13,849			2,225			6,525
Shareholders’ equity:
Shareholders’ equity (deficit):
Common stock, $0.01 par value
Authorized - 100,000,000 shares
Issued and outstanding – 25,128,158 and 25,019,237 shares at September 30, 2019 and December 31, 2018		91,310			87,723
Issued and outstanding – 25,474,477 and 25,128,158 shares at March 31, 2020 and December 31, 2019								92,678			93,331
Accumulated other comprehensive loss		(128,352	)		(105,495	)		(180,853	)		(100,078	)
Retained earnings		365,258			391,037			60,485			258,437
Total shareholders’ equity		328,216			373,265
Total liabilities, mezzanine equity and shareholders’ equity	$	1,403,362		$	1,451,616
Total shareholders’ equity (deficit)								(27,690	)		251,690
Total liabilities, mezzanine equity and shareholders’ equity (deficit)							$	1,283,794		$	1,311,867

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

Nine Months Ended September 30,	2019			2018
							Three Months Ended
							March 31, 2020			March 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,589		$	17,789
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(190,082	)	$	1,950
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		77,500			71,932			24,392			23,331
Income tax, non-cash changes		(3,472	)		4,422			(5,849	)		(1,719	)
Impairment of goodwill and indefinite-lived intangibles								193,641			—
Stock-based compensation		3,695			2,960			(653	)		504
Amortization of debt issuance costs		3,681			2,899			1,385			953
Other non-cash items		444			2,835			(3,600	)		2,291
Changes in operating assets and liabilities:
Accounts receivable		(30,464	)		2,755			(423	)		(31,270	)
Inventories		9,028			(21,997	)		(5,209	)		7,463
Other assets and liabilities		20,313			(11,462	)		2,897			9,680
Accounts payable		11,176			(8,575	)		16,904			5,287
Income taxes		7,861			782			(2,090	)		10,221
NET CASH PROVIDED BY OPERATING ACTIVITIES		102,351			64,340			31,313			28,691
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment		(47,584	)		(55,466	)		(13,865	)		(13,392	)
Other investing activities		9,631			-			—			1,461
NET CASH USED IN INVESTING ACTIVITIES		(37,953	)		(55,466	)		(13,865	)		(11,931	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt repayment		(35,015	)		(5,390	)
Proceeds from issuance of long-term debt								11,690			—
Repayments of debt								(22,600	)		(1,000	)
Cash dividends paid		(19,171	)		(21,680	)		(3,392	)		(6,128	)
Purchase of non-controlling redeemable shares		(3,888	)		(33,421	)		(4,190	)		(1,411	)
Payments related to tax withholdings for stock-based compensation		(108	)		(606	)		—			(108	)
Proceeds from the exercise of stock options		-			68
Proceeds from borrowings on revolving credit facility		69,600			234,700			213,825			25,000
Repayments of borrowings on revolving credit facility		(69,600	)		(216,100	)		(5,992	)		(25,000	)
Other financing activities		(1,035	)		-			(292	)		—
NET CASH USED IN FINANCING ACTIVITIES		(59,217	)		(42,429	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES								189,049			(8,647	)
Effect of exchange rate changes on cash		(3,337	)		(1,321	)		(2,261	)		(1,938	)
Net increase (decrease) in cash and cash equivalents		1,844			(34,876	)
Net increase in cash and cash equivalents								204,236			6,175
Cash and cash equivalents at the beginning of the period		47,464			46,360			77,927			47,464
Cash and cash equivalents at the end of the period	$	49,308		$	11,484		$	282,163		$	53,639

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

(Unaudited)

Common Stock

Accumulated Other Comprehensive (Loss)
Income

Number of
Shares

Amount

Unrecognized
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

Net income

—

—

—

—

—

17,789

—

17,789

Change in unrecognized gains (losses) on derivative
   instruments, net of tax

—

—

13,444

—

—

—

—

13,444

Change in employee benefit plans, net of taxes

—

—

—

255

—

—

—

255

Net foreign currency translation adjustment

—

—

—

—

(10,016
)

—

—

(10,016
)
Stock options exercised

4,500

68

—

—

—

—

—

68

Common stock issued, net of shares withheld for
   employee taxes

97,712

—

—

—

—

—

—

—

Stock-based compensation

—

2,355

—

—

—

—

—

2,355

Cash dividends declared ($0.09 per common share)

—

—

—

—

—

(7,101
)

—

(7,101
)
Redeemable preferred dividend (9% per
   preferred share and $0.09 per common
   share equivalent) and accretion

—

—

—

—

—

(24,499
)

—

(24,499
)
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

—

—

—

—

—

(1,342
)

—

(1,342
)
BALANCE AT SEPTEMBER 30, 2018

25,019,237

$
88,553

$
4,946

$
(5,002
)

$
(85,382
)

$
377,993

$
—

$
381,108

(Unaudited)	Common Stock				Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount		Unrecognized 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		—		—		—			—			—			1,950			1,950
Change in unrecognized gains/losses on derivative instruments, net of tax		—		—		4,926			—			—			—			4,926
Change in employee benefit plans, net of taxes		—		—		—			41			—			—			41
Net foreign currency translation adjustment		—		—		—			—			(7,349	)		—			(7,349	)
Common stock issued, net of shares withheld for employee taxes		54,123		—		—			—			—			—			—
Stock-based compensation		—		396		—			—			—			—			396
Cash dividend declared ($0.09 per common share)		—		—		—			—			—			(2,323	)		(2,323	)
Redeemable preferred dividend and accretion		—		—		—			—			—			(7,771	)		(7,771	)
European non-controlling redeemable equity dividend		—		—		—			—			—			(121	)		(121	)
BALANCE AT MARCH 31, 2019		25,073,360	$	88,119	$	1,721		$	(2,959	)	$	(106,639	)	$	382,772		$	363,014

(Unaudited)

Common Stock

Accumulated Other Comprehensive (Loss)
Income

Number of
Shares

Amount

Unrecognized
Gains (Losses)
on Derivative
Instruments

Pension
Obligations

Cumulative
Translation
Adjustment

Retained
Earnings

Non-controlling
Interest

Total

BALANCE AT JUNE 30, 2018

25,011,730

$
87,305

$
(12,577
)

$
(5,126
)

$
(89,695
)

$
389,465

$
—

$
369,372

Net income

—

—

—

—

—

(663
)

—

(663
)
Change in unrecognized gains (losses) on derivative
   instruments, net of tax

—

—

17,523

—

—

—

—

17,523

Change in employee benefit plans, net of taxes

—

—

—

124

—

—

—

124

Net foreign currency translation adjustment

—

—

—

—

4,313

—

—

4,313

Stock options exercised

—

—

—

—

—

—

—

—

Common stock issued, net of shares withheld for
   employee taxes

7,507

—

—

—

—

—

—

—

Stock-based compensation

—

1,248

—

—

—

—

—

1,248

Cash dividends declared ($0.09 per common share)

—

—

—

—

—

(2,256
)

—

(2,256
)
Redeemable preferred dividend (9% per
   preferred share and $0.09 per common
   share equivalent) and accretion

—

—

—

—

—

(8,295
)

—

(8,295
)
European non-controlling redeemable equity dividend

—

—

—

—

—

(258
)

—

(258
)
BALANCE AT SEPTEMBER 30, 2018

25,019,237

$
88,553

$
4,946

$
(5,002
)

$
(85,382
)

$
377,993

$
—

$
381,108

(Unaudited)

Common Stock

Accumulated Other Comprehensive (Loss)
Income

Number of
Shares

Amount

Unrecognized
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

Net income

—

—

—

—

—

2,589

2,589

Change in unrecognized gains (losses) on derivative
   instruments, net of tax

—

—

(1,520
)

—

—

—

(1,520
)
Change in employee benefit plans, net of taxes

—

—

—

122

—

—

122

Net foreign currency translation adjustment

—

—

—

—

(21,459
)

—

(21,459
)
Common stock issued, net of shares withheld for
   employee taxes

108,921

—

—

—

—

—

—

Stock-based compensation

—

3,587

—

—

—

—

3,587

Cash dividends declared ($0.09 per common share)

—

—

—

—

—

(4,597
)

(4,597
)
Redeemable preferred dividend (9% per
   preferred share and $0.09 per common
   share equivalent) and accretion

—

—

—

—

—

(23,275
)

(23,275
)
European non-controlling redeemable equity dividend

—

—

—

—

—

(496
)

(496
)
BALANCE AT SEPTEMBER 30, 2019

25,128,158

$
91,310

$
(4,725
)

$
(2,878
)

$
(120,749
)

$
365,258

$
328,216

(Unaudited)

Common Stock

Accumulated Other Comprehensive (Loss)
Income

Number of
Shares

Amount

Unrecognized
Gains (Losses)
on Derivative
Instruments

Pension
Obligations

Cumulative
Translation
Adjustment

Retained
Earnings

Total

BALANCE AT JUNE 30, 2019

25,114,598

$
89,532

$
3,577

$
(2,917
)

$
(98,606
)

$
379,604

$
371,190

Net income

—

—

—

—

—

(6,631
)

(6,631
)
Change in unrecognized gains (losses) on derivative
   instruments, net of tax

—

—

(8,302
)

—

—

—

(8,302
)
Change in employee benefit plans, net of taxes

—

—

—

39

—

—

39

Net foreign currency translation adjustment

—

—

—

—

(22,143
)

—

(22,143
)
Common stock issued, net of shares withheld for
   employee taxes

13,560

—

—

—

—

—

—

Stock-based compensation

—

1,778

—

—

—

—

1,778

Cash dividends declared ($0.09 per common share)

—

—

—

—

—

(15
)

(15
)
Redeemable preferred dividend (9% per
   preferred share) and accretion

—

—

—

—

—

(7,587
)

(7,587
)
European non-controlling redeemable equity dividend

—

—

—

—

—

(113
)

(113
)
BALANCE AT SEPTEMBER 30, 2019

25,128,158

$
91,310

$
(4,725
)

$
(2,878
)

$
(120,749
)

$
365,258

$
328,216

(Unaudited)	Common Stock					Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount			Unrecognized Gains (Losses) on Derivative Instruments			Pension Obligations			Cumulative Translation Adjustment			Retained Earnings			Total
BALANCE AT DECEMBER 31, 2019		25,128,158	$	93,331		$	9,951		$	(5,571	)	$	(104,458	)	$	258,437		$	251,690
Consolidated net loss		—		—			—			—			—			(190,082	)		(190,082	)
Change in unrecognized gains/losses on derivative instruments, net of tax		—		—			(45,297	)		—			—			—			(45,297	)
Change in employee benefit plans, net of taxes		—		—			—			55			—			—			55
Net foreign currency translation adjustment		—		—			—			—			(35,533	)		—			(35,533	)
Common stock issued, net of shares withheld for employee taxes		346,319		—			—			—			—			—			—
Stock-based compensation		—		(653	)		—			—			—			—			(653	)
Redeemable preferred dividend and accretion		—		—			—			—			—			(7,850	)		(7,850	)
European non-controlling redeemable equity dividend		—		—			—			—			—			(20	)		(20	)
BALANCE AT MARCH 31, 2020		25,474,477	$	92,678		$	(35,346	)	$	(5,516	)	$	(139,991	)	$	60,485		$	(27,690	)

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

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

Superior Industries International, Inc.’s (referred to herein as the ~~“Company”~~“Company,” “Superior,” or ~~“we,” “us”~~“we” and “our”) ~~designs~~principal business is the design and ~~manufactures~~manufacture of aluminum wheels for sale to original equipment manufacturers ~~(“OEMs”)~~(OEMs) in North America and Europe and aftermarket ~~customers.~~distributors in Europe. We employ approximately 8,400 employees, operating in eight manufacturing facilities in North America and Europe with a combined annual manufacturing capacity of approximately 20 million wheels. We are one of the largest suppliers ~~of cast~~to global OEMs and we believe we are the #1 European aluminum ~~wheels to the world’s leading automobile~~wheel aftermarket manufacturer and ~~light truck manufacturers, with manufacturing operations in the United States, Mexico, Germany and Poland.~~supplier. Our OEM aluminum wheels accounted for approximately 93 percent of our sales in the first quarter of 2020 and are primarily sold ~~primarily~~ for factory installation ~~as either standard equipment or optional equipment~~ on vehicle models manufactured by ~~BMW-Mini,~~BMW (including Mini), Daimler AG Company (Mercedes-Benz, AMG, Smart), FCA, Ford, GM, Honda, Jaguar-Land Rover, Mazda, Mitsubishi, Nissan, PSA, Renault, Subaru, Suzuki, Toyota, VW Group (Volkswagen, Audi, SEAT, Skoda, Porsche, Bentley) and Volvo. We also sell aluminum wheels to the European aftermarket under the brands ATS, RIAL, ALUTEC and ANZIO. North America and Europe represent the principal markets for our products, but we have a global presence and ~~influence with~~diversified customer base consisting of North American, European and Asian OEMs. We have determined that our North American and European operations should be treated as separate ~~operating~~reporting segments as further described in Note 5, “Business Segments.”

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the SEC’s requirements for quarterly reports on Form 10-Q and U.S. ~~GAAP~~Generally Accepted Accounting Principles (“GAAP”) and, in our opinion, contain all adjustments, of a normal and recurring nature, which are necessary for fair presentation of (i) the condensed consolidated statements of income (loss) ~~statements~~ for the ~~three and nine month~~three-month periods ended ~~September 30,~~March 31, 2020 and March 31, 2019, ~~and September 30, 2018,~~ (ii) the condensed consolidated statements of comprehensive income (loss) for the ~~three and nine month~~three-month periods ended ~~September 30,~~March 31, 2020 and March 31, 2019, ~~and September 30, 2018,~~ (iii) the condensed consolidated balance sheets at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, (iv) the condensed consolidated statements of cash flows for the ~~nine month~~three-month periods ended ~~September 30,~~March 31, 2020 and March 31, 2019, ~~and September 30, 2018,~~ and (v) the condensed consolidated statements of shareholders’ equity (deficit) for the ~~three and nine month~~three-month periods ended ~~September 30, 2019~~March 31, 2020 and ~~September 30, 2018.~~March 31, 2019. This Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and notes thereto filed with the Securities and Exchange Commission (“SEC”) in our ~~2018~~2019 Annual Report on Form 10-K.

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

Certain prior year amounts have been reclassified to conform with the current year presentation.

Cash paid for interest was ~~$28.2~~$6.0 million and ~~$28.6~~$6.6 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and March 31, 2019, ~~and 2018,~~ respectively. Net cash income taxes paid (refunded) was ~~$6.5~~ $4.4 million and ~~$3.6~~$(1.6) million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and March 31, 2019, ~~and 2018,~~ respectively. As of ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ $4.1 ~~15.8~~ million and $~~12.8~~$9.0 million, respectively, of equipment had been purchased but not yet paid ~~for~~ and iswas included in accounts payable ~~and accrued expenses~~ in our condensed consolidated balance sheets.

~~ASU 2016-02, Topic 842, “Leases.~~Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement.” Effective January 1, ~~2019, we~~2020, the Company adopted ASU ~~2016-02, ASC 842, “Leases,”~~2018-13 which allows companies to remove, modify and add certain disclosures related to fair value measurements. The adoption of this standard did not have a significant impact on the new lease accounting standard, using the optional transition approach. Adoption of the standard resulted in recognition of operating lease right-of-use (“ROU”) assets and lease liabilities of $18.2 million and $18.6 million, respectively, as well as a charge to eliminate previously deferred rent of $0.4 million, as of January 1, 2019. The ASU also requires lessees to disclose qualitative and quantitative information about leasing arrangements to enable a user of theCompany’s condensed consolidated financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. Under the optional transition approach, financial statements for prior periods have not been restated and the disclosures applicable under the previous standard will be included for those periods. In adopting the standard, the Company has adopted the package of practical expedients. As a consequence, the Company has not reassessed (1) whether existing or expired contracts contain leases under the new definition of a lease, (2) lease classification for expired or existing leases (finance vs. operating) and (3) whether previously capitalized initial direct costs qualify for capitalization under the new standard. In addition, the Company has also adopted an accounting policy to exclude leases of less than one year from capitalization.statement disclosures.

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

~~ASU 2017-04, “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 step 2 of the goodwill impairment test. As a result, entities should perform their annual or interim goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and recognize an impairment if the carrying amount exceeds the reporting unit’s fair value. ASU 2017-04 is effective for annual periods beginning after December 15, 2019 with early adoption permitted. The new standard should be applied prospectively. We will consider the merits of early adoption of the new standard, if relevant, when performing our annual impairment test in the fourth quarter.

ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” In June 2016, the ~~FASB~~Financial Accounting Standards Board (“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)~~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 plan~~As a smaller reporting company (as defined under SEC regulations), the Company is not required to adopt ASU 2016-13 on January 1, 2020. The Company does not expect that adoption will have any significant effect on our financial statements or disclosures because we generally do not incur any significant credit losses due to the ~~financial strength and credit worthiness of our customers.~~

~~ASU 2018-13, “Fair Value Measurement~~.” In August 2018, the FASB issued an ASU entitled “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement,” which is designed to improve the effectiveness of disclosures by removing, modifying and adding disclosures related to fair value measurements. ASU 2018-13 is effective fornew standard until fiscal years beginning after December ~~15, 2019, including interim periods within those fiscal years. The ASU allows for early adoption in any interim period after issuance of the update.~~ 31, 2022. We are evaluating the impact this ~~guidance~~new standard will have on our financial ~~statement~~statements and 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,”~~Plans” (ASU 2018-14), which is designed to improve the effectiveness of disclosures by removing and adding disclosures related to defined benefit plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020. ~~The new standard allows for early adoption in any year end after issuance of the update.~~ We are evaluating the impact this new standard will have on our financial statement disclosures.

~~Restatement for Reclassification of Certain Foreign Currency Translation Adjustments~~

~~Subsequent to the issuance~~ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the ~~September 30, 2018 interim~~Effects of Reference Rate Reform on Financial Reporting.” In March 2020, the FASB issued ASU 2020-04 entitled “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provides temporary optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial ~~statements,~~reporting. The relief provided by this guidance is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference the ~~Company identified~~London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform initiatives being undertaken in an ~~error related~~effort to ~~the classification of foreign currency translation adjustments associated with the European non-controlling redeemable equity within the June 30, 2018~~identify alternative reference rates that are more observable or transaction based and September 30, 2018 condensed consolidated statements of shareholders’ equity, condensed consolidated balance sheets, condensed consolidated income statements and condensed consolidated statements of comprehensive income. As a result, the amounts previously reported have been corrected as the Company has reclassified $0.03 million and $2.9 million of European non-controlling redeemable equity translation adjustments from retained earningsless susceptible to cumulative translation adjustment for the three and nine month periods ended September 30, 2018, respectively. In addition, the basic and diluted earnings (loss) per share amounts for the three and nine month periods ended September 30, 2018 have been corrected accordingly.manipulation. The ~~Company’s condensed consolidated statement of cash flows for the nine-month period ended September 30, 2018 was unaffected. Management evaluated the materiality~~optional amendments of this ~~misstatement from quantitative and qualitative perspectives and concluded it is not material to~~guidance are effective for all entities upon adoption. We are currently assessing the ~~prior periods.~~ impact of this update on our consolidated financial statements.

Three Months Ended

Nine Months Ended

September 30, 2018

September 30, 2018

As Previously Reported

Adjustment

As Restated

As Previously Reported

Adjustment

As Restated

Condensed Consolidated Income Statements
   and Note 12 Earnings per Share

Loss per share - Basic
$
(0.37
)

$
(0.37
)

$
(0.21
)

$
(0.11
)

$
(0.32
)
Loss per share - Diluted

(0.37
)

(0.37
)

(0.21
)

(0.11
)

(0.32
)

Condensed Consolidated Statements of
   Comprehensive Income (Loss)

Foreign currency translation gain (loss), net
   of tax
$
4,282

$
31

$
4,313

$
(12,898
)

$
2,882

$
(10,016
)
Other comprehensive income (loss), net of tax

21,929

31

21,960

801

2,882

3,683

Comprehensive income (loss)

21,266

31

21,297

18,590

2,882

21,472

Nine Months Ended

September 30, 2018

As Previously Reported

Adjustment

As Restated

Condensed Consolidated Statement of Shareholders' Equity

Cumulative Translation Adjustment:

Net foreign currency translation adjustment
$
(12,898
)

$
2,882

$
(10,016
)

Cumulative translation adjustment balance
   at September 30, 2018

(88,264
)

2,882

(85,382
)

Retained Earnings:

European non-controlling redeemable equity
   translation adjustment

2,882

(2,882
)

—

Retained earnings balance at September 30, 2018

380,875

(2,882
)

377,993

Total Shareholders' Equity:

Net foreign currency translation adjustment

(12,898
)

2,882

(10,016
)

European non-controlling redeemable equity
   translation adjustment

2,882

(2,882
)

—

Total shareholders' equity balance at September 30, 2018

381,108

381,108

In accordance with ASC 606, “Revenue from Contracts with Customers,” the Company disaggregates revenue from contracts with customers into our operating segments, North America and Europe. Revenues by segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 are summarized in Note 5, “Business Segments.”

The Company’s customer receivables and current and long-term contract liabilities balances as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are as follows (in thousands):

The Company 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 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 generally consist of cash, certificates of deposit and fixed deposits and money market funds with original maturities of three months or less. ~~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.~~

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 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 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 4, “Derivative Financial Instruments.”

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 $7.6 million. We also received $0.6 million for death benefit claims.

The following tables categorize items measured at fair value at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

			Fair Value Measurement at Reporting Date Using								Fair Value Measurement at Reporting Date Using
September 30, 2019			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2020											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
Money market fund investment									$	175,019	$	175,019	$	—	$	—
Derivative contracts	$	8,879	$	—	$	8,879	$	—		5,833		—		5,833		—
Total		8,879		—		8,879		—		180,852		175,019		5,833		—
Liabilities													.
Derivative contracts		14,856		—		14,856		—		61,705		—		61,705		—
Embedded derivative liability		3,457		—		—		3,457
Total	$	18,313	$	—	$	14,856	$	3,457	$	61,705	$	—	$	61,705	$	—

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 and 2018 in the 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, 2018 – September 30, 2019

(Dollars in thousands)

Beginning fair value - January 1, 2018

$
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

323

Ending fair value - September 30, 2019

$
3,457

			Fair Value Measurement at Reporting Date Using
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
Derivative contracts	$	21,973	$	—	$	21,973	$	—
Total		21,973		—		21,973		—
Liabilities
Derivative contracts		8,709		—		8,709		—
Total	$	8,709	$	—	$	8,709	$	—

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 input based on the U.S. GAAP fair value hierarchy). The estimated fair value, as well as the carrying value, of the Company’s debt instruments are shown below:

We use derivatives to partially offset our exposure to foreign currency, interest rate, aluminum and other commodity price 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. 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, interest rates, and aluminum or other 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 denominated in the Mexican Peso and Polish Zloty, respectively. We may hedge portions of our forecasted foreign currency exposure up to 48 months.

We record all derivatives in the condensed consolidated balance sheets at fair value. Our accounting treatment for these instruments is based on the hedge designation. Gains or losses on cash flow hedges that are designated as hedging instruments are recorded in accumulated other comprehensive income (loss) (“AOCI”) until the hedged item is recognized in earnings, at which point accumulated gains or losses will be recognized in 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. The Company has derivatives that are designated as hedging instruments as well as derivatives that ~~did~~do not qualify for designation as hedging instruments.

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 derivative liability. Separation of the 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 the redeemable 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 ($56.32) is significantly greater than the price at the date of issuance ($19.05), all of which led 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 (e.g. change of control, etc.) 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 the redemption event would accelerate the holder’s option to redeem the shares (refer to Note 10, “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 end with changes in fair value recorded in the change in fair value of redeemable preferred stock embedded derivative financial statement line item of the Company’s condensed consolidated income statements (refer to Note 3, “Fair Value Measurements”).

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 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 scenarios 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 U.S. Treasury zero coupon yield 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 September 30, 2019 are as follows: valuation scenario terms between 2.25 and 5.96 years, volatility of 68.0 percent, risk-free rate of 1.6 percent related to the respective assumed terms, a risky bond rate of 20.0 percent and no dividend yield.

The following tables display the fair value of derivatives by balance sheet line item at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

September 30, 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

$
3,537

$
4,205

$
1,557

$
3,695

Foreign exchange forward contracts not designated
   as hedging instruments

1,130

—

454

—

Aluminum forward contracts designated as hedging
   instruments

—

—

563

—

Natural gas forward contracts designated as hedging
   instruments

7

—

741

790

Interest rate swaps designated as hedging
   instruments

—

—

2,216

4,840

Embedded derivative liability

—

—

—

3,457

Total derivative financial instruments

$
4,674

$
4,205

$
5,531

$
12,782

	March 31, 2020
	Other Current Assets		Other Non-current Assets		Accrued Liabilities		Other Non-current Liabilities
(Dollars in thousands)
Foreign exchange forward contracts designated as hedging instruments	$	2,005	$	178	$	11,923	$	27,995
Foreign exchange forward contracts not designated as hedging instruments		3,313		—		7,979		—
Aluminum forward contracts designated as hedging instruments		—		—		1,225		—
Natural gas forward contracts designated as hedging instruments		142		195		615		403
Interest rate swap contracts designated as hedging instruments		—		—		4,784		6,781
Total derivative financial instruments	$	5,460	$	373	$	26,526	$	35,179

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 a hedging
   instrument

—

—

227

—

Natural gas forward contracts designated as hedging
   instruments

275

—

355

—

Interest rate swaps 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, 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
Total derivative financial instruments	$	9,145	$	12,828	$	4,357	$	4,352

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

September 30, 2019

December 31, 2018

Notional
U.S. Dollar
Amount

Fair
Value

Notional
U.S. Dollar
Amount

Fair
Value

(Dollars in thousands)

Foreign exchange forward contracts designated as
   hedging instruments

$
474,672

$
2,490

$
467,253

$
(3,251
)
Foreign exchange forward contracts not designated
   as hedging instruments

83,768

676

45,905

126

Aluminum forward contracts designated as hedging
   instruments

11,905

(563
)

10,810

(927
)
Cross currency swap not designated as a hedging
   instrument

—

—

12,151

(227
)
Natural gas forward contracts designated as hedging
   instruments

5,758

(1,524
)

2,165

(80
)
Interest rate swaps designated as hedging
   instruments

260,000

(7,056
)

90,000

(259
)
Total derivative financial instruments

$
836,103

$
(5,977
)

$
628,284

$
(4,618
)

	March 31, 2020					December 31, 2019
	Notional U.S. Dollar Amount		Fair Value			Notional U.S. Dollar Amount		Fair Value
(Dollars in thousands)
Foreign currency forward contracts designated as hedging instruments	$	448,494	$	(37,735	)	$	449,181	$	20,469
Foreign exchange forward contracts not designated as hedging instruments		83,102		(4,666	)		73,491		642
Aluminum forward contracts designated as hedges		10,657		(1,225	)		9,405		(67	)
Natural gas forward contracts designated as hedging instrument		6,478		(681	)		5,816		(1,951	)
Interest rate swap contracts designated as hedging instrument		235,000		(11,565	)		260,000		(5,829	)
Total derivative financial instruments	$	783,731	$	(55,872	)	$	797,893	$	13,264

Notional amounts are presented on a ~~gross~~net 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. 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 prices.

The following tables summarize the gain or loss recognized in AOCI ~~as of September 30,~~for the three months ended March 31, 2020 and 2019, ~~and 2018,~~ the amounts reclassified from AOCI into earnings and the amounts recognized directly into earnings for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:

The North American and European businesses represent separate operating segments in view of significantly different markets, customers and products in each of these regions. 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.

Service wheel and supplies inventory included in other non-current assets in the condensed consolidated balance sheets totaled ~~$7.9~~$9.5 million and ~~$8.9~~$10.6 million at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

Depreciation expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 was ~~$24.2~~$18.3 million and ~~$57.4~~$16.5 million, respectively. Depreciation expense for the three months ended September 30, 2019 included accelerated depreciation of $7.6 million related to excess equipment arising from the plan to reduce production at our Fayetteville, Arkansas manufacturing facility (refer to Note 20, “Restructuring”). Depreciation expense for the three and nine months ended September 30, 2018 was $17.1 million and $52.0 million, respectively.

~~Following is a summary~~At March 31, 2020, the impact of COVID-19 and uncertainty with respect to the economic effects of the ~~Company’s finite-lived~~pandemic has introduced significant volatility in the financial markets and is having a widespread adverse effect on the automotive industry, including reductions in both consumer demand and OEM automotive production. In response to the COVID-19 pandemic, our key customers temporarily closed nearly all their production facilities in Europe and North America (our primary markets) during the quarter ended March 31, 2020. As a result, we concluded that an interim test of our goodwill was required. More specifically, the Company concluded that the following events and circumstances, in the aggregate, indicated that it was more likely than not that the carrying value of our European reporting unit exceeded its fair value: (1) our European reporting unit’s carrying value was effectively set to fair value at December 31, 2019, due to the $102.2 million impairment charges to goodwill and indefinite-lived ~~intangible assets~~intangibles, (2) lower forecasted 2020 industry production volumes for Western and ~~goodwill as of September 30, 2019~~Central Europe, including those for our primary European customers, due to OEM shutdowns to mitigate COVID-19 spread and ~~December 31, 2018.~~

~~Amortization expense for these intangible assets was $6.6 million and $6.5 million for~~subsequent reduced production levels over the ~~quarters ended September 30, 2019 and 2018, respectively. Amortization for the first nine months~~remainder of the year, ~~was $20.1~~as compared to our prior production forecasts (including estimates used in our 2019 assessment) and (3) the volatility in financial

markets that has both increased European interest rates due to rising credit spreads and risk premiums and lowered median European automotive market multiples. Based on the results of our quantitative analysis, we recognized a non-cash goodwill impairment charge equal to the remaining goodwill balance of $182.6 million ~~and $19.9 million for September 30, 2019 and 2018, respectively. The anticipated annual amortization expense for these intangible assets is $25.0~~ ~~million for 2019 to 2021, $22.2~~ ~~million for 2022 and $20.2~~ ~~million for 2023.~~

~~The identification of potential impairment involves comparing our Europe reporting unit’s estimated~~since the carrying value exceeded the fair value of the European reporting unit by more than the amount of the goodwill balance at March 31, 2020. Additionally, we recognized a non-cash impairment charge of $11.0 million related to ~~its carrying value, including goodwill. In performing~~ our ~~valuation, we utilize~~aftermarket trade name indefinite-lived intangible asset which was primarily attributable to a further decline in forecasted aftermarket revenues and a decline in associated profitability. Total impairment charges of $193.6 million were recognized as a separate charge and included in income (loss) from operations.

business of the ~~Europe~~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 ~~the~~ comparable, publicly traded companies. ~~Our 2018 assessment of European goodwill indicated~~

At March 31, 2020, we determined that the ~~fair~~carrying value of the European reporting unit exceeded its ~~respective carrying~~fair value by ~~approximately $12.2 million, or approximately 2%~~an amount greater than the remaining goodwill balance. The decline in fair value was primarily due to significantly lower market multiples and increased discount rates, as well as further declines in forecasted industry production volumes in Western and Central Europe as a result of the COVID-19 pandemic and consequent economic instability. Forecasted revenues, EBITDA and cash flow for the European reporting unit also 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 12.0 percent and a long-term growth rate of 1.5 percent, as compared to 10.0 percent and 2.0 percent, respectively, used in the 2019 assessment. In determining the WACC, management considered the level of risk inherent in the cash flow projections and current market conditions, including the significant increase in credit spreads and systemic market and Company specific risk premiums. The decline in the fair value under the market approach is attributable to the decline in the average EBITDA market multiple (4.9X EBITDA in 2020, 5.7X EBITDA in 2019) and lower forecasted EBITDA, as compared to the 2019 assessment. The use of these unobservable inputs results in classification of the fair value estimate as a Level 3 measurement in the fair value hierarchy. 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.

Following is a summary of the Company’s finite-lived and indefinite-lived intangible assets and goodwill as of March 31, 2020 and December 31, 2019.

As of March 31, 2020	Gross Carrying Amount		Impairment			Accumulated Amortization			Currency Translation			Net Carrying Amount		Remaining Weighted Average Amortization Period
(Dollars in thousands)
Brand name	$	9,000	$	—		$	(5,219	)	$	49		$	3,830	3-4
Technology		15,000		—			(8,699	)		85			6,386	2-4
Customer relationships		167,000		—			(58,643	)		(593	)		107,764	4-9
Total finite		191,000		—			(72,561	)		(459	)		117,980
Trade names		14,000		(13,772	)		—			(228	)		—	Indefinite
Total intangibles	$	205,000	$	(13,772	)	$	(72,561	)	$	(687	)	$	117,980

As of 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

Amortization expense for these intangible assets was $6.1 million and $6.8 million for the quarters ended March 31, 2020 and 2019, respectively. The ~~identification and evaluation of potential triggering events in interim periods between~~anticipated annual ~~impairment assessments also involves considerable judgment.~~ ~~Recent analyst forecasts of automotive passenger car and light truck sales in Europe~~amortization expense for these intangible assets is $24.5 million for 2020 to 2021, $21.7 million for 2022 and $19.8 million for 2023 ~~are lower than previously issued forecasts. In addition, the Company’s closing stock price (which fluctuated higher~~ and lower than the December 31, 2018 stock price during the first two quarters) has ranged between a low of $2.41 and high of $3.74 during the third quarter with a price of $2.89 as of September 30, 2019, representing a 40 percent decline in market capitalization since December 31, 2018. While these factors may indicate a potential decline in the fair value of the European reporting unit, we do not have sufficient evidence to conclude that it is more likely than not that the carrying value of the European reporting unit exceeds its fair value. The Company plans to complete its long-term business planning in the fourth quarter of 2019. These financial projections are a key input into the quantitative impairment test of goodwill and indefinite-lived intangibles, which we plan to perform in the fourth quarter.2024.

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

	September 30, 2019 (Dollars in Thousands)									March 31, 2020 (Dollars in Thousands)
Debt Instrument	Total Debt		Debt Issuance Costs⁽¹⁾			Total Debt, Net			Weighted Average Interest Rate	Total Debt		Debt Issuance Costs ⁽¹⁾			Total Debt, Net			Weighted Average Interest Rate
Term Loan Facility	$	375,800	$	(10,953	)	$	364,847		6.1%	$	349,200	$	(9,054	)	$	340,146			5.0	%
6.00% Senior Notes due 2025		243,962		(5,810	)		238,152		6.0%		239,797		(5,162	)		234,635			6.0	%
Other		13,183		—			13,183		2.2%
Capital Leases		1,800		—			1,800		2.9%
Corporate Revolving Credit Facility											156,000		—			156,000			4.3	%
European CapEx Loans											24,271		—			24,271			2.2	%
European Revolving Credit Facility											51,926		—			51,926			1.6	%
Finance Leases											2,866		—			2,866			3.0	%
	$	634,745	$	(16,763	)		617,982			$	824,060	$	(14,216	)		809,844
Less: Current portion							(3,300	)								(56,853	)
Long-term debt						$	614,682								$	752,991

	December 31, 2018 (Dollars in Thousands)									December 31, 2019 (Dollars in Thousands)
Debt Instrument	Total Debt		Debt Issuance Costs ⁽¹⁾			Total Debt, Net			Weighted Average Interest Rate	Total Debt		Debt Issuance Costs ⁽¹⁾			Total Debt, Net			Weighted Average Interest Rate
Term Loan Facility	$	382,800	$	(13,078	)	$	369,722		6.3%	$	371,800	$	(10,192	)	$	361,608			5.7	%
6.00% Senior Notes due 2025		286,100		(7,366	)		278,734		6.0%		243,074		(5,408	)		237,666			6.0	%
Other		16,022		—			16,022		2.2%
European CapEx Loan											12,693		—			12,693			2.2	%
Finance Leases											3,068		—			3,068			2.9	%
	$	684,922	$	(20,444	)		664,478			$	630,635	$	(15,600	)		615,035
Less: Current portion							(3,052	)								(4,010	)
Long-term debt						$	661,426								$	611,025

On June 15, 2017, the Company issued ~~250.0~~€250.0 million ~~Euro~~ aggregate principal amount of 6.00% Senior Notes ~~(the “Notes”~~(“Notes”) due June 15, 2025. Interest on the Notes is payable semiannually, on June 15 and December 15. The Company may redeem the Notes, in

whole or in part, on or after June 15, 2020 at redemption prices of 103.000% and 101.500% 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% 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% 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% 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 second and third quarters of 2019, the Company opportunistically purchased Notes on the open market with face values of $22.4 million (20.0 million Euro) and $~~7.8 million (7.0 million Euro) for $19.4 million and $6.6 million, respectively. The associated carrying values of the Notes, net of allocable debt issuance costs, were $21.8 million and $7.6 million, respectively, resulting in net gains of $2.4 million and $1.0 million for the second and third quarters, respectively~~, which are included in other income~~.

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.

Subject to certain exceptions, the indenture governing the Notes contains restrictive covenants that, among other things, limit the ability of the Company 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% 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. As of ~~September 30, 2019,~~March 31, 2020, the Company was in compliance with all covenants under the indenture governing the Notes.

On March 22, 2017, the Company entered into a senior secured credit agreement ~~(the “Credit~~(“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~~(“Term Loan Facility”), which matures on May 23, 2024, and a $160.0 million revolving credit facility maturing on May 23, 2022 ~~(the “Revolving~~(“Revolving Credit Facility” and, together with the Term Loan Facility, the ~~“Senior~~USD Senior Secured Credit ~~Facilities”~~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, ~~with~~adjusted for statutory requirements, subject to a floor of ~~zero,~~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, with a floor of ~~1.00~~0.00 percent per annum, plus anthe applicable rate ~~of 3.50 percent~~ or (b) a base rate, with a floor of 0.00 percent, 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 anthe 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.~~rate. 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 ranging between 3.50 percent and 3.00 percent, currently 3.50 percent, base rate applicable rates between 2.50 percent and 2.00 percent, currently 2.50 percent and commitment fees between 0.50 percent and 0.25 percent, currently 0.50 percent. Commitment fees are included in our consolidated financial statements line, interest expense.

As of ~~September 30, 2019,~~March 31, 2020, the Company had repaid ~~$24.2~~$50.8 million under the Term Loan Facility resulting in a balance of ~~$375.8~~$349.2 million. ~~As of September 30, 2019,~~In addition, the Company had noborrowings outstanding ~~borrowings~~of $156.0 million under the Revolving Credit Facility, ~~and had~~ outstanding letters of credit of $3.6 million and available unused commitments under this facility of ~~$156.4 million.~~$0.4 million as of March 31, 2020.

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).

The ~~Senior Secured~~ Credit ~~Facilities contain~~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.~~affiliates, and, solely with respect to the Revolving Credit Facility, requires a Total Net Leverage Ratio (calculated as defined in the Credit Agreement) of not more than 4.5 to 1.0 as of each fiscal quarter-end when outstanding borrowings and undrawn letters of credit exceeding $20 million under the Revolving Credit Facility exceed 35% of the $160 million commitment amount.

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 Senior Secured Credit Facilities during an event of default. As of ~~September 30, 2019,~~March 31, 2020, the Company was in compliance with all covenants under the Credit Agreement.

In connection with the acquisition of Uniwheels, AG, the Company assumed $70.7 million of outstanding debt. At ~~September 30, 2019, $13.2~~March 31, 2020, $12.6 million of the assumed debt remained outstanding ~~of which $3.0 million was classified as current. The outstanding debt is related to equipment~~ and bears interest at 2.2 percent.

During the second quarter of 2019, the Company amended its European ~~revolving credit facility (the “European~~Revolving Credit ~~Facility”~~Facility (“EUR SSCF”), increasing the available borrowing limit from ~~30.0~~€30.0 million ~~Euro~~ to ~~45.0~~€45.0 million ~~Euro~~ and extending the term to May 22, 2022. On January 31, 2020, the available borrowing limit of the EUR SSCF was increased from €45.0 million to €60.0 million. All other terms of the EUR SSCF remained unchanged. At ~~September 30, 2019, there was 44.6~~March 31, 2020, the Company had borrowings outstanding of $51.9 million ~~Euro~~(€47 million), outstanding letters of credit of $0.4 million (€0.4 million) and available ~~funds~~unused commitments under ~~the European Credit Facility.~~this facility of $13.9 million (€12.6 million). The ~~credit facility~~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. 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 ~~European Credit Facility.~~EUR SSCF.

The ~~European Credit Facility~~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 ~~September 30, 2019,~~March 31, 2020, Superior Europe AG was in compliance with all covenants under the ~~European Credit Facility.~~EUR SSCF.

During the fourth quarter of 2019, the Company entered into new equipment loan agreements totaling $13.4 million (€12.0 million) which bear interest at 2.3 percent and mature on September 30, 2027. Interest and principal repayments are due quarterly. The funds are used to finance costs incurred to acquire 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 covenants that, among other things, include a material adverse change default provision pursuant to which the lender could accelerate the loan maturity, as well as a provision that restricts 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. As of March 31, 2020, the Company has drawn $11.7 million (€10.6 million) under the equipment loans. Quarterly installment payments of $473 thousand (€427.7 thousand) under the loan agreements will begin in December of 2020. At March 31, 2020, the Company was in compliance with all covenants under the loans.

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 4, “Derivative Financial Instruments”).~~liability.

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 has 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 stock).

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 is 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 ~~September 30, 2019~~March 31, 2020 is ~~$21.3~~$29.9 million resulting in an adjusted redeemable preferred stock balance of ~~$156.7~~$165.4 million.

On May 30, 2017, the Company acquired 92.3 percent of the outstanding shares of Uniwheels, Inc. Subsequently, the Company commenced a delisting and associated tender offer for the remaining shares. On January 17, 2018, the Company entered into a Domination and Profit and Loss Transfer agreement (“DPLTA”) retroactively effective as of January 1, 2018 pursuant to which we offered to purchase the remaining outstanding shares at ~~Euro 62.18.~~€62.18. This price may be subject to change based on appraisal proceedings initiated by the minority shareholders which have not yet been concluded. The Company must also pay an annual dividend of ~~Euro 3.23~~€3.23 as long as the DPLTA is in effect. For any shares tendered prior to the annual dividend payment, we must pay interest at a statutory rate, currently 4.12 percent, in place of the dividend. 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. As a result of purchases pursuant to the tender offer and the DPLTA, the Company has increased its ownership to ~~98.9~~99.8 percent as of ~~September 30, 2019.~~March 31, 2020. In addition, the carrying value of the non-controlling interests must be adjusted to redemption value since they are currently redeemable. The following table summarizes the European non-controlling redeemable equity activity ~~for~~through the ~~twenty-one months~~period ended ~~September 30, 2019~~March 31, 2020 (in thousands):

Basic earnings per share is computed by dividing net income (loss) attributable to Superior, after deducting preferred dividends and accretion and European non-controlling redeemable equity dividends, 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 10, “Redeemable Preferred Stock” are not included in the diluted earnings per share because the conversion would be anti-dilutive for the three-month periods ended ~~September 30, 2019~~March 31, 2020 and ~~September 30, 2018.~~March 31, 2019.

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018			March 31, 2020			March 31, 2019
(Dollars in thousands, except per share amounts)
Basic Earnings Per Share:
Reported net income	$	(6,631	)	$	(663	)	$	2,589		$	17,789
Reported net income (loss) attributable to Superior													$	(190,082	)	$	1,950
Less: Redeemable preferred stock dividends and accretion		(7,587	)		(8,295	)		(23,275	)		(24,499	)		(7,850	)		(7,771	)
Less: European non-controlling redeemable equity dividend		(113	)		(258	)		(496	)		(1,342	)		(20	)		(121	)
Basic numerator	$	(14,331	)	$	(9,216	)	$	(21,182	)	$	(8,052	)	$	(197,952	)	$	(5,942	)
Basic (loss) earnings per share	$	(0.57	)	$	(0.37	)	$	(0.84	)	$	(0.32	)
Weighted average shares outstanding-Basic		25,127			25,017			25,089			24,985
Basic loss per share													$	(7.84	)	$	(0.24	)
Weighted average shares outstanding - Basic														25,243			25,034
Diluted Earnings Per Share:
Reported net income	$	(6,631	)	$	(663	)	$	2,589		$	17,789
Reported net income (loss) attributable to Superior													$	(190,082	)	$	1,950
Less: Redeemable preferred stock dividends and accretion		(7,587	)		(8,295	)		(23,275	)		(24,499	)		(7,850	)		(7,771	)
Less: European non-controlling redeemable equity dividend		(113	)		(258	)		(496	)		(1,342	)		(20	)		(121	)
Diluted numerator	$	(14,331	)	$	(9,216	)	$	(21,182	)	$	(8,052	)	$	(197,952	)	$	(5,942	)
Diluted (loss) earnings per share	$	(0.57	)	$	(0.37	)	$	(0.84	)	$	(0.32	)
Weighted average shares outstanding-Basic		25,127			25,017			25,089			24,985
Diluted loss per share													$	(7.84	)	$	(0.24	)
Weighted average shares outstanding - Basic														25,243			25,034
Dilutive effect of common share equivalents		—			—			—			—			—			—
Weighted average shares outstanding-Diluted		25,127			25,017			25,089			24,985
Weighted average shares outstanding - Diluted														25,243			25,034

The estimated annual effective tax rate is forecasted quarterly using actual historical information and forward-looking estimates and applied to year-to-date ordinary income. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances, settlements with taxing authorities and effects of changes in tax laws or rates, are reported in the interim period in which they occur.

The income tax benefit for the three months ended ~~September 30, 2019,~~March 31, 2020, was ~~$4.8~~$3.5 million on pre-tax loss of $193.5 million, resulting in an effective income tax rate of a ~~41.9~~1.8 percent. The effective tax rate was lower than the statutory rate primarily due to the mix of earnings among tax jurisdictions, recognition of a valuation allowance on non-deductible interest and the impairment of goodwill for which there is no corresponding tax benefit.

The income tax provision for the ~~nine~~three months ended ~~September 30,~~March 31, 2019, was ~~$7.7~~$4.9 million on pre-tax income of $6.9 million, resulting in an effective income tax rate of ~~and 75.0 percent for nine months.~~71.7%. The effective tax rate was higher than the statutory rate primarily due to the ~~United States (U.S.)~~US taxation of foreign earnings under the Global Intangible Low-Tax Income (“GILTI”) provisions, ~~of the Act,~~ and the recognition of a valuation allowance on ~~forecasted~~ non-deductible interest, offset with a benefit due to the mix of earnings among tax jurisdictions.

The income tax provision for the nine months ended September 30, 2018 was $1.1 million resulting in an effective income tax rate of 5.9 percent. The effective tax rate was lower than the statutory rate primarily due to earnings in countries with tax rates lower than the U.S. statutory rate, offset in part by U.S. taxation of foreign earnings under the GILTI provisions of the Act. The income tax benefit for the three months ended September 30, 2018 was $7.1 million resulting in an effective tax rate of 91.4 percent. The effective tax rate was a benefit primarily due to a revision to the estimated U.S. tax on foreign earnings under the GILTI provisions of the Act.

At September 30, 2019, the Company remains indefinitely reinvested with respect to its initial investment and any associated potential withholding tax on earnings of its non-U.S. subsidiaries subject to the transition tax, as well as with respect to future earnings that will primarily fund the operations of the subsidiaries.

Effective January 1, 2019, we adopted ASU 2016-02, ASC 842, “Leases,” the new lease accounting standard, using the optional transition approach resulting in recognition of operating lease right-of-use (“ROU”) assets and lease liabilities of $18.2 million and $18.6 million, respectively, as well as a charge to eliminate previously deferred rent of $0.4 million.

The Company determines whether an arrangement is or contains a lease at the inception of the arrangement. Operating leases are included in other non-current assets, accrued expenses and other non-current liabilities in our condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, net, short-term debt and long-term debt (less current portion) in our condensed consolidated balance sheets.

~~ROU~~Right-of-use (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 operating leases is recognized on a straight-line basis over the term of the lease. Certain of our leases contain both lease and non-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 our 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 which have been excluded from the term of the lease since exercise of these options is not reasonably certain.

Lease expense and cash flow for the three months ended March 31, 2020 and 2019 and operating and finance lease assets and liabilities, average lease term and average discount rate as of March 31, 2020 and December 31, 2019 are as follows:

	September 30, 2019					Three Months Ended
	Three Months Ended			Nine Months Ended		March 31, 2020			March 31, 2019
Lease Expense
Finance lease expense:
Amortization of right-of-use assets	$	548		$	1,551	$	354		$	516
Interest on lease liabilities		34			65		22			14
Operating lease expense		846			2,560		845			853
Total lease expense	$	1,428		$	4,176	$	1,221		$	1,383

Cash Flow Components
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from finance leases	$	34		$	65	$	22		$	14
Operating cash outflows from operating leases		821			2,484	$	891		$	828
Financing cash outflows from finance leases		381			1,035	$	292		$	325
Right-of-use assets obtained in exchange for new finance lease liabilities, net of terminations and disposals		1,292			1,803	$	148		$	556
Right-of-use assets obtained in exchange for operating lease liabilities (including adoption impact of $18.2 million) net of terminations and disposals		12			18,353	$	65		$	18,285


	September 30, 2019					March 31, 2020			December 31, 2019
Balance Sheet Information
Operating leases:
Other non-current assets	$	15,079				$	14,417		$	15,201
Accrued liabilities	$	(2,694	)			$	(2,888	)	$	(2,949	)
Other non-current liabilities		(13,508	)				(12,363	)		(13,282	)
Total operating lease liabilities	$	(16,202	)			$	(15,251	)	$	(16,231	)

Finance leases:
Property and equipment gross	$	4,109				$	4,949		$	4,821
Accumulated depreciation		(1,677	)				(2,472	)		(2,118	)
Property and equipment, net	$	2,432				$	2,477		$	2,703
Current portion of long-term debt	$	(328	)			$	(998	)	$	(1,023	)
Long-term debt		(1,472	)				(1,868	)		(2,045	)
Total finance lease liabilities	$	(1,800	)			$	(2,866	)	$	(3,068	)

Lease Term and Discount Rates
Weighted-average remaining lease term - finance leases (years)	4.4						4.1			4.1
Weighted-average remaining lease term - operating leases (years)	6.7						6.4			6.4
Weighted-average discount rate - finance leases		2.9	%				3.0	%		2.9	%
Weighted-average discount rate - operating leases		4.0	%				3.9	%		3.9	%

Summarized future minimum payments under our leases as of March 31, 2020 are as follows:

	September 30,
	2019						March 31, 2020
	Finance Leases			Operating Leases			Finance Leases			Operating Leases
Lease Maturities (in thousands)
Three remaining months of 2019	$	247		$	835
2020		824			3,227
Nine remaining months of 2020							$	951		$	2,728
2021		560			2,823			926			2,987
2022		224			2,409			528			2,461
2023		5			2,140			126			2,122
2024								120			2,008
Thereafter		—			6,859			428			4,885
Total		1,860			18,293			3,079			17,191
Less: Imputed Interest		(60	)		(2,091	)		(213	)		(1,940	)
Total lease liabilities, net of interest	$	1,800		$	16,202		$	2,866		$	15,251

	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

~~The 2018 disclosure includes certain non-lease components that have been excluded from our ASC 842 accounting and disclosures for 2019.~~

We have an unfunded salary continuation plan covering certain directors, officers and other key members of management. Subject to certain vesting requirements, the plan provides for a benefit based on final average compensation, which becomes payable on the employee’s death or upon attaining age 65, if retired. The plan was closed to new participants effective February 3, 2011. We purchased 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 Company’s condensed consolidated balance sheets at December 31, 2018. In the second quarter of 2019, we terminated our life insurance policies in exchange for the cash surrender value of $7.6 million. We also received $0.6 million for death benefit claims.

For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, payments to retirees or their beneficiaries totaled approximately ~~$1.0~~$0.4 million. We presently anticipate benefit payments in ~~2019~~2020 to total approximately ~~$1.4~~$1.3 million. The following table summarizes the components of net periodic pension cost for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019.

Our 2018 Equity Incentive Plan (the “Plan”) was approved by stockholders in May 2018. The Plan authorizes us to issue up to 4.35 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 ~~September 30, 2019,~~March 31, 2020, there were ~~1.6~~0.2 million shares available for future grants under this Plan. No more than 1.2 million shares may be used under the Plan as “full value” awards, which include restricted stock and performance units. It is our policy to issue shares from authorized but not issued shares upon the exercise of stock options.

Under the terms of the Plan, each year eligible participants are granted time value restricted stock units (“RSUs”), vesting ratably over a three-year period, and performance restricted stock units (“PSUs”), with three-year cliff vesting. Upon vesting, each restricted stock award is exchangeable for one share of the Company’s common stock, with accrued dividends.

On May 16, 2019 the Company granted the following equity awards to our new President and Chief Executive Officer in connection with the 2019 Inducement Grant Plan (the “Inducement Plan”): (i) an initial award consisting of (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 (b) 333,333 RSUs, vesting in approximately equal installments on February 28, 2020, 2021 and 2022; (ii) a 2019-2021 PSU grant, with the target 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 earned at up to 200% of target depending on the level of achievement of the performance metrics.

~~Stock-based~~Restricted stock unit and restricted performance stock unit activity for the three months ended March 31, 2020 is summarized in the following table:

	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, 2019		1,047,256		$	5.39		1,548,793		$	7.17		50,250		$	18.86
Granted		474,317			3.26		948,636			3.25		—			—
Settled		(284,270	)		6.22		(245,713	)		5.05		—			—
Forfeited or expired		(7,776	)		4.78		(44,827	)		20.95		(10,000	)		17.45
Balance at March 31, 2020		1,229,527		$	4.38		2,206,889		$	5.33		40,250		$	19.21

Vested or expected to vest at March 31, 2020		940,277		$	4.57		207,184		$	10.72		27,465		$	19.34

For the first quarter of 2020, stock-based compensation income was $0.2 million, as compared to expense ~~was $1.8 million and~~for the first quarter of 2019 of $0.5 million. The year-over-year reduction in expense, is due to the reduction of our estimates regarding the achievement of the performance metrics for certain PSU awards, to zero, in light of the COVID-19 global pandemic. This change in estimate resulted in a reversal of $1.2 million for the three-month period ended September 30, 2019 and 2018, respectively. Stock-based compensation expense was $3.7 million and $2.9 million for the nine-month period ended September 30, 2019 and 2018, respectively.of previously accrued expenses. Unrecognized stock-based compensation expense related to non-vested awards of ~~$9.3~~$5.2 million is expected to be recognized over a weighted average period of approximately ~~1.9~~2.2 years as of ~~September 30, 2019.~~March 31, 2020.

In January 2016, our Board of Directors approved a common stock repurchase program (the “Repurchase Program”), authorizing the repurchase of up to $50.0 million of our common stock. Under the Repurchase Program we have purchased $15.4 million, leaving a remaining authorization of $34.6 million, which we may repurchase from time to time on the open market or in private transactions. The timing and extent of the repurchases under the Repurchase Program will depend upon market conditions and other corporate considerations in our sole discretion. There were no repurchases under this program for the nine months ended September 30, 2019.

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. Prices 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,~~commitments; however, any excess commitments are generally negotiated with suppliers and those which have occurred in the past have been carried over to future periods.

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 ~~nine~~three months ended ~~September 30,~~March 31, 2020 and March 31, 2019, the Company sold trade receivables totaling ~~$272.4~~$69.9 million and ~~incurred factoring fees of $0.8~~$111.7 million, ~~which are included in other expense, net. During the third quarter of 2019, the Company sold trade receivables totaling $80.6 million~~respectively, and incurred factoring fees of $0.2 ~~million.~~million and $0.4 million, respectively. As of March 31, 2020 and December 31, 2019, $55.3 million and $49.6 million, respectively, of receivables had been factored under the arrangements. The collective limit under our factoring arrangements ~~is $116.3~~as of March 31, 2020 was $116.7 million, ~~at any point in time. As~~while the collective limit under our factoring arrangements as of ~~September 30,~~December 31, 2019 ~~$56.6 million of receivables had been factored under the arrangements.~~was $117.3 million.

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. ~~Relocation~~In addition, relocation costs for redeployment of machinery and equipment ~~will be~~of $1.8 million were recognized in ~~cost~~the fourth quarter of ~~sales as~~2019. During the three months ended March 31, 2020, we recognized additional relocation costs for redeployment of machinery and equipment of $0.7 million. Additional relocation costs are expected to be incurred over the next ~~12-18~~nine months. As of March 31, 2020, $0.7 million of the restructuring severance accrual remains.

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. In Europe and North America (our primary markets), federal, state and local governments have either recommended or mandated actions to slow the transmission of COVID-19. Most U.S. states and most countries have implemented shelter-in-place orders, quarantines, significant restrictions on travel, as well as work restrictions that prohibit non-essential employees from going to work. Borders between countries have been closed to contain the spread of COVID-19 contagion. We are complying with these government restrictions to reduce the transmission of COVID-19.

The impact of COVID-19 developments and uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets and is having a widespread adverse effect on the automotive industry, including reductions in consumer demand and OEM automotive production. While the full extent of the impact is unknown and the current situation is evolving rapidly, our key customers temporarily closed nearly all of their production facilities in Europe and North America during the quarter ended March 31, 2020.

While navigating through this period of volatility and uncertainty, Superior’s top priorities are:

Consistent with these priorities, to ensure the health and safety of our employees globally and respond to the current industry production environment, we began closing production at our European facilities in late March 2020. In North America, our manufacturing operations ceased production in early April 2020. Production remained suspended at the majority of our global facilities for the month of April 2020. As of May 8, 2020, most OEMs’ facilities in Europe have reopened and many of the facilities in North America are expected to open throughout May. Superior has reopened three of its four facilities in Europe and expects to reopen the fourth in June based on demand and in line with identified safety precautions. In North America, the Company anticipates reopening its facilities in line with production demand, finished goods levels, and in accordance with local government requirements.

Superior has developed a Safe Work Playbook for implementation at all global facilities prior to employees returning to work. We have also instituted a Global Employee Health & Safety (“EH&S”) Steering Team, led by our Director of EH&S, and comprised of our global and regional leaders from Operations and Human Resources. The purpose of the EH&S Steering Team is to ensure the Safe Work Playbook leverages global best practices and to ensure the consistent and complete implementation of the policies across our global footprint, including all policies and protocols in compliance with local rules and regulations. We have invested in facility updates to ensure social distancing, including changes in cafeteria layout and practices, transportation services and marked spacing throughout our manufacturing facilities. Formalized protocols have been implemented to measure employee temperatures prior to entering any Superior work environment to proactively identify potential COVID-19 symptoms. Formalized protocols and checklists will be used to ensure deep cleaning of equipment between plant shifts. Company-provided employee transportation vehicles will be sanitized after every route, with limited seating to ensure spacing between employees. Finally, we have established Personal Protective Equipment (“PPE”) levels for each location, based on local requirements, and the purchasing controls are in place to ensure adequate supplies. In the event of a COVID-19 incident, the local COVID-19 response team will immediately execute the defined protocols, including isolation of any employee showing symptoms, and conduct traceability activities to identify and quarantine all potentially exposed individuals. The duration of these actions will be dependent on how the COVID-19 situation evolves in each of our locations.

As a result of the onset of the COVID 19 pandemic and the ensuing economic uncertainty, in March 2020 we have drawn $156.0 million on our U.S. Revolving Credit Facility. Additionally, we drew on our European Revolving Credit Facility. The outstanding balance on our European Revolving Credit Facility was $51.9 million (or €47 million) as of March 31, 2020. To maintain and enhance our liquidity (totaling $296.5 million, including cash on-hand $282.2 million at March 31, 2020) during our customers’ announced shutdown periods, we have:

To further bolster our liquidity position, we are applying for various COVID-19 related subsidies, tax benefits and low-interest rate loans available to us.

On May 5, 2020, we entered into a Nomination Withdrawal Agreement (the “Agreement”) with D.C. Capital Partners, L.P., a Delaware limited partnership (“D.C. Capital”) that contemplates the appointment of Raynard D. Benvenuti to our Board of Directors immediately following our 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”), but no later than July 10, 2020.

Pursuant to the Agreement, D.C. Capital agreed to irrevocably withdraw its notice of nomination previously provided to us notifying us as to D.C. Capital’s nomination of Mr. Benvenuti for election to our Board of Directors at the 2020 Annual Meeting. D.C. Capital and its affiliates also agreed, in pertinent part, that (i) it will not submit any director nominations, stockholder proposals, and/or other business in connection with the 2020 Annual Meeting, and (ii) subject to certain conditions, would cause all of its shares of the Company’s common stock beneficially owned, directly or indirectly, by it and/or its affiliates to be present at the 2020 Annual Meeting for quorum purposes and to vote such shares (A) in favor of the director nominees recommended by our Board of Directors, and (B) against any nominees to serve on the Board that have not been recommended by our Board of Directors.

Under the terms of the Agreement, we agreed to reimburse D.C. Capital for its reasonable and documented fees and expenses incurred in connection with the matters related to the preparation of D.C. Capital’s nomination process and related correspondence with the Company, D.C. Capital’s engagement with the Company, and the preparation of the Agreement in an amount not to exceed, in the aggregate, $75,000.

On May 6, 2020, the Company was informed by GAMCO Asset Management Inc. (“GAMCO”) that it had irrevocably withdrawn its notice of nomination dated January 23, 2020, notifying the Company as to GAMCO’s nomination of Walter M. Schenker for election to the Board at the 2020 Annual Meeting, and, accordingly, its nomination of Mr. Schenker for election to the Board at the 2020 Annual Meeting.

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

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. We have included or incorporated by reference in this Quarterly Report on Form 10-Q (including in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) and from time to time our management may make statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Act of 1934. These forward-looking statements are based upon management’s current expectations, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, the impact of COVID-19 on our future business, results, operation and prospects, anticipated future performance (including sales and earnings), expected growth, future business plans and costs and potential liability for environmental-related matters. Any statement that is not historical in nature is a forward-looking statement and may be identified using words and phrases such as “expects,” “anticipates,” “believes,” “will,” “will likely result,” “will continue,” “plans to” and similar expressions. These statements include our belief regarding general automotive industry and market conditions and growth rates, as well as general domestic and international economic conditions.

Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the company, which could cause actual results to differ materially from such statements and from the company’s historical results and experience. These risks, uncertainties and other factors include, but are not limited to, those described in Part I—Item 1A—“Risk Factors” and Part II—Item 7—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, and Part I—Item 2—“Management’s Discussion and Analysis and Analysis of Financial Condition and Results of Operations” of this Quarterly Report ofon Form 10-Q, and elsewhere in the Quarterly Report and those described from time to time in our other reports filed with the Securities and Exchange Commission.

Readers are cautioned that it is not possible to predict or identify all the risks, uncertainties and other factors that may affect future results and that the risks described herein should not be considered to be a complete list. Any forward-looking statement speaks only as of the date on which such statement is made, and the company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto and with the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

~~Our~~Superior Industries International, Inc.’s (referred herein as the “Company,” “Superior,” or “we” and “our”) principal business is the design and manufacture of aluminum wheels for sale to original equipment manufacturers ~~(“OEM”)~~(OEMs) in North America and Europe and aftermarket distributors in Europe. We employ approximately ~~8,000~~8,400 employees, operating ~~nine~~in eight manufacturing facilities in North America and Europe with a combined annual manufacturing capacity of approximately 2120 million wheels. We are one of the largest suppliers to global OEMs and we believe ~~that~~ we are the #1 European aluminum wheel aftermarket manufacturer and supplier. Our OEM aluminum wheels ~~account~~accounted for approximately ~~92%~~93 percent of our sales in the first quarter of 2020 and are primarily sold for factory installation on ~~many~~ vehicle models manufactured by ~~BMW-Mini,~~BMW (including Mini), Daimler AG Company (Mercedes-Benz, AMG, Smart), FCA, Ford, GM, Honda, Jaguar-Land Rover, Mazda, Mitsubishi, Nissan, PSA, Renault, Subaru, Suzuki, Toyota, VW Group (Volkswagen, Audi, SEAT, Skoda, Porsche, Bentley) and Volvo. We also sell aluminum wheels to the European aftermarket under the brands ATS, RIAL, ALUTEC and ANZIO. North America and Europe represent the principal markets for our products, but we have a global presence and diversified customer base consisting of North American, European and Asian OEMs. We continue to deliver on our strategic plan to be one of the leading light vehicle aluminum wheel suppliers globally, delivering innovative wheel solutions to our customers.

We expect that our size and capability will be favorably viewed by OEMs and our aftermarket customers when the measures taken to stop the spread of COVID-19 are reduced and OEMs resume manufacturing operations.

Our global reach encompasses sales to the ten largest OEMs in the world. The following chart shows our sales by customer for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019.

Demand for our products is primarily driven by ~~light-vehicle~~the production ~~levels~~of light-vehicles in North America and Europe and customer take rates on specific vehicle ~~platforms.~~platforms that we serve and wheel SKUs that we produce. The majority of our customers’ wheel programs are awarded two to four years in advance. Our purchase orders with OEMs are typically specific to a particular vehicle model.

In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. Since then, COVID-19 has spread to over 180 countries. On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. In the North America and Europe (our primary markets), federal, state and local governments have either recommended or mandated actions to slow the transmission of COVID-19. Most U.S. states and most countries have implemented shelter-in-place orders, quarantines, significant restrictions on travel, as well as work restrictions that prohibit non-essential employees from going to work. Borders between countries have been closed to contain the spread of COVID-19 contagion. We are complying with these government restrictions to reduce the transmission of COVID-19.

The impact of the COVID-19 developments and uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets and is having a widespread adverse effect on the automotive industry, including reductions in consumer demand and OEM automotive production. While the full extent of the impact is unknown and the current situation is evolving rapidly, our key customers temporarily closed nearly all of their production facilities in Europe and North America during the quarter ended March 31, 2020.

While navigating through this period of volatility and uncertainty, Superior’s top priorities are:

We are in continuous contact with our customers to understand their evolving plant-by-plant start-up timing, production ramp-up plans and expected weekly vehicle platform order volumes. Because of the complexity of the global automotive supply chain, significant uncertainty remains. However, upon our return to production in both regions, we reasonably expect we may incur manufacturing inefficiencies associated with operating our plants at less than maximum capacity as OEM requirements gradually rise over the remainder of 2020 and into 2021. Incremental costs may also occur due to increased scrap rates associated with producing smaller batch sizes and the costs associated with new measures to adequately protect our workers upon their return. While we strategically increased our product inventories in March in both regions to meet our customers’ eventual requirements, there is no guarantee what benefit, if any, these inventory builds will have as our customers’ ordering plans may change.

Based on recent production forecasts, industry volumes will be down approximately 60 to 70 percent in Europe and North America, respectively, in the second quarter of 2020 as compared to the second quarter of 2019. Additionally, full-year 2020 industry production volumes are forecasted to be down 25 percent as compared to the prior year, negatively impacting our year-over-year financial results and cash flows.

The ultimate impact that COVID-19 will have on our business, results of operations and financial condition will depend on a number of evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, OEMs, suppliers, customers and individuals’ actions that have been and continue to be taken in response to the pandemic; and the impact of the pandemic on economic activity and actions taken in response to such impact by the OEMs’ suppliers and customers. During the second quarter, we will actively balance working capital with customer demand, in order to maintain our current liquidity position (totaling $296.5 million, including cash on-hand of $282.2 million at March 31, 2020).

We will continue to obtain and assess all relevant available data, including customer orders and industry forecasts (and revisions) to manage our productive capacity as efficiently as possible.

The following charts show the operational performance in the quarter ended ~~September 30, 2019~~March 31, 2020 in comparison to ~~September 30, 2018.~~March 31, 2019 (in $ millions):

SALES AND PROFITABILITY FOR THE 3RD QUARTER OF 2019 AND 2018 ($ in millions) Sales for 3rd Quarter 2019 & 2018 $352.0 $347.6 2019 2019 Income from Operations 3rd Quarter 2019 & 2018$(0.2) $7.7 2019 218 Net Income & Adjusted EBITDA* for 3rd Quarter 2019 & 2018 Net Income Adjusted EBITDA $38.9 $30.6 $(6.6) 2019 2018 * See the Non-GAAP Financial Measures section of this quarterly report for a reconciliation of our Adjusted EBITDA to Net Income (Loss).

	Three Months Ended									Three Months Ended
	September 30, 2019			September 30, 2018			Net Change			March 31, 2020			March 31, 2019			Net Change
(Dollars in thousands, except per share data)
Net sales
North America	$	188,089		$	197,776		$	(9,687	)	$	155,551		$	185,116		$	(29,565	)
Europe		163,925			149,836			14,089			145,561			172,577			(27,016	)
Net sales		352,014			347,612			4,402			301,112			357,693			(56,581	)
Cost of sales		335,967			323,939			12,028			277,951			324,571			46,620
Gross profit		16,047			23,673			(7,626	)		23,161			33,122			(9,961	)
Percentage of net sales		4.6	%		6.8	%		(2.2	)%		7.7	%		9.3	%		(1.6	)%
Selling, general and administrative		16,290			15,985			(305	)		12,535			(14,483)			1,948
Impairment of goodwill and indefinite-lived intangibles											193,641			—			(193,641	)
Income (loss) from operations		(243	)		7,688			(7,931	)		(183,015	)		18,639			(201,654	)
Percentage of net sales		(0.1	)%		2.2	%		(2.3	)%		(60.8	)%		5.2	%		(66.0	)%
Interest expense, net		(11,807	)		(12,378	)		571			(11,850	)		(11,873	)		23
Other income (expense), net		1,676			(3,238	)		4,914
Change in fair value of redeemable preferred stock embedded derivative		(1,042	)		214			(1,256	)
Income tax benefit		4,785			7,051			(2,266	)
Net income (loss)	$	(6,631	)	$	(663	)	$	(5,968	)
Other income, net											1,323			127			1,196
Income tax benefit (provision)											3,460			(4,943	)		8,403
Net (loss) income										$	(190,082	)	$	1,950		$	(192,032	)
Percentage of net sales		(1.9	)%		(0.2	)%		(1.7	)%		(63.1	)%		0.5	%		(63.6	)%
Diluted loss per share	$	(0.57	)	$	(0.37	)	$	(0.20	)	$	(7.84	)	$	(0.24	)	$	(7.60	)
Value added sales (1)	$	195,451		$	179,101		$	16,350		$	170,091		$	192,802		$	(22,711	)
Adjusted EBITDA (2)	$	38,852		$	30,572		$	8,280		$	39,530		$	43,220		$	(3,690	)
Percentage of net sales		11.0	%		8.8	%		2.2	%		13.1	%		12.1	%		1.0	%
Percentage of value added sales		19.9	%		17.1	%		2.8	%		23.2	%		22.4	%		0.8	%
Unit shipments in thousands		4,851			4,734			117			4,307			5,039			(732	)

Wheel unit shipments were ~~4.9~~4.3 million for the ~~third~~first quarter of ~~2019~~2020 compared to unit shipments of ~~4.7~~5.0 million in the prior year period, ~~an increase~~a decrease of ~~2.5~~14.5 percent. The ~~increase~~decrease occurred in both our North American and European operations and was primarily driven by ~~higher~~ production ~~levels related to some of~~shutdowns at our key ~~European~~ customers ~~and higher aftermarket volumes, partially offset by lower shipments~~ in ~~our North America operations.~~response to the COVID-19 pandemic, which resulted in a reduction of 0.5 million units.

Net sales for the ~~third~~first quarter of ~~2019~~2020 were ~~$352.0~~$301.1 million, compared to net sales of ~~$347.6~~$357.7 million for the same period in ~~2018.~~2019. The ~~increase~~decrease in net sales is primarily driven by ~~favorable product mix~~lower global production volumes due to the COVID-19 outbreak of approximately $40.0 million, lower aluminum pricing and ~~increased volumes,~~a weaker Euro, which was partially offset by ~~lower aluminum prices and a weaker Euro.~~favorable mix.

Cost of sales were ~~$336.0~~$278.0 million for the ~~third~~first quarter of ~~2019~~2020 compared to cost of sales of ~~$323.9~~$324.6 million for the same period in ~~2018.~~2019. The ~~increase~~decrease in cost of sales was primarily due to ~~changes~~lower volume due to the COVID-19 outbreak, lower aluminum prices and utilities (due to both lower volumes and cost savings from our North American plant investments in ~~product mix~~2019 to use electricity from the secondary market), a weaker Euro and ~~$13.0 million of restructuring~~reduced North American fixed costs related to ending manufacturing activities at our Fayetteville, Arkansas location ~~partially offset by lower aluminum costs and a weaker Euro.~~in the fourth quarter of 2019.

Selling, general and administrative (“SG&A”) expenses for the ~~third~~first quarter of ~~2019~~2020 were ~~$16.3~~$12.5 million, or ~~4.6~~4.2 percent of net sales, compared to SG&A expense of ~~$16.0~~$14.5 million, or ~~4.6~~4.1 percent of net sales, for ~~the~~ same period in ~~2018.~~ 2019 due to lower management compensation costs.

For the first quarter of 2020, we recognized a goodwill and indefinite-lived intangible asset impairment charge totaling $193.6 million relating to our European reporting unit (refer to Note 8, “Goodwill and Other Intangible Assets” in the notes to the condensed consolidated financial statements).

Net interest expense for the ~~third~~first quarter of ~~2019~~2020 was ~~$11.8~~$11.9 million compared to net interest expense of ~~$12.4~~$11.9 million for ~~the~~ same period in ~~2018. The reduction in interest expense was primarily due to reduced interest expense resulting from the 2019 early extinguishment of a portion of our Senior Notes and lower interest rates.~~2019.

Other income was ~~$1.7~~$1.3 million for the ~~third~~first quarter of ~~2019~~2020 compared to other ~~expense~~income of ~~$3.2~~$0.1 million for ~~the~~ same period in ~~2018.~~2019. The ~~increase~~other income in ~~other income~~the first quarter of 2020 was primarily driven by a ~~$1.0 million gain on the early extinguishment of a portion of our Senior Notes in the third quarter of 2019 and a~~ foreign exchange ~~gain in the third quarter of 2019 versus a foreign exchange loss for the same period in 2018.~~

During the third quarter of 2019, the redeemable preferred stock derivative liability increased $1.0 million. This was primarily due to an increase in the conversion option value that was driven by an increase in assumed stock price volatility as well as a reduction to the assumed dividend yield given the suspension of the common stock dividend in the third quarter of 2019.gain.

The income tax ~~provision~~benefit for the quarter ended ~~September 30, 2019~~March 31, 2020 was ~~a $4.8~~$3.5 million ~~benefit~~ on a pre-tax loss of ~~$11.4~~$193.5 million, representing an effective income tax rate benefit of ~~41.9~~1.8 percent. The effective tax rate was ~~higher~~lower than the statutory rate primarily due to the mix of earnings among tax jurisdiction, recognition of a valuation allowance on non-deductible interest and the impairment of goodwill for which there is no corresponding tax benefit. The income tax provision for the quarter ended March 31, 2019 was $4.9 million on pre-tax income of $6.9 million primarily due to the effects of ~~the~~ U.S. taxation of foreign earnings under ~~the~~ Global Intangible Low-Tax Income (“GILTI”) provisions, ~~of the Act,~~ and a ~~forecasted~~ valuation allowance on non-deductible interest, ~~partially~~ offset bywith a benefit due to the mix of earnings among tax jurisdictions. The income tax benefit for the quarter ended September 30, 2018 was $7.1 million on a pre-tax loss of $7.7 million, representing an effective income tax rate of 91.4 percent. The tax effective tax rate was primarily due to a revision to the estimated U.S. tax on foreign earnings under the GILTI provisions of the Act.

Net loss for the ~~third~~first quarter of ~~2019~~2020 was ~~$6.6~~$190.1 million, or a loss of ~~$0.57~~$7.84 per diluted share, compared to a net ~~loss~~income of ~~$0.7~~$2.0 million, or a loss of ~~$0.37~~$0.24 per diluted share, for the same period in ~~2018.~~

	Three Months Ended								Three Months Ended
	September 30, 2019			September 30, 2018		Change			March 31, 2020			March 31, 2019		Change
(Dollars in thousands)
Selected data
Net sales
Net Sales
North America	$	188,089		$	197,776	$	(9,687	)	$	155,551		$	185,116	$	(29,565	)
Europe		163,925			149,836		14,089			145,561			172,577		(27,016	)
Total net sales	$	352,014		$	347,612	$	4,402		$	301,112		$	357,693	$	(56,581	)
Income from operations
Income from Operations
North America	$	(4,440	)	$	2,901	$	(7,341	)	$	6,109		$	6,199	$	(90	)
Europe		4,197			4,787		(590	)		(189,124	)		12,440		(201,564	)
Total income from operations	$	(243	)	$	7,688	$	(7,931	)	$	(183,015	)	$	18,639	$	(201,654	)

Net sales for our North American segment for the ~~third~~first quarter of ~~2019~~2020 decreased ~~4.9~~16.0 percent, compared to the same period in ~~2018~~2019 primarily due to a ~~5.4~~15.4 percent decrease in volumes, of which approximately 69 percent is attributable to COVID-19, 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, Toyota, Subaru and FCA, partially offset~~production by ~~increased sales to GM.~~Superior’s key customers during the quarter. U.S. and Mexico sales as a percentage of North America total sales were approximately ~~14.3~~10.4 percent and ~~85.7~~89.6 percent, respectively, for the quarter ended ~~September 30, 2019,~~March 31, 2020, which compares to ~~14.0~~15.3 percent and ~~86.0~~84.7 percent for the same period of the prior ~~year period.~~year. The change in North American sales by country is due to ending manufacturing activities at our Fayetteville, Arkansas location in the fourth quarter of 2019. North American segment income from operations ~~decreased~~ for the three months ended ~~September 30, 2019 primarily~~March 31, 2020 was comparable to the prior year, despite reduced volumes, due to ~~restructuring costs~~favorable product mix, utilities savings associated with plant investments made in 2019 to use electricity from the secondary market and reduced fixed cost related to our Fayetteville, Arkansas ~~manufacturing operations and reduced volumes, partially offset by favorable product mix.~~

On September 15, 2019, the United Auto Workers (UAW) at GM went on a national strike. As of the date of this filing, GM’s settlement offer has been ratified by the UAW and this situation is resolved.

Net sales for our European segment for the ~~third~~first quarter of ~~2019 increased 9.4~~2020 decreased 15.7 percent, compared to the same period in ~~2018,~~2019, primarily due to a ~~12.5~~13.5 percent ~~increase~~decrease in volumes, ~~favorable product mix~~ of ~~higher diameter wheels and premium finishes, partially offset by~~which approximately 77 percent is attributable to COVID-19, lower aluminum prices. European segment sales in Germany and Poland were approximately 36.3 percent and 63.7 percent, respectively, during the quarter ended September 30, 2019, which compares to 38.2 percent and 61.8 percent for the prior period. European segment income from operations for the third quarter in 2019 decreased primarily due to higher energy and material costs, which was mostly offset by increased volume and favorable mix.

~~The following chart shows the operational performance in the nine months ended September 30, 2019 in comparison to September 30, 2018.~~

SALES AND PROFITABILITY FOR FIRST NINE MONTHS OF 2019 AND 2018 ($ in millions) Sales for YTD 2019 &2018 $1,062.2 $1,123.0 Income from Operations YTD 2019 &2018 $42.4 $66.6 2019 2018 Net Income &Adjusted EBITDA * FOR YTD 2019 & 2018 $131.3 Net Income Adjusted EBITDA $ 2.6 $17.8 2019 2018 * See the Non-GAAP Financial Measures section of this quarterly report for a reconciliation of our Adjusted EBITDA to Net Income (Loss).

Nine Months Ended

September 30,
2019

September 30,
2018

Net
Change

(Dollars in thousands, except per share data)

Net sales

North America

$
553,607

$
606,684

$
(53,077
)
Europe

508,599

516,320

(7,721
)
Net sales

1,062,206

1,123,004

(60,798
)
Cost of sales

973,042

995,781

(22,739
)
Gross profit

89,164

127,223

(38,059
)
Percentage of net sales

8.4
%

11.3
%

(2.9
)%
Selling, general and administrative

46,737

60,631

13,894

Income from operations

42,427

66,592

(24,165
)
Percentage of net sales

4.0
%

5.9
%

(1.9
)%
Interest expense, net

(35,532
)

(37,417
)

1,885

Other income (expense), net

3,716

(6,796
)

10,512

Change in fair value of redeemable preferred stock
embedded derivative

(323
)

(3,476
)

3,153

Income tax provision

(7,699
)

(1,114
)

(6,585
)
Net income

$
2,589

$
17,789

$
(15,200
)
Percentage of net sales

0.2
%

1.6
%

(1.4
)%
Diluted loss per share

$
(0.84
)

$
(0.32
)

$
(0.52
)
Value added sales (1)

$
581,899

$
590,932

$
(9,033
)
Adjusted EBITDA (2)

$
131,282

$
140,008

$
(8,726
)
Percentage of net sales

12.4
%

12.5
%

(0.1
)%
Percentage of value added sales

22.6
%

23.7
%

(1.1
)%
Unit shipments in thousands

14,780

15,824

(1,044
)

Wheel unit shipments were 14.8 million for the first nine months of 2019 compared to unit shipments of 15.8 million in the prior year period, a decrease of 6.6 percent. The decrease occurred primarily in our North American operations and was driven by softer industry production levels at our key customers, lower take rates, and reduced share.

Net sales for the first nine months of 2019 were $1,062.2 million, compared to net sales of $1,123.0 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 wheels and premium ~~finishes in both regions.~~

Cost of sales were $973.0 million for the first nine months of 2019 compared to cost of sales of $995.8 million for the same period in 2018. The decrease in cost of sales was primarily due to lower volumes in our North American operations, lower aluminum prices, favorable North American foreign exchange, and a weaker Euro, partially offset by higher aluminum content associated with larger diameter wheels and $13.0 million of restructuring costs related to our Fayetteville, Arkansas, manufacturing location.

SG&A expenses for the first nine months of 2019 were $46.7 million, or 4.4 percent of net sales, compared to SG&A of $60.6 million, or 5.4 percent of net sales for the same period in 2018. The decrease is primarily due to a reduction in acquisition and integration expenses, the alignment of reporting for SG&A between our North American and European operations, and actions to align costs with current industry production levels.

Net interest expense for the first nine months of 2019 was $35.5 million compared to interest expense of $37.4 million for the same period in 2018. The reduction in interest expense was primarily due to the 2018 repricing of the Company’s term loan facility, reduced interest expense on our Senior Notes, resulting from the early extinguishment of a portion of our Senior Notes in 2019 and lower interest rates.

Other income was $3.7 million for the first nine months of 2019 compared to other expense of $6.8 million for the same period in 2018. The increase in other income was primarily driven by a $3.4 million gain on the early extinguishment of a portion of our Senior Notes in 2019 and a foreign exchange gain in the first nine months of 2019 versus a foreign exchange loss for the same period in 2018.

During the first nine months of 2018, the redeemable preferred stock derivative liability increased $3.5 million primarily due to the increase in our stock price during that period as well as a decrease in assumed discount rate.

The income tax provision for the nine months ended September 30, 2019 was $7.7 million on pre-tax income of $10.3 million, representing an effective income tax rate of 75.0%. The effective tax rate was higher than the statutory rate primarily due to the effects of the U.S. taxation of foreign earnings, under Global Intangible Low-Tax Income (“GILTI”) provisions of tax reform, and a forecasted valuation allowance on non-deductible interest, partially offset with a benefit due to the mix of earnings among tax jurisdictions. The income tax provision for the nine months ended September 30, 2018 was $1.1 million on pre-tax income of $18.9 million, representing an effective income tax rate of 5.9 percent.

Net income for the first nine months of 2019 was $2.6 million, or a loss of $0.84 per diluted share, compared to net income of $17.8 million, or a loss of $0.32 per diluted share for the same period in 2018.

Net sales for our North American segment for the first nine months of 2019 decreased 8.8 percent, compared to the same period in 2018, primarily due to a 11.8 percent decrease in volumes 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, FCA and Toyota; partially offset~~production by increased sales to GM. U.S. and Mexico sales as a percentage of North America total sales were approximately 14.7 percent and 85.3 percent, respectively, for year-to-date September 30, 2019, which compares to 14.6 percent and 85.4 percent forSuperior’s key customers during the prior year period. North American segment income from operations decreased for the first nine months of 2019 primarily due to a reduction in volumes and Fayetteville restructuring costs, partially offset by favorable procurement savings, product mix and foreign exchange.

Net sales for our European segment for the first nine months of 2019 decreased 1.5 percent, compared to the same period in 2018, primarily due to a weaker Euro and lower aluminum prices, partially offset by improved product mix comprised of higher diameter wheels and premium wheel finishes.quarter. European segment sales ~~between~~in Germany and Poland were approximately ~~35.5~~34.4 percent and ~~64.5~~65.6 percent, respectively, during the ~~first nine months of 2019,~~quarter ended March 31, 2020, which compares to ~~38.6~~37.1 percent and ~~61.4~~62.9 percent for the ~~first nine months~~same period of ~~2018.~~the prior year. European segment income from operations for ~~nine months ended September 30, 2019~~the first quarter in 2020 decreased primarily due to ~~negative foreign exchange effects from~~ the ~~Euro, higher energy costs~~goodwill and indefinite-lived intangible asset impairment noted above and lower ~~manufacturing capacity utilization,~~shipment volumes, which was partially offset by favorable mix.

As of March 31, 2020, our cash and cash equivalents totaled $282.2 million compared to $53.6 million and $77.9 million at March 31, 2019 and December 31, 2019, respectively. Our sources of liquidity primarily include cash, cash equivalents and short-term investments, net cash provided by operating activities, 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 ~~$165.8~~$279.0 million and ~~1.8:1,~~2.0:1.0, respectively, at ~~September 30, 2019,~~March 31, 2020, versus ~~$192.0~~$163.1 million and ~~2.1:1~~1.9:1.0 at December 31, ~~2018. As of September 30, 2019, our cash, cash equivalents and short-term investments totaled $49.3 million compared to $48.2 million at December 31, 2018.~~2019.

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 ~~the foreseeable future.~~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 operations, we entered into several debt and equity financing arrangements during 2017. On March 22, 2017, we entered into a ~~senior secured credit agreement (the “Credit Agreement”~~USD Senior Secured Credit facility (“USD SSCF”) consisting of a $400.0 million

~~senior secured term loan facility (the “Term~~ Senior Secured Term Loan Facility (“Term Loan Facility”) and a $160.0 million ~~revolving credit facility.~~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~~€250.0 million ~~Euro~~ aggregate principal amount of 6.00% Senior Notes ~~(the “Notes”)~~ due June 15, ~~2025. In addition, as a~~2025 (“Notes”). As part of ~~our~~the European business acquisition, we assumed $70.7 million of outstanding ~~debt. At September 30,~~debt, including a European Revolving Credit Facility (“EUR SSCF”).

On January 31, 2020, the available borrowing limit of the EUR SSCF was increased from €45.0 million to €60.0 million. All other terms of the EUR SSCF remained unchanged. In addition, the European business entered into equipment loan agreements totaling $13.4 million (€12.0 million) in the fourth quarter of 2019, ~~balances~~and the Company has drawn down $11.7 million on these loans as of March 31, 2020.

As a result of the onset of the COVID 19 pandemic and the ensuing economic uncertainty and to maintain and enhance our liquidity during customers’ announced shutdown periods, we have:

Both of our revolving credit facilities mature in May 2022, and based on various forecasted scenarios, Superior does not, at this time, anticipate any issues meeting the financial covenants under these facilities. The Company has no other significant funded debt obligations until May 2024.

Balances outstanding under the Term Loan Facility, Notes, the Revolving Credit Facility, EUR SSCF and an equipment ~~loan~~loans as of March 31, 2020 were ~~$375.8~~$349.2 million, ~~$244.0~~$239.8 million, ~~$13.2~~$156.0 million, $51.9 million and $24.3 million, respectively. ~~At September 30, 2019, we had total available liquidity~~The redeemable preferred stock amounted to $165.4 million as of ~~$254.5 million, which consisted of $49.3 million in cash and cash equivalents, $156.4 million of unused revolving credit facility commitments and 44.6 million Euro available~~ ~~under our European business line of credit.~~

During the second quarter of 2019, the Company amended its European revolving credit facility (the “European 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 September 30, 2019, there were 44.6 million Euro of available funds under the European Credit Facility.

~~Additionally, on September 3, 2019, the Company announced that its Board of Directors determined to suspend the Company’s quarterly common dividend.~~March 31, 2020.

To further bolster our liquidity position, we are applying for various COVID-19 related subsidies, tax benefits and low-interest rate loans available to us.

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

Net cash provided by operating activities was ~~$102.4~~$31.3 million for the first ~~nine~~three months of ~~2019~~2020 and ~~$64.3~~$28.7 million for the same period in ~~2018.~~2019. The increase in cash flow provided by operating activities was mainly due to ~~reductions in inventory caused by reduced production volumes~~favorable working capital, including increased accounts receivable factoring and ~~lower aluminum pricing, as well as increases in~~increased payables due to improved terms with aluminum ~~suppliers.~~suppliers, partially offset by inventory builds to prepare for our customers’ return to production.

Net cash used in investing activities was ~~$38.0~~$13.9 million for the first ~~nine~~three months of ~~2019~~2020 compared to ~~$55.5~~$11.9 million for the same period in ~~2018.~~2019. Net cash used in investing activities was lower in 2019 due to ~~reductions~~inclusion of certain other cash inflows not realized in ~~capital expenditures, as well as cash proceeds received upon sale of other assets.~~2020.

Net cash ~~used in~~provided by financing activities was ~~$59.2~~$189.0 million for the first ~~nine~~three months of ~~2019~~2020 compared to ~~$42.4~~a use of cash of $8.6 million for the same period in ~~2018.~~2019. This increase was primarily due to the ~~early extinguishment of a portion of our Senior Notes and Term Loan in the second and third quarters of 2019 and a reduction in net borrowings~~draws on our ~~revolver facility,~~revolving credit facilities in both Europe and North America, and proceeds from the new European equipment loans, partially offset by ~~reduced purchases of European non-controlling redeemable equity shares.~~

As of ~~September 30, 2019,~~March 31, 2020, we had no significant off-balance sheet arrangements other than factoring of ~~$56.6~~$55.3 million of our trade receivables.

In this quarterly 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 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 outsourced service providers (“OSP”) that are included in net sales. As discussed further below, arrangements with our customers allow us to pass on changes in aluminum prices; therefore, fluctuations in underlying aluminum price generally does 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. Management utilizes value added sales as a key metric to determine growth of the Company because it eliminates the volatility of aluminum prices.

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, changes in fair value of redeemable preferred stock embedded derivative, 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.

The following table reconciles our net sales, the most directly comparable U.S. GAAP financial measure, to our value added sales:

The following table reconciles our net income, the most directly comparable U.S. GAAP financial measure, to our adjusted EBITDA:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018			March 31, 2020			March 31, 2019
(Dollars in thousands)
Net income (loss)	$	(6,631	)	$	(663	)	$	2,589		$	17,789		$	(190,082	)	$	1,950
Interest expense, net		11,807			12,378			35,532			37,417			11,850			11,873
Income tax provision (benefit)		(4,785	)		(7,051	)		7,699			1,114			(3,460	)		4,943
Depreciation		24,192			17,135			57,382			52,026			18,255			16,554
Amortization		6,636			6,457			20,118			19,906			6,137			6,777
Acquisition, integration, restructuring, debt extinguishment gains and factoring fees ⁽¹⁾		6,591			2,530			7,639			8,280
Change in fair value of redeemable preferred stock embedded derivative liability		1,042			(214	)		323			3,476
Impairment of goodwill and indefinite-lived intangibles														193,641			—
Integration, restructuring, factoring fees and other ⁽¹⁾														3,189			1,123
Adjusted EBITDA	$	38,852		$	30,572		$	131,282		$	140,008		$	39,530		$	43,220
Adjusted EBITDA as a percentage of net sales		11.0	%		8.8	%		12.4	%		12.5	%		13.1	%		12.1	%
Adjusted EBITDA as a percentage of value added sales		19.9	%		17.1	%		22.6	%		23.7	%		23.2	%		22.4	%

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to apply significant judgment in making estimates and assumptions that affect amounts 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 values of assets and liabilities that are not readily apparent through other sources. There can be no assurance that actual results reported in the future will not differ from these estimates, or that future changes in these estimates will not adversely impact our results of operations or financial condition.

Impairment of Goodwill - ~~The identification~~–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 ~~potential~~the fiscal year, or more frequently if events or circumstances indicate that impairment ~~involves comparing~~may be more likely than not.

At March 31, 2020, the impact of the COVID-19 developments and uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets and is having a widespread adverse effect on the automotive industry, including reductions in both consumer demand and OEM automotive production. In response, our key customers temporarily closed nearly all production facilities in Europe and North America (our primary markets) during the quarter ended March 31, 2020. As a result, we concluded that an interim test of our goodwill was required. More specifically, the Company concluded that the following events and circumstances, in the aggregate, indicated that it was more likely than not that the carrying value of our European reporting unit exceeded its fair value: (1) our European reporting unit’s ~~estimated~~carrying value was effectively set to fair value at December 31, 2019, due to ~~its~~the $102.2 million impairment charges to goodwill and indefinite-lived intangibles, (2) lower forecasted 2020 industry production volumes for Western and Central Europe, including those for our primary European customers, due to OEM shutdowns to mitigate COVID-19 spread and subsequent reduced production levels over the remainder of the year, as compared to our prior production forecasts (including estimates used in our 2019 assessment), and (3) the volatility in financial markets that has both increased European interest rates due to rising credit spreads and risk premiums and lowered median European automotive market multiples. Based on the results of our quantitative analysis, we recognized a non-cash goodwill impairment charge equal to the remaining goodwill balance of $182.6 million since the carrying value ~~including goodwill. In performing our valuation, we utilize~~exceeded the fair value of the European reporting unit by more than the amount of the goodwill balance at March 31, 2020. This impairment was recognized as a separate charge (together with the indefinite-lived intangible asset trade name) included in income (loss) from operations.

We utilized both an income ~~approach~~ and a market approach, weighted 75 percent and 25 percent respectively, to determine the fair ~~value.~~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 ~~Europe~~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 ~~the~~ comparable, publicly traded companies. ~~Our 2018 assessment of European goodwill indicated~~

~~The identification~~Impairment of Intangible Assets – Intangible assets include both finite and ~~evaluation~~indefinite-lived intangible assets. Finite-lived intangible assets consist of ~~potential triggering events~~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 ~~interim periods between annual impairment assessments also involves considerable judgment.~~ ~~Recent analyst forecasts~~which the asset will be consumed cannot be reliably determined). Indefinite-lived intangible assets, excluding goodwill, consist of ~~automotive passenger car and light truck sales in Europe for 2020 to 2023 are lower than previously issued forecasts.~~ trade names associated with our aftermarket business. In ~~addition, the Company’s closing stock price (which fluctuated higher and lower than the December 31, 2018 stock price during~~ the first ~~two quarters) has ranged between~~quarter of 2020, we recognized a ~~low~~non-cash impairment charge of ~~$2.41 and high of $3.74 during the third quarter with~~$11.0 million related to our aftermarket trade name indefinite-lived intangible asset which was primarily attributable to a ~~price of $2.89 as of September 30, 2019, representing a 40 percent~~further decline in ~~market capitalization since December 31, 2018. While these factors may indicate~~forecasted aftermarket revenues and a ~~potential~~ decline in ~~the fair value of the European reporting unit, we do not have sufficient evidence~~associated profitability (refer to ~~conclude that it is more likely than not that the carrying value of the European reporting unit exceeds its fair value. The Company plans to complete its long-term business planning~~ Note 8, “Goodwill and Other Intangible Assets” in the ~~fourth quarter~~notes to condensed consolidated financial statements in Item 1, “Financial Statements and Supplementary Data” in this Quarterly Report for further discussion of ~~2019. These financial projections are a key input into the quantitative impairment test of goodwill and indefinite-lived intangibles, which we plan to perform in the fourth quarter.~~asset impairments).

Also see Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of our ~~2018~~2019 Annual Report on Form 10-K.

~~Foreign Currency.~~ We have business operations in 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 mitigate foreign currency exposures associated with certain existing assets and liabilities, firmly committed transactions and forecasted future cash flows. We have implemented a program to hedge a portion of our Peso, Zloty and Euro foreign exchange exposure,Not applicable for up to approximately 48 months. We do not use derivative contracts for trading, market-making, or speculative purposes. For additional information on our derivatives, refer to Note 4, “Derivative Financial Instruments” in the notes to these condensed consolidated financial statements.smaller reporting companies.

At September 30, 2019, the net fair value asset of foreign currency exchange derivatives with an aggregate notional value of $558.4 million was $3.2 million. The potential loss in fair value of such financial instruments from a 10 percent adverse change in foreign currency exchange rates would be $59.7 million at September 30, 2019.

~~Interest Rate Risk.~~ At September 30, 2019, approximately $375.8 million of our debt bears interest at variable rates, currently 6.1 percent. A 100 basis point change in our rate would result in an increase or decrease in our interest expense of $3.8 million. We have entered into interest rate swaps exchanging floating for fixed rate interest payments in order to reduce interest rate volatility. At September 30, 2019 the fair value liability for interest rate swaps with a notional value of $260 million was $7.1 million. These swaps mature as follows: $25.0 million in March 31, 2020, $35.0 million in December 31, 2020, $50 million September 30, 2022 and $150 million in 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.

~~Also see Item 7A—“Quantitative and Qualitative Disclosures About Market Risk” in Part II of our 2018 Annual Report on Form 10-K.~~

The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September 30, 2019.~~March 31, 2020. 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 Chief 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 ~~September 30, 2019~~March 31, 2020 our disclosure controls and procedures were effective.

There has been no change in our internal control over financial reporting during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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. See also under Item 1A, “Risk Factors - We are from time to time subject to litigation, which could adversely impact our financial condition or results of operations” of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

~~See Part I—Item 1A— “Risk~~In light of the recent events surrounding COVID-19 and our possible de-listing from the NYSE, we are adding the below risk factors entitled “The COVID-19 pandemic has disrupted, and may continue to disrupt our business, which we expect will have a material adverse impact on our business, results of operations and financial condition” and “A delisting of our common stock from the NYSE could reduce the liquidity and market price of our common stock; reduce the number of investors and analysts that cover our common stock; limit our ability to issue additional shares, and damage our reputation which could have a material adverse impact on our business, results of operations and financial condition. In addition, a delisting of our common stock from the NYSE could cause a redemption of some or all of our outstanding redeemable preferred stock which would negatively impact our liquidity” to the risk factors as previously disclosed in “Item 1A Risk Factors” inof our ~~Annual Report on~~ Form 10-K for the year ended December 31, ~~2018.~~2019. Other than as set forth below, there have been no material changes to the risk factors set forth in “Item 1A Risk Factors” of our Form 10-K for the year ended December 31, 2019. However, many of the risk factors set forth in our Form 10-K for the year ended December 31, 2019 are, and will continue to be, exacerbated by the COVID-19 pandemic and any resulting worsening of the economic environment.

The COVID-19 pandemic has disrupted, and may continue to disrupt our business, which we expect will have a material adverse impact on our business, results of operations and financial condition.

The ongoing COVID-19 pandemic has caused a widespread health crisis, resulting in an economic downturn and government imposed measures to reduce the spread of COVID-19. In Europe and North America (our primary markets), federal, state and local governments have either recommended or mandated actions to slow the transmission of COVID-19. Most U.S. states and most countries have implemented shelter-in-place orders, quarantines, significant restrictions on travel, as well as work restrictions that prohibit non-essential employees from going to work. The impact of COVID-19 and uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets and is having a widespread adverse effect on the automotive industry. Specific risks to our Company associated with the COVID-19 pandemic include the following:

A delisting of our common stock from the NYSE could reduce the liquidity and market price of our common stock; reduce the number of investors and analysts that cover our common stock; limit our ability to issue additional shares, and damage our reputation which could have a material adverse impact on our business, results of operations and financial condition. In addition, a delisting of our common stock from the NYSE could cause a redemption of some or all of our outstanding redeemable preferred stock which would negatively impact our liquidity.

We are required under the NYSE continued listing standards to maintain a market capitalization of at least $50 million, over a consecutive 30 trading-day period, and maintain stockholders’ equity of at least $50 million. Currently, our market capitalization has been less than $50 million over a consecutive 30-day trading period and our stockholders’ equity is less than the minimum threshold. As a result, we expect the NYSE will send us notification that we are not in compliance with the NYSE continued listing standards. In response, we will have an opportunity to submit a plan to the NYSE to cure the deficiency and if the NYSE accepts our plan, we will have 18 months to cure the deficiency. In the event that the NYSE does not accept our compliance plan or we are unable to cure the deficiency, our stock may be delisted from the NYSE.

A delisting of our common stock could have a material adverse impact on our business, results of operations and financial condition by, among other things:

In addition, the holder of our redeemable preferred stock has the right to redeem all of the outstanding shares of redeemable preferred stock if our common stock is delisted from the NYSE. If we are delisted from the NYSE and the holder exercises its right to redeem all of the outstanding shares of redeemable preferred stock, we would be required to: (1) increase the then carrying value of the redeemable preferred stock to the $300 million redemption value through a corresponding charge (decrease) to our retained earnings, and (2) make a redemption payment in any amount up to $300 million if our Board determined, under Delaware law, that there was a “surplus” to fund a full or partial redemption and such payment would not render us insolvent. The shares of preferred stock that have not been redeemed would continue to receive a dividend of 9% per annum on the Stated Value, as defined in the Certificate of Designations, until such shares of preferred stock are redeemed. A redemption payment, if required, for some or all of our outstanding shares of preferred stock would negatively impact our liquidity and could adversely affect our business, results of operations and financial condition.

On October 30, 2019, the Company entered into an amendment to the management board service contract of Andreas Meyer, dated September 26, 2019 and effective November 1, 2019 (the “Amendment”). The Amendment provides that Mr. Meyer will receive a €70,000 sign-on bonus within 30 days following his employment start date, which is intended to make up for certain long-term incentives and the annual incentive opportunity that Mr. Meyer forfeited with his current employer by resigning before year-end. The foregoing description of the Amendment is qualified in its entirety by reference to the full text of the Amendment, a copy of which is attached hereto as Exhibit 10.3.Not applicable.

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.

Delaware	95-2594729
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

26600 Telegraph Road, Suite 400
Southfield, Michigan	48033
(Address of Principal Executive Offices)	(Zip Code)


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	SUP	New York Stock Exchange

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐	Smaller Reporting Company	☐☒
		Emerging Growth Company	☐

					Page
PART I	-	FINANCIAL INFORMATION

		Item 1	-	Financial Statements (Unaudited)

				Condensed Consolidated Income Statements	1

				Condensed Consolidated Statements of Comprehensive Income	2

				Condensed Consolidated Balance Sheets	3

				Condensed Consolidated Statements of Cash Flows	4

				Condensed Consolidated Statements of Shareholders’ Equity	5

				Notes to Condensed Consolidated Financial Statements	76

		Item 2	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2926

		Item 3	-	Quantitative and Qualitative Disclosures About Market Risk	4036

		Item 4	-	Controls and Procedures	4036

PART II	-	OTHER INFORMATION			37

		Item 1	-	Legal Proceedings	4137

		Item 1A	-	Risk Factors	4137

		Item 2	-	Unregistered Sales of Equity Securities and Use of Proceeds	4138

		Item 5	-	Other Information	4138

		Item 6	-	Exhibits	4239

		Signatures			4340

	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Customer receivables	$	125,665	$	97,566	$	64,455	$	68,283
Contract liabilities—current		7,219		5,810		8,073		5,880
Contract liabilities—noncurrent		9,892		8,354		11,776		13,577

			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

January 1, 2018 – September 30, 2019
(Dollars in thousands)
Beginning fair value - January 1, 2018	$	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		323
Ending fair value - September 30, 2019	$	3,457

Three months ended September 30, 2019	Amount of Gain or (Loss) Recognized in AOCI on Derivatives, net of tax			Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
Three Months Ended March 31, 2020								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	$	(8,302	)	$	703	$	1,817
Derivative Contracts								$	(45,297	)	$	(1,114	)	$	(5,439	)
Total	$	(8,302	)	$	703	$	1,817	$	(45,297	)	$	(1,114	)	$	(5,439	)

Nine months ended September 30, 2019	Amount of Gain or (Loss) Recognized in AOCI on Derivatives, net of tax			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	$	(1,520	)	$	2,417	$	3,557
Total	$	(1,520	)	$	2,417	$	3,557

Three months ended September 30, 2018	Amount of Gain or (Loss) Recognized in AOCI on Derivatives, net of tax		Amount of Pre-tax Gain or (Loss) Reclassified from AOCI into Income		Amount of Pre-tax Gain or (Loss) Recognized in Income on Derivatives
Three Months Ended March 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	$	17,523	$	233	$	(411	)
Derivative Contracts								$	4,926	$	836	$	1,684
Total	$	17,523	$	233	$	(411	)	$	4,926	$	836	$	1,684

Nine months ended September 30, 2018	Amount of Gain or (Loss) Recognized in AOCI on Derivatives, net of tax		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	$	13,444	$	279	$	(720	)
Total	$	13,444	$	279	$	(720	)

(Dollars in thousands)	Depreciation and Amortization				Capital Expenditures				Depreciation and Amortization				Capital Expenditures
Three months ended	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018		March 31, 2020		March 31, 2019		March 31, 2020		March 31, 2019
North America	$	15,432	$	8,300	$	5,425	$	11,197	$	8,805	$	7,866	$	6,560	$	6,128
Europe		15,396		15,292		13,494		6,249		15,587		15,465		7,305		7,264
	$	30,828	$	23,592	$	18,919	$	17,446	$	24,392	$	23,331	$	13,865	$	13,392

(Dollars in thousands)	Property, Plant and Equipment, net				Goodwill and Intangible Assets
	September 30, 2019		December 31, 2018		September 30, 2019		December 31, 2018
North America	$	235,115	$	249,791	$	—	$	—
Europe		281,777		282,976		421,232		459,803
	$	516,892	$	532,767	$	421,232	$	459,803

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

Three Months Ended March 31, 2020	Beginning Balance													Ending Balance
	Gross		Accumulated Impairment			Net Balance		Impairment			Currency Translation			Gross		Accumulated Impairment			Net Balance
(Dollars in thousands)
Goodwill	$	284,337	$	(99,505	)	$	184,832	$	(182,528	)	$	(2,304	)	$	282,033	$	(282,033	)	$	—

Year Ended December 31, 2019	Beginning Balance												Ending Balance
	Gross		Accumulated Impairment		Net Balance		Impairment			Currency Translation			Gross		Accumulated Impairment			Net Balance
(Dollars in thousands)
Goodwill	$	291,434	$	—	$	291,434	$	(99,505	)	$	(7,097	)	$	284,337	$	(99,505	)	$	184,832

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		$	13,849
Dividends accrued		496			566
Dividends paid		(755	)		(848	)
Translation adjustment		(566	)		(361	)
Purchase of shares		(3,888	)		(6,681	)
Balance at September 30, 2019	$	9,136
Balance at December 31, 2019					6,525
Dividends accrued					20
Dividends paid					(35	)
Translation adjustment					(95	)
Purchase of shares					(4,190	)
Balance at March 31, 2020				$	2,225

	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		$	19.1		59,000		$	18.33
Granted		1,021,317			4.98		1,477,734			6.09		—			—
Settled		(103,681	)		17.12		(31,081	)		22.81		—			—
Forfeited or expired		(83,373	)		9.79		(204,438	)		12.36		(8,750	)		15.30
Balance at September 30, 2019		1,017,989		$	5.57		1,538,738		$	7.43		50,250		$	18.86
Vested or expected to vest at September 30, 2019		885,208		$	5.63		1,278,648		$	6.73		50,250		$	18.86

10.1	~~Retention Award Letter,~~Amendment Agreement, dated ~~August 8,~~April 6, 2020, to Executive Employment Agreement, dated March 28, 2019, between ~~Matti Masanovich and~~ Superior Industries International, Inc. and Majdi B. Abulaban, including forms of award agreements to be granted under the Inducement Plan., *

~~10.2~~	Management Board Member Service Contract, dated September 26, 2019, between Superior Industries Europe AG and Andreas Meyer., *

~~10.3~~	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., *

~~10.4~~	Superior Industries International, Inc. 2019 Inducement Grant Plan (Incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-8 dated August 8, 2019).*

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.**

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.**

32.1	Certification of Majdi B. Abulaban, President and Chief Executive Officer, and 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).~~2002.*

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.***