SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1997 Commission File Number 1-7256
INTERNATIONAL ALUMINUM CORPORATION
(Exact name of Registrant as specified in its charter)
California 95-2385235
(State of incorporation) (I.R.S. Employer No.)
767 Monterey Pass Road
Monterey Park, California 91754
(213) 264-1670
(Principal executive office)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days. Yes X No
At May 1, 1997 there were 4,265,869 shares of Common Stock outstanding.
Page 1 of 10 Pages
<PAGE>
<PAGE>
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
INDEX
Page Nos.
PART I Financial Information
Consolidated Balance Sheets -
March 31, 1997 and June 30, 1996 3
Consolidated Statements of Income -
three and nine month periods
ended March 31, 1997 and 1996 5
Consolidated Statements of Cash Flows -
nine months ended March 31, 1997
and 1996 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Signatures 10
- 2 -
<PAGE>
<PAGE>
<TABLE>
PART I
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Unaudited Audited
Assets March 31, 1997 June 30, 1996
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,784,000 $ 13,230,000
Accounts receivable, net 33,738,000 34,498,000
Unbilled receivables 891,000 823,000
Inventories:
Raw materials 32,373,000 29,667,000
Work-in-process 2,700,000 2,252,000
Finished goods 8,271,000 7,663,000
Prepaid expenses 1,760,000 2,712,000
Future income tax benefits 1,350,000 1,350,000
Total current assets 85,867,000 92,195,000
____________ ____________
Property, plant and equipment, at cost 99,223,000 98,298,000
Accumulated depreciation (53,114,000) (53,356,000)
46,109,000 44,942,000
____________ ____________
Other assets:
Costs in excess of net assets of
purchased businesses 10,425,000 4,706,000
____________ ____________
$142,401,000 $141,843,000
____________ ____________
____________ ____________
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
- 3 -
<PAGE>
<PAGE>
<TABLE>
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Unaudited Audited
Liabilities and Shareholders' Equity March 31, 1997 June 30, 1996
<S> <C> <C>
Current liabilities:
Accounts payable $ 9,986,000 $ 9,648,000
Accrued liabilities 10,163,000 9,343,000
Current portion of long-term debt 119,000 542,000
Income taxes payable 624,000 766,000
Total current liabilities 20,892,000 20,299,000
____________ ____________
Other liabilities:
Deferred income taxes 4,337,000 4,337,000
Other 291,000 325,000
4,628,000 4,662,000
____________ ____________
Shareholders' equity 116,881,000 116,882,000
____________ ____________
$142,401,000 $141,843,000
____________ ____________
____________ ____________
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
- 4 -
<PAGE>
<PAGE> <TABLE> Unaudited
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $53,593,000 $49,910,000 $166,682,000 $160,302,000
Costs and expenses:
Cost of sales 39,053,000 36,213,000 120,241,000 115,697,000
Selling, general and
administrative expenses 12,997,000 11,755,000 40,253,000 35,910,000
Interest (income) expense, net (7,000) (58,000) (91,000) (128,000)
Income before income taxes 1,550,000 2,000,000 6,279,000 8,823,000
Provision for income taxes 650,000 880,000 2,770,000 3,610,000
Net income $ 900,000 $ 1,120,000 $ 3,509,000 $ 5,213,000
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Weighted average number of
common shares outstanding 4,264,474 4,258,405 4,262,474 4,256,691
Earnings per common share $.21 $.26 $.82 $1.22
Cash dividends per common share $.25 $.25 $.75 $.75
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
- 5 -
<PAGE>
<PAGE> <TABLE> Unaudited
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended
March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,509,000 $ 5,213,000
Adjustments for noncash transactions:
Depreciation and amortization 3,789,000 3,902,000
Writedown of long-lived assets 888,000
Changes in assets and liabilities:
Receivables 2,235,000 2,065,000
Inventories (2,437,000) 786,000
Prepaid expenses 986,000 1,014,000
Accounts payable (730,000) 832,000
Accrued liabilities and other (676,000) (374,000)
Income taxes payable (259,000) (590,000)
Net cash provided by operating activities 7,305,000 12,848,000
Cash flows from investing activities:
Capital expenditures (5,508,000) (5,151,000)
Proceeds from sales of capital assets 223,000 192,000
Acquisition of businesses, net of cash acquired (6,971,000)
Changes in investments 2,213,000
Net cash used in investing activities (12,256,000) (2,746,000)
Cash flows from financing activities:
Repayment of long-term debt (423,000) (285,000)
Exercise of stock options 73,000 112,000
Dividends paid to shareholders (3,198,000) (3,194,000)
Net cash used in financing activities (3,548,000) (3,367,000)
Effect of exchange rate changes on cash 53,000 2,000
Net change in cash and cash equivalents (8,446,000) 6,737,000
Cash and cash equivalents at beginning
of period 13,230,000 3,550,000
Cash and cash equivalents at end of period $ 4,784,000 $10,287,000
___________ ___________
___________ ___________
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
- 6 -
<PAGE>
<PAGE> Unaudited
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (which consist solely of normal
recurring adjustments unless otherwise disclosed) necessary to present fairly
its financial position as of March 31, 1997 and June 30, 1996, and the results
of operations for the three and nine month periods ended March 31, 1997 and
1996, and the cash flows for the nine month periods ended March 31, 1997 and
1996.
The results of operations for the three and nine month periods ended
March 31, 1997 and 1996 are not necessarily indicative of the results to be
expected for the full year.
The financial statements included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is suggested
that these financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's latest annual
report on Form 10-K.
Acquisitions
On October 1, 1996, the Company completed the purchase of Orca Coatings Ltd.
("Orca") of Surrey, British Columbia, Canada. Orca is an architectural
coatings applicator and a distributor of storefront and architectural metal
products. Effective with the acquisition, the company will be known as Orca
Architectural Aluminum Ltd. and will be a member of the Commercial Products
Group.
On October 1, 1996, the Company also completed the purchase of Altura
Architectural Products, Inc. ("Altura") of Houston, Texas. Altura is a
manufacturer of interior aluminum office fronts. Altura's product line and
operations are very similar to those of the Company's Ragland Manufacturing
subsidiary, also of Houston. Altura was merged into Ragland and the combined
entity will operate as Raco Altura in the Commercial Products Group.
The above acquisitions were made with $6,971,000 of cash from the Company's
existing cash reserves. The estimated fair market value of net assets
acquired is $897,000. The $6,074,000 excess of purchase price over the
estimated fair value was allocated to goodwill and is being amortized on a
straight line basis over periods of 5 to 30 years.
- 7 -
<PAGE>
<PAGE> Unaudited
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Significant Changes in Results of Operations:
Net sales increased by $3,683,000 or 7.4% for the quarter ended March 31,
1997 and by $6,380,000 or 4.0% for the nine months then ended when compared
with the 1996 period. These sales include increases posted by the Commercial
Products Group, up $1,775,000 or 7.8% for the quarter and by $6,167,000 or
8.4% for the nine months. The sales for the quarter also included an increase
of $2,631,000 or 22.4% posted by the Aluminum Extrusion Group.
Cost of sales as a percentage of net sales increased by 0.3% for the quarter
ended March 31, 1997 but declined by 0.1% for the nine months then ended when
compared with the 1996 periods. The decrease for the nine months is primarily
attributable to increased margins in the Aluminum Extrusion Group resulting
from decreased material costs. This was partially offset with inventory and
asset writedowns during the second quarter related to the purchase of Altura
and additional workers compensation insurance expense recorded during the
third quarter related to a major industrial accident during the current year.
Selling, general and administrative expenses increased by $1,242,000 or
10.6% for the quarter and by $4,343,000 or 12.1% for the nine month period.
The continuing portion of these increases primarily relate to additional
selling costs associated with the expansion of the commercial products
satellite warehouse program as well as sales personnel and marketing programs
associated with the purchase of Altura. The non-recurring portion of the
increases relate to a writedown of long-lived assets during the first quarter,
a charge for asset writedowns and restructuring related to the purchase of
Altura during the second quarter and retrospective charges for prior years
workers compensation insurance during the first and third quarters. The
retrospective adjustments had been positive in recent years but took a
substantial swing to the negative during this fiscal year.
The decreases in net interest income for the three and nine month periods
relate to the significantly decreased level of funds available for investment
due to the cash purchase of the two companies (see the Acquisitions note).
The effective tax rate for the nine months ended March 31, 1997 was 44.1%
whereas the comparable period of fiscal year 1996 was 40.9%. This increase
is primarily related to incurrence of foreign pretax losses for which the
Company realized no tax benefit due to the lack of available loss carryback
provisions.
- 8 -
<PAGE>
<PAGE> Unaudited
Liquidity and Capital Resources:
Working capital decreased to $64,975,000 during the nine months ended
March 31, 1997, which represents a decrease of $6,921,000 from June 30, 1996.
The ratio of current assets to current liabilities is currently 4.1 as
compared to 4.5 as of the beginning of the year.
In addition to the completed cash purchases of the two companies (see the
Acquisitions note) the Company's projected net capital expenditures for fiscal
1997 include $8,000,000 for scheduled expansion of production capacity in
addition to the normal annual noncapitalized expenditures for replacement
items. The Company anticipates financing these expenditures through internal
cash flow and cash reserves.
The Company's line of credit remains unchanged from that noted in the
June 30, 1996 Annual Report to Shareholders.
- 9 -
<PAGE>
<PAGE>
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
International Aluminum Corporation
(Registrant)
Date May 12, 1997 DAVID C. TREINEN
David C. Treinen
Senior Vice President - Finance
and Administration
(Principal Financial Officer)
Date May 12, 1997 MITCHELL K. FOGELMAN
Mitchell K. Fogelman
Vice President - Controller
(Principal Accounting Officer)
- 10 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,784
<SECURITIES> 0
<RECEIVABLES> 34,629
<ALLOWANCES> 0
<INVENTORY> 43,344
<CURRENT-ASSETS> 85,867
<PP&E> 99,223
<DEPRECIATION> 53,114
<TOTAL-ASSETS> 142,401
<CURRENT-LIABILITIES> 20,892
<BONDS> 0
0
0
<COMMON> 8,526
<OTHER-SE> 108,355
<TOTAL-LIABILITY-AND-EQUITY> 142,401
<SALES> 166,682
<TOTAL-REVENUES> 166,682
<CGS> 120,241
<TOTAL-COSTS> 160,494
<OTHER-EXPENSES> (91)
<LOSS-PROVISION> 642
<INTEREST-EXPENSE> 74
<INCOME-PRETAX> 6,279
<INCOME-TAX> 2,770
<INCOME-CONTINUING> 3,509
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,509
<EPS-PRIMARY> .82
<EPS-DILUTED> 0
</TABLE>
