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, 1998 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, 1998 there were 4,290,494 shares of Common Stock outstanding.
Page 1 of 10 Pages
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INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
INDEX
Page Nos.
PART I Financial Information
Consolidated Balance Sheets -
March 31, 1998 and June 30, 1997 3
Consolidated Statements of Income -
three and nine month periods
ended March 31, 1998 and 1997 5
Consolidated Statements of Cash Flows -
nine months ended March 31, 1998
and 1997 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Signatures 10
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<TABLE>
PART I
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Unaudited Audited
Assets March 31, 1998 June 30, 1997
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 11,497,000 $ 6,485,000
Accounts receivable, net 32,219,000 35,773,000
Unbilled receivables 885,000
Inventories:
Raw materials 32,557,000 32,275,000
Work-in-process 1,949,000 2,320,000
Finished goods 6,652,000 7,398,000
Prepaid expenses 2,400,000 1,834,000
Future income tax benefits 1,289,000 1,289,000
Total current assets 88,563,000 88,259,000
____________ ____________
Property, plant and equipment, at cost 96,026,000 99,564,000
Accumulated depreciation (50,673,000) (53,600,000)
45,353,000 45,964,000
____________ ____________
Other assets:
Costs in excess of net assets of
purchased businesses 9,886,000 10,290,000
Other 520,000 528,000
10,406,000 10,818,000
____________ ____________
$144,322,000 $145,041,000
____________ ____________
____________ ____________
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Unaudited Audited
Liabilities and Shareholders' Equity March 31, 1998 June 30, 1997
<S> <C> <C>
Current liabilities:
Accounts payable $ 7,727,000 $ 9,417,000
Accrued liabilities 10,296,000 11,727,000
Income taxes payable 487,000 976,000
Total current liabilities 18,510,000 22,120,000
____________ ____________
Other liabilities:
Deferred income taxes 4,362,000 4,362,000
Other 319,000
4,362,000 4,681,000
____________ ____________
Shareholders' equity 121,450,000 118,240,000
____________ ____________
$144,322,000 $145,041,000
____________ ____________
____________ ____________
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE> <TABLE> Unaudited
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $52,988,000 $53,593,000 $168,156,000 $166,682,000
Costs and expenses:
Cost of sales 36,972,000 39,053,000 116,907,000 120,241,000
Selling, general and
administrative expenses 12,325,000 12,997,000 37,088,000 40,253,000
Interest (income) expense, net (96,000) (7,000) (177,000) (91,000)
Income before income taxes 3,787,000 1,550,000 14,338,000 6,279,000
Provision for income taxes 1,510,000 650,000 5,500,000 2,770,000
Net income $ 2,277,000 $ 900,000 $ 8,838,000 $ 3,509,000
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Shares used to compute EPS:
Basic 4,290,244 4,264,474 4,280,572 4,262,474
Diluted 4,324,295 4,276,111 4,298,940 4,274,796
Earnings per share:
Basic $.53 $.21 $2.06 $.82
Diluted $.53 $.21 $2.06 $.82
Cash dividends per common share $.30 $.25 $.85 $.75
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE> <TABLE> Unaudited
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended
March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,838,000 $ 3,509,000
Adjustments for noncash transactions:
Depreciation and amortization 4,339,000 3,789,000
Gain on disposition of business (1,156,000)
Writedown of long-lived assets 888,000
Changes in assets and liabilities:
Receivables 1,315,000 2,235,000
Inventories (52,000) (2,437,000)
Prepaid expenses and other (729,000) 986,000
Accounts payable 1,243,000 (730,000)
Accrued liabilities and other (807,000) (676,000)
Income taxes payable (476,000) (259,000)
Net cash provided by operating activities 12,515,000 7,305,000
Cash flows from investing activities:
Capital expenditures (5,282,000) (5,508,000)
Proceeds from sales of capital assets 92,000 223,000
Disposition (acquisition) of businesses 1,021,000 (6,971,000)
Net cash used in investing activities (4,169,000) (12,256,000)
Cash flows from financing activities:
Repayment of long-term debt (423,000)
Exercise of stock options 301,000 73,000
Dividends paid to shareholders (3,642,000) (3,198,000)
Net cash used in financing activities (3,341,000) (3,548,000)
Effect of exchange rate changes on cash 7,000 53,000
Net change in cash and cash equivalents 5,012,000 (8,446,000)
Cash and cash equivalents at beginning
of period 6,485,000 13,230,000
Cash and cash equivalents at end of period $11,497,000 $ 4,784,000
___________ ___________
___________ ___________
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<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, 1998 and June 30, 1997, and the results
of operations for the three and nine month periods ended March 31, 1998 and
1997, and the cash flows for the nine month periods ended March 31, 1998 and
1997.
The results of operations for the three and nine month periods ended
March 31, 1998 and 1997 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.
This report contains forward-looking statements with respect to the
financial condition, results of operations and business of the Company. Such
items are subject to certain risks and uncertainties that could cause actual
results to differ materially from those set forth in such statements.
Disposition Of Foreign Subsidiary
During the second quarter, the Company sold Eland-Brandt, B.V., it's dutch
subsidiary. The sale generated an after-tax book gain of $1,156,000 or $.27
per share and provided $1,021,000 in net cash proceeds. Due to the sale, the
Company's consolidated financial statements for the second and third quarter
do not include the operations of Eland-Brandt, B.V..
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<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 decreased by $605,000 or 1.1% for the quarter ended March 31, 1998
and increased by $1,474,000 or 0.9% for the nine months then ended when
compared with the 1997 periods. The sale of the Company's dutch subsidiary,
Eland-Brandt B.V., during the second quarter significantly impacts period
comparisons. The exclusion of Eland-Brandt from the comparisons shows
increases of $1,728,000 or 3.4% for the quarter and $8,101,000 or 5.1% for the
nine months. The sales from continuing operations include increases posted
by the Residential Products Group, up $1,070,000 or 11.5% for the quarter and
by $3,009,000 or 9.5% for the nine months and by the Commercial Products
Group, whose sales were up $1,744,000 or 7.3% for the quarter and $4,094,000
or 5.3% for the nine months.
Cost of sales as a percentage of net sales decreased by 3.1% for the quarter
ended March 31, 1998 and by 2.6% for the nine months then ended when compared
with the 1997 periods. These decreases are primarily attributable to
increased margins in the Aluminum Extrusion Group resulting from labor and
overhead efficiencies attained through higher production volume. Also factors
were the prior year inventory and asset writedowns related to the purchase of
Altura during the second quarter and the prior year additional workers
compensation insurance expense recorded during the third quarter related to
a major industrial accident during that year.
Selling, general and administrative expenses decreased by $672,000 or 5.2%
for the quarter and by $3,165,000 or 7.9% for the nine month period. A
portion of these decreases relate to elimination of costs due to the sale of
Eland-Brandt. Other components of the decreases were: positive retrospective
adjustments for prior years workers compensation insurance during the current
year as opposed to negative adjustments during last year; the writedown of
long-lived assets during the first quarter of last year; and a charge for
asset writedowns and restructuring related to the purchase of Altura during
the second quarter of last year.
The increases in net interest income for the three and nine month periods
directly relate to the significantly increased level of funds available for
investment.
The effective tax rate for the nine months ended March 31, 1998 was 38.4%
whereas the comparable period of the prior year was 44.1%. This decrease
results from the current year being low due to the sale of the foreign
subsidiary which incurred a small taxable gain in relation to the book gain
and the prior year being high due to the incurrence of foreign pretax losses
for which the Company realized no tax benefit.
- 8 -
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<PAGE> Unaudited
Liquidity and Capital Resources:
Working capital increased to $70,053,000 during the nine months ended
March 31, 1998, which is an increase of $3,914,000 from June 30, 1997. The
ratio of current assets to current liabilities is currently 4.8 as compared
to 4.0 as of the beginning of the year.
The Company's projected net capital expenditures for fiscal 1998 include
$7,000,000 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, 1997 Annual Report to Shareholders.
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<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, 1998 DAVID C. TREINEN
David C. Treinen
Senior Vice President - Finance
and Administration
(Principal Financial Officer)
Date May 12, 1998 MITCHELL K. FOGELMAN
Mitchell K. Fogelman
Vice President - Controller
(Principal Accounting Officer)
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 11,497
<SECURITIES> 0
<RECEIVABLES> 32,219
<ALLOWANCES> 0
<INVENTORY> 41,158
<CURRENT-ASSETS> 88,563
<PP&E> 96,026
<DEPRECIATION> 50,673
<TOTAL-ASSETS> 144,322
<CURRENT-LIABILITIES> 18,510
<BONDS> 0
0
0
<COMMON> 8,851
<OTHER-SE> 112,599
<TOTAL-LIABILITY-AND-EQUITY> 144,322
<SALES> 168,156
<TOTAL-REVENUES> 168,156
<CGS> 116,907
<TOTAL-COSTS> 153,995
<OTHER-EXPENSES> (177)
<LOSS-PROVISION> 612
<INTEREST-EXPENSE> 60
<INCOME-PRETAX> 14,338
<INCOME-TAX> 5,500
<INCOME-CONTINUING> 8,838
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,838
<EPS-PRIMARY> 2.06
<EPS-DILUTED> 2.06
</TABLE>
