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 December 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 February 2, 1998 there were 4,290,494 shares of Common Stock outstanding.
Page 1 of 11 Pages
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INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
INDEX
Page Nos.
PART I Financial Information
Consolidated Balance Sheets -
December 31, 1997 and June 30, 1997 3
Consolidated Statements of Income -
three and six month periods
ended December 31, 1997 and 1996 5
Consolidated Statements of Cash Flows -
six months ended December 31, 1997
and 1996 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
PART II Other Information
Item 4. Submission of Matters to a Vote of
Security Holders 10
Signatures 11
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<TABLE>
PART I
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Unaudited Audited
Assets Dec. 31, 1997 June 30, 1997
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,620,000 $ 6,485,000
Accounts receivable, net 34,078,000 35,773,000
Unbilled receivables 885,000
Inventories:
Raw materials 28,329,000 32,275,000
Work-in-process 1,908,000 2,320,000
Finished goods 6,592,000 7,398,000
Prepaid expenses 2,734,000 1,834,000
Future income tax benefits 1,289,000 1,289,000
Total current assets 85,550,000 88,259,000
____________ ____________
Property, plant and equipment, at cost 94,699,000 99,564,000
Accumulated depreciation (49,756,000) (53,600,000)
44,943,000 45,964,000
____________ ____________
Other assets:
Costs in excess of net assets of
purchased businesses 10,021,000 10,290,000
Other 523,000 528,000
10,544,000 10,818,000
____________ ____________
$141,037,000 $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 Dec. 31, 1997 June 30, 1997
<S> <C> <C>
Current liabilities:
Accounts payable $ 5,677,000 $ 9,417,000
Accrued liabilities 10,114,000 11,727,000
Income taxes payable 452,000 976,000
Total current liabilities 16,243,000 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 120,432,000 118,240,000
____________ ____________
$141,037,000 $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 Six Months Ended
December 31, December 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $55,659,000 $56,161,000 $115,168,000 $113,089,000
Costs and expenses:
Cost of sales 38,214,000 40,350,000 79,935,000 81,188,000
Selling, general and
administrative expenses 11,686,000 13,455,000 24,763,000 27,256,000
Interest (income) expense, net (68,000) 13,000 (81,000) (84,000)
Income before income taxes 5,827,000 2,343,000 10,551,000 4,729,000
Provision for income taxes 1,970,000 1,070,000 3,990,000 2,120,000
Net income $ 3,857,000 $ 1,273,000 $ 6,561,000 $ 2,609,000
___________ ___________ ____________ ____________
___________ ___________ ____________ ____________
Shares used to compute EPS:
Basic 4,282,994 4,262,348 4,276,319 4,261,419
Diluted 4,294,837 4,274,683 4,286,778 4,274,083
Earnings per share:
Basic $.90 $.30 $1.53 $.61
Diluted $.90 $.30 $1.53 $.61
Cash dividends per share $.30 $.25 $.55 $.50
<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>
Six Months Ended
December 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,561,000 $ 2,609,000
Adjustments for noncash transactions:
Depreciation and amortization 2,881,000 2,197,000
Gain on disposition of business (1,156,000)
Writedown of long-lived assets 888,000
Changes in assets and liabilities:
Receivables (544,000) 2,806,000
Inventories 4,277,000 266,000
Prepaid expenses and other (1,066,000) 364,000
Accounts payable (806,000) (914,000)
Accrued liabilities and other (989,000) (776,000)
Income taxes payable (511,000) (30,000)
Net cash provided by operating activities 8,647,000 7,410,000
Cash flows from investing activities:
Capital expenditures (3,505,000) (3,366,000)
Proceeds from sales of capital assets 48,000 175,000
Disposition (acquisition) of businesses 1,021,000 (6,971,000)
Net cash used in investing activities (2,436,000) (10,162,000)
Cash flows from financing activities:
Repayment of long-term debt (423,000)
Exercise of stock options 272,000 35,000
Dividends paid to shareholders (2,355,000) (2,131,000)
Net cash used in financing activities (2,083,000) (2,519,000)
Effect of exchange rate changes on cash 7,000
Net change in cash and cash equivalents 4,135,000 (5,271,000)
Cash and cash equivalents at beginning
of period 6,485,000 13,230,000
Cash and cash equivalents at end of period $10,620,000 $ 7,959,000
___________ ___________
___________ ___________
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<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 December 31, 1997 and June 30, 1997, and the
results of operations for the three and six month periods ended December 31,
1997 and 1996, and the cash flows for the six month periods ended December 31,
1997 and 1996.
The results of operations for the three and six month periods ended
December 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.
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 quarter ended December 31, 1997, 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 quarter do not include the operations of Eland-Brandt, B.V..
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<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 $502,000 or 0.9% for the quarter ended December 31,
1997 and increased by $2,079,000 or 1.8% for the six months then ended when
compared with the 1996 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 fiscal 1997 shows increases
of $3,130,000 or 6.0% for the quarter and $6,373,000 or 4.2% for the six
months. The sales from continuing operations include increases posted by the
Residential Products Group, up $945,000 or 9.0% for the quarter and $1,939,000
or 8.6% for the six months, the Aluminum Extrusion Group, whose sales were up
$1,054,000 or 9.8% for the quarter and $1,256,000 or 5.3% for the six months
and by the Commercial Products Group, whose sales were up $452,000 or 1.6% for
the quarter and $2,351,000 or 4.4% for the six months.
Cost of sales as a percentage of net sales decreased by 3.1% for the quarter
ended December 31, 1997 and by 2.4% for the six months then ended when
compared with the 1996 periods. These decreases are primarily attributable
to increased margins in the Aluminum Extrusion Group and the Residential
Products Group resulting from labor and overhead efficiencies attained through
higher sales volume. Also a factor were the inventory and asset writedowns
related to the purchase of Altura during the second quarter of the prior year.
Selling, general and administrative expenses decreased by $1,769,000 or
13.1% for the quarter and by $2,493,000 or 9.1% for the six month period. The
expenses related to continuing operations was essentially unchanged as costs
eliminated by the sale of the subsidiary were offset by additional costs
associated with the increased volume of continuing business. The non-
recurring changes are the gain on sale of subsidiary during the second quarter
of the current year, a writedown of long-lived assets during the first quarter
of the prior year and a charge for asset writedowns and restructuring related
to the purchase of Altura during the second quarter of the prior year.
The increase in net interest income for the quarter directly relates to the
significantly increased level of funds available for investment.
The effective tax rate for the six months ended December 31, 1997 was 37.8%
whereas the comparable period of the prior year was 44.8%. This decrease is
directly related to the sale of the foreign subsidiary which incurred a small
taxable gain in relation to the book gain.
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<PAGE> Unaudited
Liquidity and Capital Resources:
Working capital increased to $69,307,000 during the six month period ended
December 31, 1997, which is an increase of $3,168,000 from June 30, 1997. The
ratio of current assets to current liabilities is currently 5.3 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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PART II. OTHER INFORMATION
Item 4(c). Submission of Matters to a Vote of Security Holders
On October 30, 1997, the Company held its 1997 Annual Shareholders Meeting.
Shareholders voted proxies representing 3,911,177 shares which was 91.6% of
the 4,267,619 shares outstanding on the record date. The proposed slate of
directors were elected with 3,900,764 shares and the selected independent
accountants were ratified with 3,905,381 shares.
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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 February 11, 1998 DAVID C. TREINEN
David C. Treinen
Senior Vice President - Finance
and Administration
(Principal Financial Officer)
Date February 11, 1998 MITCHELL K. FOGELMAN
Mitchell K. Fogelman
Vice President - Controller
(Principal Accounting Officer)
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 10,620
<SECURITIES> 0
<RECEIVABLES> 34,078
<ALLOWANCES> 0
<INVENTORY> 36,829
<CURRENT-ASSETS> 85,550
<PP&E> 94,699
<DEPRECIATION> 49,756
<TOTAL-ASSETS> 141,037
<CURRENT-LIABILITIES> 16,243
<BONDS> 0
0
0
<COMMON> 8,822
<OTHER-SE> 111,610
<TOTAL-LIABILITY-AND-EQUITY> 141,037
<SALES> 115,168
<TOTAL-REVENUES> 115,168
<CGS> 79,935
<TOTAL-COSTS> 104,698
<OTHER-EXPENSES> (81)
<LOSS-PROVISION> 401
<INTEREST-EXPENSE> 48
<INCOME-PRETAX> 10,551
<INCOME-TAX> 3,990
<INCOME-CONTINUING> 6,561
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,561
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 1.53
</TABLE>
