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 September 30, 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
(323) 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 November 2, 1998 there were 4,291,494 shares of Common Stock outstanding.
Page 1 of 8 Pages
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INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
INDEX
Page
PART I. Financial Information
Consolidated Balance Sheets -
September 30, 1998 and June 30, 1998 3
Consolidated Statements of Income -
three months ended September 30, 1998 and 1997 4
Consolidated Statements of Cash Flows -
three months ended September 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Signatures 8
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<TABLE>
PART I
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Unaudited Audited
Assets Sept. 30, 1998 June 30, 1998
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 12,392,000 $ 14,320,000
Accounts receivable, net 37,743,000 34,850,000
Inventories 38,997,000 38,135,000
Prepaid expenses and deposits 3,369,000 2,827,000
Future income tax benefits 1,521,000 1,521,000
Total current assets 94,022,000 91,653,000
Property, plant and equipment, at cost 100,146,000 96,692,000
Accumulated depreciation (52,314,000) (51,316,000)
Net property, plant and equipment 47,832,000 45,376,000
Other assets:
Costs in excess of net assets of
purchased businesses 9,617,000 9,752,000
Other 514,000 517,000
Total other assets 10,131,000 10,269,000
$151,985,000 $147,298,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 9,752,000 $ 7,932,000
Accrued liabilities 9,888,000 10,921,000
Income taxes payable 2,493,000 630,000
Total current liabilities 22,133,000 19,483,000
Deferred income taxes 4,366,000 4,366,000
Total liabilities 26,499,000 23,849,000
Shareholders' equity 125,486,000 123,449,000
$151,985,000 $147,298,000
<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
September 30,
1998 1997
<S> <C> <C>
Net sales $62,150,000 $59,509,000
Costs and expenses:
Cost of sales 42,827,000 41,721,000
Selling, general and administrative 13,870,000 13,077,000
Interest (income) expense, net (106,000) (13,000)
Income before income taxes 5,559,000 4,724,000
Provision for income taxes 2,150,000 2,020,000
Net income $ 3,409,000 $ 2,704,000
Earnings per share:
Basic $.79 $.63
Diluted $.79 $.63
Shares used to compute EPS:
Basic 4,290,994 4,268,988
Diluted 4,298,807 4,278,064
Cash dividends per share $.30 $.25
<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>
Three Months Ended
September 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,409,000 $ 2,704,000
Adjustments for noncash transactions:
Depreciation and amortization 1,470,000 1,452,000
Changes in assets and liabilities:
Receivables (2,893,000) (1,228,000)
Inventories (862,000) 1,308,000
Prepaid expenses and other (539,000) (629,000)
Accounts payable 1,820,000 1,064,000)
Accrued liabilities and other (1,033,000) (1,803,000)
Income taxes payable 1,863,000 1,454,000
Net cash provided by operating activities 3,235,000 4,322,000
Cash flows from investing activities:
Capital expenditures (4,375,000) (1,894,000)
Proceeds from sales of capital assets 471,000 23,000
Net cash used in investing activities (3,904,000) (1,871,000)
Cash flows from financing activities:
Dividends paid to shareholders (1,288,000) (1,068,000)
Proceeds from exercises of stock options 29,000 93,000
Net cash used in financing activities (1,259,000) (975,000)
Effect of exchange rate changes on cash 7,000
Net change in cash and cash equivalents (1,928,000) 1,483,000
Cash and cash equivalents at beginning
of period 14,320,000 6,485,000
Cash and cash equivalents at end of period $12,392,000 $ 7,968,000
<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,
in all material respects, its financial position as of September 30, 1998 and
June 30, 1998, and the results of operations and cash flows for the three
month periods ended September 30, 1998 and 1997. The results of operations
for the three month periods ended September 30, 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 conditions, 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.
Comprehensive Income
Comprehensive income, defined as net income and other comprehensive income,
for the first quarters ended September 30, 1998 and 1997 was $3,296,000 and
$2,569,000, respectively. Other comprehensive income includes foreign
currency translation adjustments recorded directly in shareholders' equity.
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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 for the first quarter ended September 30, 1998 increased by
$2,641,000 or 4.4% from the comparable quarter of the prior year. The sale
of the Company's Dutch subsidiary, Eland-Brandt B.V., during the prior year
significantly impacts the comparison which if excluded would show an increase
of $4,624,000 or 8.0% in quarterly sales. This increase in sales from
continuing operations is primarily composed of a $4,768,000 or 17.5% increase
posted by the Commercial Products Group resulting from strong demand in the
Southwestern and Midwestern regions of the country.
The cost of sales as a percentage of net sales was 68.9% for the quarter
ended September 30, 1998 as opposed to 70.1% for the comparable prior year
period. This decrease is primarily attributable to the sale of Eland-Brandt
which if excluded from the prior year would have resulted in a 69.2% cost of
sales percentage.
Selling, general and administrative expenses for the quarter were $793,000
higher than those of the comparable quarter of the prior year. This increase
consists of a $467,000 or 3.6% increase in costs associated with the increased
sales volume and a $326,000 increase in retrospective charges for prior years
workers compensation insurance.
The increase in net interest income for the quarter relates to the
significantly increased level of funds available for investment during the
quarter.
The effective tax rate for the quarter ended September 30, 1998 was 38.7%
whereas the comparable quarter of fiscal year 1998 was 42.8%. This decrease
is primarily attributable to the sale of Eland-Brandt which if excluded from
the prior year would have resulted in a 39.7% effective tax rate.
Liquidity and Capital Resources:
Working capital decreased to $71,889,000 during the three months ended
September 30, 1998, a decrease of $281,000 from June 30, 1998. The ratio of
current assets to current liabilities is currently 4.2 as compared to 4.7 as
of the beginning of the year.
The Company's projected capital expenditures for fiscal 1999 and related
financing remain unchanged from those described in the June 30, 1998 Annual
Report. The Company's line of credit remains unchanged from that noted in the
June 30, 1998 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: November 12, 1998 DAVID C. TREINEN
David C. Treinen
Senior Vice President - Finance
and Administration
(Principal Financial Officer)
Date: November 12, 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> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 12,392
<SECURITIES> 0
<RECEIVABLES> 37,743
<ALLOWANCES> 0
<INVENTORY> 38,997
<CURRENT-ASSETS> 94,022
<PP&E> 100,146
<DEPRECIATION> 52,314
<TOTAL-ASSETS> 151,985
<CURRENT-LIABILITIES> 22,133
<BONDS> 0
0
0
<COMMON> 8,880
<OTHER-SE> 116,606
<TOTAL-LIABILITY-AND-EQUITY> 151,985
<SALES> 62,150
<TOTAL-REVENUES> 62,150
<CGS> 42,827
<TOTAL-COSTS> 42,827
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 152
<INTEREST-EXPENSE> 17
<INCOME-PRETAX> 5,559
<INCOME-TAX> 2,150
<INCOME-CONTINUING> 3,409
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,409
<EPS-PRIMARY> .79
<EPS-DILUTED> .79
</TABLE>
