SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1998 Commission File Number 1-
7256
INTERNATIONAL ALUMINUM CORPORATION
(Exact name of Registrant as specified in its charter)
California 95-2385235
(Incorporation) (I.R.S. Employer No.)
767 Monterey Pass Road
Monterey Park, California 91754
(323) 264-1670
(Principal executive office)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Names of Exchanges on Which Registered
Common Stock ($1.00 Par Value) New York Stock Exchange
Pacific Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
At September 9, 1998 there were 4,291,494 shares of Registrant's Common Stock
outstanding. The aggregate market value of shares held by non-affiliates was
$68,528,038 based on the New York Stock Exchange composite closing price on
that date.
DOCUMENTS INCORPORATED BY REFERENCE
Registrant's Annual Report to Shareholders for fiscal year ended June 30, 1998
is incorporated by reference into Parts I and II.
Registrant's Proxy Statement dated September 18, 1998 for the Annual Meeting
of Shareholders to be held on October 29, 1998 is incorporated by reference,
other than the performance graph and Compensation Committee Report, into Part
III.
<PAGE>
<PAGE> PART I
ITEM 1. BUSINESS
a. GENERAL DEVELOPMENT OF BUSINESS
International Aluminum Corporation is an integrated
manufacturer and supplier of a broad line of quality aluminum,
wood, vinyl and glass products. The Company was incorporated in
California in 1963 as successor to an aluminum fabricating
business begun in 1957 and maintains its executive offices at 767
Monterey Pass Road, Monterey Park, California 91754. The
Company's telephone number is (323) 264-1670. Reference to the
"Registrant", "International Aluminum Corporation" or the
"Company" includes International Aluminum Corporation and its
subsidiaries unless the context indicates otherwise.
b. INDUSTRY SEGMENTS, LINES OF BUSINESS AND CLASSES OF PRODUCTS
This information is included on pages 4 and 14 of the
Registrant's 1998 Annual Report to Shareholders and is hereby
incorporated by reference.
c. NARRATIVE DESCRIPTION OF BUSINESS
Processes and Products
Building Products
Residential. Residential products are fabricated from
aluminum, wood and vinyl into a broad line of horizontal sliding
windows, vertical sliding windows, casement windows, garden
windows, bay and bow windows, special configuration windows,
louvre windows, patio doors, tub enclosures, shower doors,
wardrobe mirror doors and related products. These products are
used in new residential construction and in remodeling, home
improvement and replacement.
Commercial. Commercial products are fabricated from
aluminum into curtain walls, window walls, storefront framing,
entrance doors and frames for exterior applications and
officefronts, doors and frames for interior applications. These
products are utilized in varying combinations to produce systems
used for office and commercial construction, remodeling and
tenant improvement applications.
- 1 -<PAGE>
<PAGE>
Extrusions. In the extrusion process, heated aluminum
billets are hydraulically forced through steel dies to produce
a piece of metal of the desired length and cross-section shape.
The extrusions are then cut and, when requested, anodized or
painted in a variety of finishes in the Company's anodizing and
painting departments.
Aluminum extrusions produced by the Company are used in
fabricating substantially all of its other aluminum products.
In addition, during fiscal 1998 approximately 49% of the
extrusions produced were sold to users in its own or other
industries, including manufacturers of fixtures, electronic
equipment, automotive products, sailboats, skylights and truck
bodies. The Company furnishes design services to assist its
customers in developing or better utilizing custom extrusions.
Glass Products
This product group shapes, bends, bevels, etches, polishes
and tempers bulk flat glass. The fabricated glass is primarily
utilized in the Company's store fixturing products and in its
glass furniture lines. Glass is also processed to customer
specifications for incorporation into their end products, which
include residential, patio and office furniture, truck and
recreational vehicle windows, light fixtures and appliances.
Sales and Distribution
The Company markets its residential products primarily to
mass merchandisers, independent dealers and distributors, with
whom the Company has no long-term contracts. Commercial building
products are marketed primarily to glazing and tenant improvement
contractors. Aluminum extrusions are marketed principally by
direct sales to other manufacturers. The Company's glass
products are marketed to manufacturers, distributors and
retailers.
Each of the Company's subsidiaries has its own administrative
and sales organizations. Sales are made primarily in North
America.
No customer accounted for more than 5% of net sales in 1998,
and no material part of the business is dependent upon a single
customer or a few customers, the loss of any one or more of whom
would have a materially adverse effect on the business of the
Company. The Company does business on a current basis and has
no significant backlog of unfilled firm orders.
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<PAGE>
Materials
The Company purchases its aluminum ingot requirements from
primary aluminum producers or spot metal brokers. Although
increased worldwide demand produces periods of tight supply of
aluminum ingot and scrap, the Company has had satisfactory
experience to date in obtaining sufficient raw materials to meet
its requirements and does not anticipate material shortages which
would significantly hamper its operations.
Flat glass is purchased from domestic glass manufacturers.
The Company has had satisfactory experience to date in obtaining
sufficient glass to meet its requirements.
The Company produces the aluminum extrusions used in the
products it manufactures and sells. Wood, vinyl, hardware,
fasteners and screening are purchased from outside sources.
Seasonality
Sales of products designed for residential and commercial
applications are subject to cyclical swings in new construction
and seasonal fluctuations due to reduced construction activity
in some marketing areas during the winter months (second and
third quarters).
Working Capital
To maintain an adequate supply of aluminum to meet customer
delivery requirements and to assure itself of a continuous
allotment of materials from its suppliers, the Company at times
carries a significant inventory of aluminum ingot. Depending on
price and availability, bulk quantities of ingot are purchased
from either primary aluminum producers or from spot metal
brokers.
The Company does not believe there are any abnormal working
capital requirements associated with any of its product groups
as merchandise is normally produced for specific customer orders
or shipped from inventory and as a general practice extended
payment terms are not granted to customers.
Patents
The Company has no material patents, either issued or
pending, and is not a party to any significant licensing
agreements.
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<PAGE>
Competition and Risk
The business of International Aluminum is highly competitive.
Competition in all product lines is on the basis of price,
service and product quality. The manner and extent of such
competition depends on the product being marketed and the
relevant marketing area. In selling its residential products to
mass merchandisers, dealers and distributors, the Company faces
competition primarily from numerous fabricators. Several of the
Company's major competitors in selling commercial products and
aluminum extrusions are substantially larger, more diversified
and have greater resources than the Company.
The Company anticipates that expansion of its product lines
may result in its competing with certain of its present
customers. While the Company cannot accurately predict the
effect, if any, that such development will have on its business,
the Company anticipates no material adverse effect.
Since a substantial portion of the Company's business is
connected with residential and commercial building construction,
any significant decrease in new or remodeling construction could
adversely affect revenues. Experience has shown that high
interest rates for construction financing and residential
mortgage and home improvement loans may adversely affect
revenues.
Environmental Controls
The Company's domestic aluminum extrusion, anodizing,
painting and manufacturing facilities are subject to water and
air pollution control standards mandated by federal, state and
local law. While the Company anticipates no material capital
expenditures to meet established environmental quality control
standards, there can be no assurance that more stringent
standards will not be established which might require such
expenditures.
Employees
As of June 30, 1998, the Company had approximately 2,000
full-time employees.
d. FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
The information concerning sales, net income and identifiable
assets of foreign and domestic operations for fiscal years 1998,
1997 and 1996 is set forth in Note 10 to the consolidated
financial statements included on page 14 of the Company's 1998
Annual Report incorporated herein by reference.
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<PAGE> <TABLE>
ITEM 2. PROPERTIES
The following table sets forth information concerning the
location, size and use of the Company's present facilities:
<CAPTION>
Square
Location Feet (A) Use
<S> <C> <C>
Alhambra, CA 221,000 Aluminum extrusions,
foundry & finishing
Waxahachie, TX 272,000 Aluminum extrusions,
foundry & finishing
South Gate, CA 189,000 Residential products
Hayward, CA 103,000 Residential products
Phoenix, AR 100,000 Residential products
Moreno Valley, CA 67,000 Residential products
Vernon, CA 134,000 Commercial products
Hayward, CA 14,000(L) Commercial products
Las Vegas, NV 12,000(L) Commercial products
Bedford Park, IL 81,000 Commercial products
Baltimore, MD 16,000(L) Commercial products
Boston, MA 21,000(L) Commercial products
Detroit, MI 12,000(L) Commercial products
Waxahachie, TX 219,000 Commercial products
Denver, CO 16,000(L) Commercial products
St. Louis, MO 14,000(L) Commercial products
Dallas, TX 53,000(L) Commercial products
Houston, TX 57,000 Commercial products
Rock Hill, SC 74,000 Commercial products
Orlando, FL 14,000(L) Commercial products
Atlanta, GA 18,000(L) Commercial products
Langley, B.C., Canada 63,000 Commercial products
South Gate, CA 65,000(L) Glass fabrication
Rock Hill, SC 84,000 Glass fabrication
Monterey Park, CA 19,000(L) Executive offices
______________________
<FN>
(A) Includes manufacturing, warehouse and office space; excludes
construction in process, parking and yard storage space.
(L) Indicates leased premises.
Of the 1,938,000 square feet exhibited above, 1,664,000 square
feet are owned by the Company. The balance of 274,000 square feet
is leased under agreements expiring at various dates. The Company
believes that its facilities are adequate for anticipated levels of
operations.
</TABLE>
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<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company has litigation pending, both offensive and
defensive, arising from the conduct of its business, none of
which are expected to have any material effect on the Company's
financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of security holders
which are required to be reported under the instructions to this
item.
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<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The market and dividend information is included on pages 15
and 16 of the Company's 1998 Annual Report to Shareholders and
is incorporated herein by reference.
There are no restrictions of future cash dividends.
There were approximately 400 shareholders of record of the
Company's common stock at June 30, 1998.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data pertaining to the Company for the
last five years is set forth on page 4 of the Company's 1998
Annual Report to Shareholders and is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This information is set forth on pages 2 through 6 of the
Company's 1998 Annual Report to Shareholders and is incorporated
herein by reference.
ITEM 7A. DISCLOSURES ABOUT MARKET RISK
The Company has no market risk sensitive instruments which
are required to be reported under the instructions to this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Part IV, Item 14.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements which are required to be
reported under the instructions to this item.
PART III
The information required under Part III is contained in the
Company's Proxy Statement for the Annual Meeting of Shareholders
to be held October 29, 1998, which information is incorporated
herein by reference.
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<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Page
(a) 1. Financial Statements
Consolidated Financial Statements (See Note):
Balance sheets - June 30, 1998 and 1997
Statements for the three years ended June 30, 1998 -
Income
Shareholders' equity
Cash flows
Notes to consolidated financial statements
2. Financial Statement Schedules
Report of Independent Accountants on Financial
Statement Schedules F-1
Schedule for the three years ended June 30, 1998 -
II Valuation and qualifying accounts F-2
3. Exhibits
3. Articles of incorporation and by-laws. This information is set
forth as Exhibits 2.2 and 2.3 to the September 9, 1977 Registration
Statement on Form S-7, and was amended by Proxy Statements dated
September 26, 1978 and September 21, 1988 furnished to shareholders
in connection with the related Annual Meeting of Shareholders held
on October 26, 1978 and October 27, 1988, respectively. These
documents were filed by the Registrant with the Securities and
Exchange Commission and are incorporated herein by reference.
4. Instruments defining the rights of security holders, including
the indentures. This information is set forth on page 10 of the
August 1, 1968 Registration Statement on Form S-1, as amended, filed
by the Registrant with the Securities and Exchange Commission and is
incorporated herein by reference.
13. Annual Report to Shareholders.
22. Subsidiaries of the registrant.
23. Consent of PricewaterhouseCoopers LLP (on page F-1 herein).
27. Financial Data Schedule.
(b) No reports on Form 8-K were required to be filed during the last
quarter of 1998.
NOTE: The consolidated financial statements referred to above are included
in the 1998 Annual Report to Shareholders and are incorporated
herein by reference.
- 8 -<PAGE>
<PAGE> <TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereto duly authorized.
INTERNATIONAL ALUMINUM CORPORATION
Date: September 21, 1998 By: DAVID C. TREINEN
David C. Treinen
Senior Vice President-Finance and
Administration; Secretary and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<CAPTION>
Signature Title Date
<S> <C> <C>
CORNELIUS C. VANDERSTAR Chairman of the Board and September 21, 1998
Cornelius C. Vanderstar Chief Executive Officer
JOHN P. CUNNINGHAM Director; President and September 21, 1998
John P. Cunningham Chief Operating Officer
DAVID C. TREINEN Director; Senior Vice September 21, 1998
David C. Treinen President-Finance and
Administration; Secretary
and Chief Financial Officer
MITCHELL K. FOGELMAN Vice President-Controller; September 21, 1998
Mitchell K. Fogelman and Chief Accounting Officer
HUGH E. CURRAN Director September 21, 1998
Hugh E. Curran
JOEL F. McINTYRE Director September 21, 1998
Joel F. McIntyre
ALEXANDER VAN DE POL Director September 21, 1998
Alexander van de Pol
DONALD J. WILLFONG Director September 21, 1998
Donald J. Willfong
</TABLE>
- 9 -<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
International Aluminum Corporation
Our audits of the consolidated financial statements referred to
in our report dated August 18, 1998 appearing on page 15 of the
1998 Annual Report to Shareholders of International Aluminum
Corporation (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed
in Item 14(a)2 of this Form 10-K. In our opinion, this Financial
Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
August 18, 1998
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 33-57109) of
International Aluminum Corporation of our report dated August 18,
1998 appearing on page 15 of the Annual Report to Shareholders
which is incorporated by reference in this Annual Report on Form
10-K for the year ended June 30, 1998. We also consent to the
incorporation by reference of our report on the Financial
Statement Schedule which appears on page F-1 of this Form 10-K.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
September 21, 1998
F-1<PAGE>
<PAGE>
<TABLE>
INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For The Three Years Ended June 30, 1998
<CAPTION>
Balance at Amounts Amounts Balance at
Beginning Charged Written End
Description of Year to Income Off of Year
<S> <C> <C> <C> <C>
Reserves for
doubtful accounts
1998 $614,000 $484,000 $401,000 $697,000
1997 571,000 548,000 505,000 614,000
1996 773,000 394,000 596,000 571,000
</TABLE>
F-2<PAGE>
<PAGE>
INTERNATIONAL ALUMINUM CORPORATION
SUBSIDIARIES
The following is a list of the significant subsidiaries of the
Registrant and the jurisdiction under which each is organized. The
Company owns 100 percent of the voting securities of each such
subsidiary.
Jurisdiction of
Name of Subsidiary Organization
International Window Corporation California
International Extrusion Corporation California
United States Aluminum Corporation California
General Window Corporation* California
International California Glass Corporation California
United States Aluminum Corporation-Illinois California
International Window-Arizona, Inc. California
United States Aluminum Corporation-Texas Texas
International Extrusion Corporation-Texas California
United States Aluminum Corporation-Carolina California
International Carolina Glass Corporation California
Maestro Products, Inc. California
United States Aluminum of Canada, Ltd. Canada
______________________________________________
* dba International Window-Northern California
Exhibit 22
INTERNATIONAL ALUMINUM CORPORATION
1998 Annual Report<PAGE>
<PAGE>
COMPANY PROFILE
INTERNATIONAL ALUMINUM CORPORATION is an integrated manufacturer and supplier
of a broad line of quality aluminum, wood, vinyl and glass products. The
Company is headquartered in Monterey Park, California and has approximately
2,000 employees. Operations are conducted through thirteen North American
subsidiaries.
COMMERCIAL PRODUCTS - Curtain walls, window walls, storefront framing,
entrance doors and frames, interior officefronts and interior doors and
frames.
RESIDENTIAL PRODUCTS - Aluminum, wood, vinyl and composite products including
expansive lines of windows, patio doors, shower and bath enclosures and
wardrobe mirror doors.
EXTRUSION PRODUCTS - Mill finish, anodized, painted and fabricated aluminum
extrusions.
GLASS PRODUCTS - Innovative store fixturing products encompassing tempered
glass, wood and metal. Proprietary showcase designs and distinctive lines of
glass furniture.
INTERNET WEBSITE - Internet users can access information on products of
International Aluminum Corporation subsidiaries at www.intlalum.com.
TABLE OF CONTENTS
Financial Highlights
Letter to Shareholders
Selected Financial Data
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Quarterly Financial Data
Report of Independent Accountants
Corporate Information
Subsidiaries By Product Class<PAGE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Fiscal Years Ended June 30, 1998, 1997 and 1996
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Operating Results:
Net sales $225,789,000 $224,026,000 $215,573,000
Income from operations 17,783,000 10,145,000 12,565,000
Net income 12,122,000 5,938,000 7,597,000
Financial Data:
Net cash provided by operating activities $ 18,136,000 $ 11,755,000 $ 17,395,000
Capital expenditures including acquisitions 6,837,000 14,479,000 5,680,000
Working capital 72,170,000 65,820,000 71,896,000
Shareholders' equity 123,449,000 118,240,000 116,882,000
Per Share Data:
Net income - Basic $ 2.83 $ 1.39 $ 1.78
Net income - Diluted 2.82 1.39 1.78
Dividends declared 1.15 1.00 1.00
Book value at yearend 28.77 27.71 27.44
Market price at yearend 31.00 26.50 25.25
</TABLE>
<PAGE>
<PAGE>
TO OUR SHAREHOLDERS
All in all, fiscal 1998 was a reasonably good year for International
Aluminum. Despite the divestiture of Eland-Brandt in mid-year, consolidated
sales increased slightly and net income more than doubled from $1.39 per
share to $2.82. All four of our principal product groups reported increased
earnings over those of the prior year. We feel that the results achieved for
the year indeed justify the Board action taken in October increasing the
annual dividend to shareholders by 20 percent to $1.20 per share. Our
business currently remains strong with our total order backlog at July 31 the
highest in the Company s history.
The leading contributor to the overall improvement in our consolidated
results was our Aluminum Extrusion Group. Increased productivity,
particularly at our Texas plant, was the primary reason for the improved
performance. We will shortly be launching into a major modernization program
at our older Alhambra, California extrusion and metal finishing plant with
major upgrades to our foundry and certain of our press equipment in an
attempt to improve productivity to match that of the newer Texas facility.
Our United States Aluminum Commercial Products Group in total had yet another
excellent year. Its performance, however, was enhanced by the mid-year
amalgamation into it of our Raco Altura interior products subsidiary. We are
already beginning to see the benefits of the merger of these two commercial
product groups. Our glass and glazing customers are for the first time now
able to quote and secure projects with aluminum glazing materials from a
single source both for the exterior as well as the interior of an office or
commercial building. In addition, since joining U.S. Aluminum, major product
line improvements have been made to Raco s interior glazing systems. In
anticipation of sharply increased interior products demand, U.S. Aluminum is
currently enlarging its Chicago fabrication plant by nearly 25 percent as
well as establishing interior product fabrication capabilities at its
Southern California facility.
Both of our International California and International Carolina glass
fabricating subsidiaries posted improved results. We have consolidated heavy
glass furniture production and distribution at the South Carolina plant while
California Glass has moved strongly in the direction of becoming a store
fixture and display products company. It is currently involved not only with
general glass fabrication and the production of tempered safety glass but is
now producing a line of aluminum showcases and display fixtures. This
subsidiary will be moving in November from its present leased facility into
a larger owned plant which is currently under construction east of Los
Angeles.<PAGE>
<PAGE>
Finally, our Residential Products Group, long the mainstay of our
consolidated profitability, also achieved improved results. However, its
overall performance still leaves much to be desired. The increasing shift
in consumer preference from aluminum to vinyl window products has had a major
impact on our Residential Group. This is primarily due to our historic
orientation toward aluminum with its obvious benefits of vertical integration
of extrusion, finishing and product fabrication and distribution. We now are
fully committed to vinyl products in addition to aluminum at all three
International Window plants. We have heavily invested in automated vinyl
fabrication equipment and are positioned to efficiently produce whatever the
market demands in the way of residential window and door products. We will
be shortly introducing a new and highly competitive thermally improved hybrid
window incorporating both aluminum and vinyl components. In addition, we
have updated our product line and introduced new marketing strategies in an
attempt to bolster the shower door and tub enclosure segment of our
residential business. We have improved and modernized all of our marketing
programs with updated literature, increased participation in trade shows and
the establishment of web sites on the Internet.
The Company s financial health continues to be excellent and our balance
sheet is stronger than ever. Shareholders equity rose to $123.4 million or
$28.77 per share while at yearend total assets stood at $147.3 million with
no long-term debt. Working capital at June 30 was slightly over $72 million
and our current ratio had improved to 4.7 to 1. Projected capital spending
in the coming year should be around $11 million with a major portion of it
earmarked for the previously mentioned equipment upgrades at International
Extrusion, California. We are encouraged by the current strength of our
business which can be attributed in part to more focused marketing efforts
company-wide as well as improved customer relation capabilities resulting
from the newly implemented integrated computer software system. With many
new product and service programs in place, we feel quite optimistic regarding
prospects for the coming year.
CORNELIUS C. VANDERSTAR JOHN P. CUNNINGHAM
Cornelius C. Vanderstar John P. Cunningham
Chairman President
August 24, 1998<PAGE>
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
Year Ended June 30 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Sales
Commercial $109,783,000 $105,781,000 $ 97,801,000 $ 87,002,000 $ 66,843,000
Residential 48,863,000 51,266,000 51,879,000 53,108,000 52,081,000
Extrusion 50,426,000 51,957,000 49,462,000 53,747,000 38,616,000
Glass 16,717,000 15,022,000 16,431,000 17,049,000 17,233,000
Total net sales $225,789,000 $224,026,000 $215,573,000 $210,906,000 $174,773,000
Earnings
Gross profit $69,112,000 $62,754,000 $59,916,000 $67,964,000 $51,048,000
Net income 12,122,000 5,938,000 7,597,000 13,502,000 8,795,000
Per share:
Net income - Basic $2.83 $1.39 $1.78 $3.18 $2.08
Net income - Diluted 2.82 1.39 1.78 3.16 2.07
Dividends declared 1.15 1.00 1.00 1.00 1.00
Financial Data at Yearend
Working capital $ 72,170,000 $ 65,820,000 $ 71,896,000 $ 68,395,000 $ 63,452,000
Total assets 147,298,000 145,041,000 141,843,000 138,104,000 129,030,000
Long-term debt 542,000 1,103,000
Shareholders' equity 123,449,000 118,240,000 116,882,000 113,771,000 103,435,000
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Significant Changes in Results of Operations
1998 vs. 1997
Net sales for fiscal 1998 increased by $1,763,000 or 0.8% from net
sales of fiscal 1997. The sale of the Company's Dutch subsidiary,
Eland-Brandt BV during the second quarter significantly impacts period
comparisons. The exclusion of Eland-Brandt BV from the comparison
shows an increase of $11,120,000 or 5.2% for the year. The sales from
ongoing operations primarily consist of a $6,808,000 or 6.7% increase
in sales of commercial products resulting from increased demand for
interior and exterior commercial products in the southern region of
the United States.
Gross profit increased to 30.6% of sales in 1998 as compared to 28.0%
in 1997. This increase is 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 and the prior year additional workers compensation
insurance expense related to a major industrial accident during that
year.
Selling, general and administrative expenses were 22.7% of sales in
1998 as compared with 23.5% in 1997. Expenses in the current year
have decreased by $1,280,000, which reflects the elimination of costs
due to the sale of Eland-Brandt BV. Other components of the change
include increased selling and marketing costs during the current year
and decreased costs related to certain nonrecurring charges in the
prior year.
The increase in interest income relates to the significantly increased
level of funds available for investment primarily resulting from the
cash provided by operations.<PAGE>
1997 vs. 1996
Net sales for fiscal 1997 increased by $8,453,000 or 3.9% from net
sales of fiscal 1996. This increase is the composite of a $10,619,000
increase in North American sales and a $2,166,000 decrease in European
sales. The sales increase primarily consists of a $7,980,000 or 8.2%
increase in sales of commercial products reflecting the acquisitions
of Altura and Orca coupled with the increased demand for exterior
commercial products in the western and southern regions of the United
States.
Gross profit increased to 28.0% of sales in 1997 as compared with
27.8% in 1996. This increase 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 related to the absorption of Altura into Ragland and
additional workers compensation insurance expense related to a major
industrial accident during the current year.
Selling, general and administrative expenses were 23.5% of sales in
1997 as compared with 22.0% in 1996. Expenses in the current year
have risen by $5,258,000. The continuing portion of this increase
primarily relates to additional selling costs associated with sales
personnel and marketing programs resulting from the purchase of Altura
as well as the continued expansion of the Commercial Products
satellite warehouse program. The non-recurring portion of the
increase relates to a writedown of long-lived assets, restructuring
charges related to the absorption of Altura and retrospective charges
for workers compensation insurance. The retrospective adjustments had
been positive in recent years but took a substantial swing to the
negative during this fiscal year.
The decrease in interest income relates to the significantly decreased
level of funds available for investment primarily due to the cash
purchases of Altura and Orca.<PAGE>
Inflation
Because the Company's products are predominately made-to-order, the
impact of inflation on operating results is typically not significant.
The Company attempts to alleviate inflationary pressures by increasing
selling prices to help offset rising costs (subject to competitive
conditions), increasing productivity and improving design.
Liquidity and Capital Resources
Working capital at June 30, 1998 was $72,170,000 compared to
$65,820,000 at June 30, 1997 and $71,896,000 at June 30, 1996. The
ratio of current assets to current liabilities was 4.7 at the end of
1998 compared to 3.9 at the end of 1997 and 4.5 at the end of 1996.
The Company continues to be in excellent position to meet its short-
term operating and discretionary cash requirements. Funds in excess
of current operating requirements are invested in short-term interest-
bearing instruments.
Capital expenditures for property, plant and equipment of
approximately $6,837,000 in 1998, $7,508,000 in 1997 and $5,680,000
in 1996 were financed through internal cash flow. Additional cash
flows include the 1998 fiscal year receipt of $1,021,000 from the sale
of a subsidiary and the 1997 fiscal year expenditure of $6,971,000
for two acquisitions (see Note 11). In addition to the normal annual
expenditures for replacement items, the Company projects capital
expenditures for fiscal 1999 of $11,000,000 for scheduled expansion
of production capacity. The Company anticipates financing these
expenditures through internal cash flow.
The Company had $10,000,000 in available credit at the end of 1998
under a short-term borrowing arrangement with a bank.
The Company's financial condition remains strong. The Company
believes that its cash, other liquid assets, operating cash flows and
borrowing capacity, taken together, provide more than adequate
resources to fund ongoing operating requirements and future capital
expenditures related to the expansion of existing businesses.
<PAGE>
Current and Pending Accounting Changes
The Financial Accounting Standards Board (FASB) issued Statement No.
128 (SFAS 128) "Earnings Per Share" (EPS), which the Company was
required to adopt this year. In preparing the financial statements
for the current fiscal year, the Company has applied the provisions
of SFAS 128 for all periods presented. Under the new requirements,
primary EPS has been replaced by a simpler calculation called basic
EPS. This calculation excludes all common stock equivalents and other
dilutive securities. Under the new requirements, diluted EPS replaces
the fully diluted EPS calculation. The new diluted EPS includes the
effect of all dilutive instruments if they meet certain requirements.
The impact of SFAS 128 on the calculation of basic and diluted EPS for
the fiscal years reported is not material.
Two new accounting standards were issued that will affect future
financial reporting. Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (SFAS 130), requires the
presentation of an additional income measure ("comprehensive income"),
which adjusts traditional net income for certain items that previously
were reflected as direct charges to equity (such as unrealized gains
and losses from foreign currency translation). Statement of Financial
Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" (SFAS 131), requires that segment
reporting for public purposes be conformed to the segment reporting
used by management for internal purposes. SFAS 130 and SFAS 131 must
be adopted by the Company during fiscal year 1999. Management is
currently evaluating the impact of these two standards on the
Company's future financial reporting but does not expect these new
standards to materially impact the Company's results of operations.
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133), requires
companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Management believes that the
adoption of SFAS 133 will not have an impact on the Company's
consolidated financial position or results of operations.
<PAGE>
Year 2000
The Company performed a review of the software it uses throughout its
business for Year 2000 compliance and determined that its financial
and operational software were not compliant. The Company is in the
process of migrating to new, compliant releases of its financial
software. The Company had previously purchased new compliant
operational software to be used by all of its entities to enhance
manufacturing information and customer service. The Company's
operating groups are in varying stages of implementation of this new
software, with at least one member of each group being completed. The
Company has targeted Year 2000 compliance by no later than mid-1999,
and thus has not developed contingency plans.
The consequences of non-compliance (although the Company does not
anticipate such) by the Company, its customers or its suppliers could
have a material adverse impact on the Company's operations. The
Company will continue to incur expenses related to these efforts;
however, such expenses are not expected to have a material impact on
the Company's results of operations.
Forward-Looking Information
This annual 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. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of
the date the statement was made. The Company undertakes no obligation
to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
For the years ended June 30, 1998, 1997 and 1996
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Net sales $225,789,000 $224,026,000 $215,573,000
Cost of sales 156,677,000 161,272,000 155,657,000
Gross profit 69,112,000 62,754,000 59,916,000
Selling, general and administrative expenses 51,329,000 52,609,000 47,351,000
Income from operations 17,783,000 10,145,000 12,565,000
Gain on sale of subsidiary 1,235,000
Interest income 343,000 198,000 311,000
Interest expense (79,000) (115,000) (109,000)
Income before income taxes 19,282,000 10,228,000 12,767,000
Provision for income taxes 7,160,000 4,290,000 5,170,000
Net income $ 12,122,000 $ 5,938,000 $ 7,597,000
Earnings per share - Basic $2.83 $1.39 $1.78
Earnings per share - Diluted $2.82 $1.39 $1.78
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended June 30, 1998, 1997 and 1996
<CAPTION>
Common Stock Paid-in Retained Cumulative
Shares Amount Capital Earnings Translation
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1995 4,252,789 $4,726,000 $3,612,000 $102,404,000 $3,029,000
Exercise of stock options 7,391 8,000 107,000
Translation adjustment (342,000)
Cash dividends (4,259,000)
Net income 7,597,000
Balance, June 30, 1996 4,260,180 4,734,000 3,719,000 105,742,000 2,687,000
Exercise of stock options 7,239 7,000 90,000
Translation adjustment (412,000)
Cash dividends (4,265,000)
Net income 5,938,000
Balance, June 30, 1997 4,267,419 4,741,000 3,809,000 107,415,000 2,275,000
Exercise of stock options 23,075 23,000 278,000
Translation adjustment (2,285,000)
Cash dividends (4,929,000)
Net income 12,122,000
Balance, June 30, 1998 4,290,494 $4,764,000 $4,087,000 $114,608,000 $ (10,000)
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE> <TABLE>
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and 1997
<CAPTION>
Assets 1998 1997
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 14,320,000 $ 6,485,000
Accounts receivable, less reserve of
$697,000 in 1998 and $614,000 in 1997 34,850,000 36,658,000
Inventories 38,135,000 41,993,000
Prepaid expenses 2,827,000 1,834,000
Future income tax benefits 1,521,000 1,289,000
Total current assets 91,653,000 88,259,000
Property, plant and equipment, at cost 96,692,000 99,564,000
Accumulated depreciation (51,316,000) (53,600,000)
45,376,000 45,964,000
Other assets:
Costs in excess of net assets of purchased businesses 9,752,000 10,290,000
Other 517,000 528,000
10,269,000 10,818,000
$147,298,000 $145,041,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 7,932,000 $ 9,417,000
Accrued liabilities 10,921,000 12,046,000
Income taxes payable 630,000 976,000
Total current liabilities 19,483,000 22,439,000
Deferred income taxes 4,366,000 4,362,000
Total liabilities 23,849,000 26,801,000
Commitments (Note 5)
Shareholders' equity:
Common stock 4,764,000 4,741,000
Paid-in capital 4,087,000 3,809,000
Retained earnings 114,608,000 107,415,000
Cumulative translation adjustment (10,000) 2,275,000
Total shareholders' equity 123,449,000 118,240,000
$147,298,000 $145,041,000
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30, 1998, 1997 and 1996
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $12,122,000 $ 5,938,000 $ 7,597,000
Adjustments for noncash transactions:
Depreciation and amortization 5,956,000 5,596,000 5,204,000
Change in deferred income taxes (228,000) 86,000 87,000
Gain on disposition of business (1,235,000)
Net loss on disposition of assets 413,000
Changes in assets and liabilities:
Receivables (1,316,000) 176,000 501,000
Inventories 2,971,000 (1,095,000) 2,107,000
Prepaid expenses and other (1,153,000) 910,000 455,000
Accounts payable 1,455,000 (1,288,000) 1,968,000
Accrued liabilities (182,000) 926,000 (191,000)
Income taxes payable (254,000) 93,000 (333,000)
Net cash provided by operating activities 18,136,000 11,755,000 17,395,000
Cash flows from investing activities:
Capital expenditures (6,837,000) (7,508,000) (5,680,000)
Proceeds from sales of capital assets 136,000 625,000 337,000
Disposition (acquisition) of businesses 1,021,000 (6,971,000)
Changes in investments 2,213,000
Net cash used in investing activities (5,680,000) (13,854,000) (3,130,000)
Cash flows from financing activities:
Repayment of long-term debt (542,000) (423,000)
Exercise of stock options 301,000 97,000 115,000
Dividends paid to shareholders (4,929,000) (4,265,000) (4,259,000)
Net cash used in financing activities (4,628,000) (4,710,000) (4,567,000)
Effect of exchange rate changes on cash 7,000 64,000 (18,000)
Net change in cash and cash equivalents 7,835,000 (6,745,000) 9,680,000
Cash and cash equivalents at beginning of year 6,485,000 13,230,000 3,550,000
Cash and cash equivalents at end of year $14,320,000 $ 6,485,000 $13,230,000
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies and Procedures
Principles of Consolidation
The consolidated financial statements include the accounts of International
Aluminum Corporation (the Company) and its domestic and foreign subsidiaries.
All significant intercompany transactions and accounts have been eliminated
in consolidation. Certain reclassifications of prior year information were
made to conform to the current presentation.
Estimates and Assumptions
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Foreign Currency Translation
Assets and liabilities of the Company's foreign subsidiary are translated
into U.S. dollars at year-end exchange rates and revenues and expenses are
translated at average rates prevailing during the year. Local currency is
considered to be the functional currency. Translation adjustments are
deferred in a separate component of shareholders' equity. Foreign currency
transaction gains and losses are included in results of operations as
incurred.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and marketable securities with
original maturities of three months or less.
Depreciation and Amortization
Depreciation and amortization are provided over the estimated useful lives of
the assets or the remaining terms of the leases, whichever is shorter, using
the straight-line method for financial reporting purposes and accelerated
methods for tax purposes.
The excess of the purchase price over the underlying book value of the
companies acquired is classified as "Costs in excess of net assets of
purchased businesses". The related amount of $12,169,000 at June 30, 1998
and June 30, 1997 is being amortized using the straight-line method over
periods of up to forty years. Accumulated amortization totalled $2,418,000
at June 30, 1998 and $1,879,000 at June 30, 1997.
Long-Lived Assets
Whenever events indicate that the carrying values of long-lived assets
including any related goodwill may not be recoverable, the Company evaluates
the carrying values of such assets using future undiscounted cash flows.
Management believes that, as of June 30, 1998, the carrying values of such
assets are appropriate. In fiscal 1997, property, plant and equipment was
written down by $888,000 pursuant to a review.
Note 2. Balance Sheet Components
Inventories, at the Lower of FIFO Cost or Market
1998 1997
Raw materials $31,016,000 $32,275,000
Work in process 1,511,000 2,320,000
Finished goods 5,608,000 7,398,000
$38,135,000 $41,993,000
Property, Plant and Equipment, at Cost
1998 1997
Land $ 7,857,000 $ 7,714,000
Buildings and improvements 28,102,000 29,895,000
Machinery and equipment 60,415,000 60,068,000
Construction in process 318,000 1,887,000
$96,692,000 $99,564,000
Accrued Liabilities
1998 1997
Wages and compensated absences $ 5,034,000 $ 4,619,000
Taxes, other than income taxes 1,201,000 1,550,000
Insurance 1,170,000 2,284,000
Dividends 1,287,000 1,067,000
Other 2,229,000 2,526,000
$10,921,000 $12,046,000
Note 3. Statement of Cash Flows
Cash payments for interest were $50,000 in 1998, $99,000 in 1997 and $140,000
in 1996. Cash payments for income taxes were $7,726,000 in 1998, $4,200,000
in 1997 and $5,496,000 in 1996. During 1997, a $530,000 long-term note was
received in conjunction with the sale of an idle facility.
<PAGE>
Note 4. Short-Term Debt and Line of Credit
The Company has a loan agreement with a domestic bank providing for a
$10,000,000 unsecured short-term line of credit at 55 basis points below the
bank's prevailing prime interest rate (7.95 percent at June 30, 1998). There
was no amount outstanding under the agreement at June 30, 1998 or at any time
during the year.
Note 5. Commitments
The Company is committed under real property lease agreements expiring at
various dates to 2002. Certain of the leases have renewal options for
periods up to five years and others provide for rent revisions at various
dates. Under the leases the Company is obligated to pay property taxes,
insurance and maintenance. All facility leases are classified as operating
leases.
Real property rental expense was $1,339,000 in 1998, $1,172,000 in 1997 and
$751,000 in 1996. Real property rental commitments are $1,139,000 in 1999,
$833,000 in 2000, $738,000 in 2001 and $411,000 in 2002.
Note 6. Capital Stock
The Company has 500,000 shares of preferred stock authorized, with a $10 par
value, of which none is outstanding. There are 10,000,000 shares of common
stock authorized, $1 par value, of which there were 4,290,494 shares
outstanding at June 30, 1998 and 4,267,419 outstanding at June 30, 1997.
<PAGE>
<TABLE>
Note 7. Stock Options
The Company grants stock options for the purchase of common stock to certain executive and managerial
employees under the Company's 1991 Stock Option Plan. Options have an exercise price equal to the market
price of the stock on the date of grant, a term of ten years and generally become exercisable over a five
year period. The Company applies APB Opinion 25 and related Interpretations in accounting for the plan,
accordingly, no compensation cost has been recognized for those stock options. There would have been no
material change in reported net income and earnings per share had compensation cost been determined based
on the fair value at the grant dates as prescribed by SFAS 123, "Accounting for Stock-Based Compensation".
The transactions for shares under options for the three years ended June 30, 1998 were:
<CAPTION>
Outstanding Exercisable
Number Of Weighted-Average Number Of Weighted-Average
Shares Exercise Price Shares Exercise Price
<S> <C> <C> <C> <C>
Outstanding, June 30, 1995 43,414 $15.38 43,414 $15.38
Granted 214,000 28.00
Exercised (7,710) 15.38
Outstanding, June 30, 1996 249,704 26.20 35,704 15.38
Exercised (8,629) 15.38
Forfeited (13,000) 28.00
Outstanding, June 30, 1997 228,075 26.50 67,275 22.92
Granted 66,000 31.23
Exercised (28,075) 15.83
Forfeited (18,000) 28.00
Outstanding, June 30, 1998 248,000 28.86 72,800 28.00
Stock Option Summary at June 30, 1998:
$28.00 (Life - 7.4 years) 182,000 28.00 72,800 28.00
$29.38-$31.56 (Life - 9.6 years) 66,000 31.23 0
Available for future grants 251,000
</TABLE> <TABLE>
Note 8. Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted average number of shares of
common stock outstanding. Diluted earnings per share is computed by dividing net income by the weighted
average common and potentially dilutive common equivalent shares outstanding determined as follows:
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Weighted average shares outstanding used to compute basic EPS 4,282,877 4,263,392 4,257,473
Incremental shares issuable upon the exercise of stock options 22,463 11,993 17,392
Shares used to compute diluted EPS 4,305,340 4,275,385 4,274,865
<FN>
Incremental shares issuable upon the assumed exercise of outstanding stock options is computed using the
average market price during the related period.
</TABLE>
<TABLE>
Note 9. Income Taxes
The components of income before United States and foreign income taxes are:
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Domestic $19,935,000 $11,757,000 $13,352,000
Foreign (653,000) (1,529,000) (585,000)
$19,282,000 $10,228,000 $12,767,000
The provision for income taxes is comprised of the following:
1998 1997 1996
Current -
Federal $ 6,592,000 $ 3,901,000 $ 4,448,000
State 796,000 303,000 635,000
Foreign
7,388,000 4,204,000 5,083,000
Deferred -
Federal (232,000) 102,000 114,000
State 4,000 (16,000) (27,000)
Foreign
(228,000) 86,000 87,000
$ 7,160,000 $ 4,290,000 $ 5,170,000
A reconciliation between the provisions for income taxes, computed by applying the Federal statutory rate
to income before taxes, and the book provisions for income taxes follows:
1998 1997 1996
Taxes on book income at statutory rate $ 6,749,000 $ 3,580,000 $ 4,468,000
Increases (decreases) resulting from:
State income taxes, net of Federal income tax benefit 520,000 183,000 395,000
Foreign (income) loss with no tax impact (131,000) 535,000 205,000
Other 22,000 (8,000) 102,000
Provision for income taxes $ 7,160,000 $ 4,290,000 $ 5,170,000
/TABLE
<PAGE>
<TABLE>
Deferred income taxes result from temporary differences in the recognition of income and expenses for tax
and financial statement purposes. The tax effects of the significant temporary differences which comprise
the deferred tax assets and liabilities at yearend are as follows:
<CAPTION>
1998 1997
<S> <C> <C>
Inventory $ 452,000 $ 413,000
Accrued liabilities 770,000 737,000
Other 299,000 139,000
Net deferred tax asset $ 1,521,000 $ 1,289,000
Property, plant and equipment $ 4,145,000 $ 4,129,000
Other 221,000 233,000
Net deferred tax liability $ 4,366,000 $ 4,362,000
</TABLE>
<TABLE>
Note 10. Segment and Geographical Information
The Company is a vertically integrated manufacturer of building products. The Company's European operations
were comprised solely of the operations of Eland-Brandt BV which was divested during the 1998 fiscal year.
Sales, net income and identifiable assets for North American and European operations for the last three years
are as follows:
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Sales:
North America $223,806,000 $212,685,000 $202,066,000
Europe 1,983,000 11,341,000 13,507,000
$225,789,000 $224,026,000 $215,573,000
Net income:
North America $ 12,489,000 $ 7,379,000 $ 8,182,000
Europe (367,000) (1,441,000) (585,000)
$ 12,122,000 $ 5,938,000 $ 7,597,000
Identifiable assets:
North America $147,298,000 $138,572,000 $134,822,000
Europe 6,469,000 7,021,000
$147,298,000 $145,041,000 $141,843,000
/TABLE
<PAGE>
Note 11. Acquisitions and Divestitures
During the second quarter of the current year, the Company sold it's Dutch
subsidiary, Eland-Brandt BV, for approximately $1,021,000 in net cash
proceeds. The sale generated a pretax gain of $1,235,000 (after-tax gain of
$1,156,000 or $.27 per share), including the recognition of $2,145,000 of
previously deferred cumulative translation adjustment. The gain had only a
small income tax effect because the Company had not provided benefit for
certain losses accumulated in prior years. The Company's consolidated
financial statements include the results of Eland-Brandt BV through the date
of disposal. Such amounts were not material in relation to the consolidated
financial statements.
During the second quarter of the prior year, the Company completed the
purchase of Orca Coatings Ltd. of British Columbia, Canada and the purchase
of Altura Architectural Products, Inc. of Texas in two separate transactions.
Both companies became members of the Commercial Products Group. The
acquisitions were made with $6,971,000 of cash from the Company's existing
cash reserves. The estimated fair market value of the net assets acquired
was $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.<PAGE>
<PAGE>
<TABLE>
QUARTERLY FINANCIAL DATA (UNAUDITED)
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
1998
Net sales $59,509,000 $55,659,000 $52,988,000 $57,633,000
Gross profit 17,788,000 17,445,000 16,016,000 17,863,000
Net income 2,704,000 3,857,000 2,277,000 3,284,000
Earnings per share - Basic .63 .90 .53 .77
Earnings per share - Diluted .63 .90 .53 .76
Dividends declared .25 .30 .30 .30
Stock price - High 28.00 31.94 36.00 35.50
Stock price - Low 25.63 27.38 30.63 31.00
1997
Net sales $56,928,000 $56,161,000 $53,593,000 $57,344,000
Gross profit 16,090,000 15,811,000 14,540,000 16,313,000
Net income 1,336,000 1,273,000 900,000 2,429,000
Earnings per share - Basic .31 .30 .21 .57
Earnings per share - Diluted .31 .30 .21 .57
Dividends declared .25 .25 .25 .25
Stock price - High 26.00 26.00 27.63 26.75
Stock price - Low 24.13 24.00 25.00 25.00
</TABLE>
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
International Aluminum Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity and cash flows
present fairly, in all material respects, the financial position of
International Aluminum Corporation and its subsidiaries at June 30, 1998 and
1997, and the results of their operations and their cash flows for each of
the three years in the period ended June 30, 1998, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Los Angeles, California
August 18, 1998<PAGE>
<PAGE>
<TABLE>
CORPORATE INFORMATION
<CAPTION>
DIRECTORS OFFICERS
<S> <C>
Cornelius C. Vanderstar John P. Cunningham
Chairman of the Board President
John P. Cunningham David C. Treinen
Senior Vice President - Finance and
David C. Treinen Administration; Secretary
Hugh E. Curran Ronald L. Rudy
Retired Vice President - Sales of Senior Vice President - Operations
International Aluminum Corporation
Mitchell K. Fogelman
Joel F. McIntyre Vice President - Controller
Attorney At Law
Michael S. Snodgrass
Alexander van de Pol Vice President - Human Resources
Retired President and Chairman of the
Board of Commonwealth Metals-Pacific Roland A. Young
Treasurer; Assistant Secretary
Donald J. Willfong
Executive Vice President of
Sutro & Co.
STOCK TRANSFER AGENT AND REGISTRAR ELECTRONIC TRANSFER OF DIVIDENDS
Continental Stock Transfer & Trust Company For information and forms, write to:
2 Broadway Corporate Secretary
New York, NY 10004 International Aluminum Corporation
(212) 509-4000 P. O. Box 6
Internet at www.continentalstock.com Monterey Park, CA 91754
ANNUAL SHAREHOLDERS MEETING
STOCK EXCHANGE LISTINGS
2 p.m., Thursday, October 29, 1998
New York Stock Exchange International Aluminum Corporation
Pacific Exchange 767 Monterey Pass Road
Trading Symbol - IAL Monterey Park, California 91754
/TABLE
<PAGE>
<PAGE>
<TABLE>
SUBSIDIARIES BY PRODUCT CLASS
<CAPTION>
COMMERCIAL RESIDENTIAL
<S> <C>
United States Aluminum Corporation International Window Corporation
Vernon, California South Gate, California
Hayward, California
Las Vegas, Nevada International Window-Northern California
Hayward, California
United States Aluminum Corporation-Illinois
Bedford Park, Illinois International Window-Arizona, Inc.
Baltimore, Maryland Phoenix, Arizona
Boston, Massachusetts
Detroit, Michigan Maestro Products, Inc.
Moreno Valley, California
United States Aluminum Corporation-Texas
Waxahachie, Texas
Denver, Colorado
St. Louis, Missouri
Dallas, Texas
Houston, Texas
United States Aluminum Corporation-Carolina
Rock Hill, South Carolina
Orlando, Florida
Atlanta, Georgia
United States Aluminum Of Canada, Ltd.
Langley, British Columbia, Canada
ALUMINUM EXTRUSIONS GLASS
International Extrusion Corporation International California Glass Corporation
Alhambra, California South Gate, California
International Extrusion Corporation-Texas International Carolina Glass Corporation
Waxahachie, Texas Rock Hill, South Carolina
/TABLE
<PAGE>
<PAGE>
International Aluminum Corporation
767 Monterey Pass Road
Monterey Park, California 91754
Tel (323) 264-1670
Fax (323) 266-3838<PAGE>
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