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, 1999 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 1, 1999 there were 4,291,794 shares of Common Stock outstanding.
Page 1 of 10 Pages
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INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
INDEX
Page
PART I. Financial Information
Consolidated Balance Sheets -
September 30, 1999 and June 30, 1999 3
Consolidated Statements of Income -
three months ended September 30, 1999 and 1998 4
Consolidated Statements of Cash Flows -
three months ended September 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
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 Sept. 30, 1999 June 30, 1999
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,505,000 $ 2,269,000
Accounts receivable, net 41,893,000 39,371,000
Inventories 40,974,000 41,576,000
Prepaid expenses and deposits 4,176,000 4,909,000
Future income tax benefits 1,492,000 1,492,000
Total current assets 91,040,000 89,617,000
Property, plant and equipment, at cost 113,078,000 109,907,000
Accumulated depreciation (56,806,000) (55,591,000)
Net property, plant and equipment 56,272,000 54,316,000
Other assets:
Costs in excess of net assets of
purchased businesses 9,645,000 9,760,000
$156,957,000 $153,693,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 7,686,000 $ 8,079,000
Accrued liabilities 10,821,000 12,415,000
Advances payable to banks 3,257,000
Income taxes payable 1,430,000 93,000
Total current liabilities 23,194,000 20,587,000
Deferred income taxes 4,405,000 4,405,000
Total liabilities 27,599,000 24,992,000
Shareholders' equity 129,358,000 128,701,000
$156,957,000 $153,693,000
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
<PAGE> <TABLE> Unaudited
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended
September 30,
1999 1998
<S> <C> <C>
Net sales $62,863,000 $62,150,000
Cost of sales 44,269,000 42,827,000
Gross profit 18,594,000 19,323,000
Selling, general and administrative expenses 15,248,000 13,870,000
Income from operations 3,346,000 5,453,000
Interest income (expense), net (44,000) 106,000
Income before income taxes 3,302,000 5,559,000
Provision for income taxes 1,330,000 2,150,000
Net income $ 1,972,000 $ 3,409,000
Earnings per share:
Basic $.46 $.79
Diluted $.46 $.79
Shares used to compute EPS:
Basic 4,291,794 4,290,994
Diluted 4,291,794 4,298,807
Cash dividends per share $.30 $.30
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE>
<PAGE> <TABLE> Unaudited
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
September 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,972,000 $ 3,409,000
Adjustments for noncash transactions:
Depreciation and amortization 1,778,000 1,470,000
Changes in assets and liabilities:
Receivables (2,522,000) (2,893,000)
Inventories 602,000 (862,000)
Prepaid expenses and deposits 733,000 (539,000)
Accounts payable (393,000) 1,820,000
Accrued liabilities (1,594,000) (1,033,000)
Income taxes payable 1,337,000 1,863,000
Net cash provided by operating activities 1,913,000 3,235,000
Cash flows from investing activities:
Capital expenditures (3,708,000) (4,375,000)
Proceeds from sales of capital assets 61,000 471,000
Net cash used in investing activities (3,647,000) (3,904,000)
Cash flows from financing activities:
Dividends paid to shareholders (1,287,000) (1,288,000)
Net borrowings under lines of credit 3,257,000
Proceeds from exercises of stock options 29,000
Net cash provided by (used in)
financing activities 1,970,000 (1,259,000)
Net change in cash and cash equivalents 236,000 (1,928,000)
Cash and cash equivalents at beginning
of period 2,269,000 14,320,000
Cash and cash equivalents at end of period $ 2,505,000 $12,392,000
<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,
in all material respects, its financial position as of September 30, 1999 and
June 30, 1999, and the results of operations and cash flows for the three
month periods ended September 30, 1999 and 1998. The results of operations
for the three month periods ended September 30, 1999 and 1998 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.
Comprehensive Income
Comprehensive income, defined as net income and other comprehensive income,
for the first quarters ended September 30, 1999 and 1998 was $1,945,000 and
$3,296,000, respectively. Other comprehensive income includes foreign
currency translation adjustments recorded directly into shareholders' equity.
Balance Sheet Components Sept. 30, 1999 June 30, 1999
Inventories, lower of Fifo Cost or Market
Raw materials $ 33,178,000 $ 34,915,000
Work in process 2,164,000 1,466,000
Finished Goods 5,632,000 5,195,000
$ 40,974,000 $ 41,576,000
Shareholders' Equity
Common stock $ 4,765,000 $ 4,765,000
Paid-in capital 4,123,000 4,123,000
Retained earnings 120,481,000 119,796,000
Accumulated other comprehensive income (11,000) 17,000
$129,358,000 $128,701,000
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<PAGE>
<PAGE> <TABLE> Unaudited
Segment Information
The following presents the Company's net sales, operating income and total
assets by operating segment, reconciling to the Company's totals. All data
presented in thousands of dollars.
<CAPTION>
Net Sales: Three Months Ended
September 30,
1999 1998
<S> <C> <C>
Commercial $ 29,802 $ 31,972
Residential 15,768 13,102
Aluminum Extrusion 24,951 28,912
Glass 4,203 3,999
Total segments 74,724 77,985
Eliminations (11,861) (15,835)
Total $ 62,863 $ 62,150
Operating Income: Three Months Ended
September 30,
1999 1998
Commercial $ 3,658 $ 4,540
Residential 1,067 636
Aluminum Extrusion (388) 2,393
Glass 158 (53)
Total segments 4,495 7,516
Eliminations 973 7
Corporate (2,122) (2,070)
Total $ 3,346 $ 5,453
Total Assets: Sept. 30, June 30,
1999 1999
Commercial $ 68,265 $ 69,306
Residential 29,754 28,874
Aluminum Extrusion 41,601 38,543
Glass 8,469 8,156
Total segments 148,089 144,879
Corporate 8,868 8,814
Total $156,957 $153,693
</TABLE>
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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, 1999 increased by
$713,000 or 1.1% from the comparable quarter of the prior year. This increase
in sales includes a $2,650,000 or 20.3% increase posted by the Residential
Products Group resulting from strong demand in Northern California and
continued penetration into the Colorado market. Offsetting this was a
$2,158,000 or 6.8% decrease posted by the Commercial Products Group, primarily
resulting from an inadequate supply of raw materials from our aluminum
extrusion operations.
The cost of sales as a percentage of net sales was 70.4% for the quarter
ended September 30, 1999 as opposed to 68.9% for the comparable prior year
period. This increase is largely attributable to higher labor and overhead
expenses incurred in our extrusion operations resulting from equipment
failures and mechanical breakdowns.
Selling, general and administrative expenses for the quarter were $1,378,000
or 9.9% higher than those of the comparable quarter of the prior year. This
increase reflects costs incurred in support of the increased sales volume
coupled with compensation, recruiting and relocation costs associated with
realigning and enlarging operating group management teams.
The swing from net interest income for the prior year quarter to net
interest expense in the current year quarter relates to the depletion of funds
available for investment due primarily to heavy capital expenditures.
The effective tax rate for the quarter ended September 30, 1999 was 40.3%
whereas the comparable quarter of fiscal year 1999 was 38.7%. This increase
is primarily attributable to reduced income in states with low effective tax
rates.
Liquidity and Capital Resources
Working capital decreased to $67,846,000 during the three months ended
September 30, 1999, a decrease of $1,184,000 from June 30, 1999. The ratio
of current assets to current liabilities is currently 3.9 as compared to 4.4
as of the beginning of the year.
The Company's projected capital expenditures for fiscal 2000 and related
financing remain unchanged from those described in the June 30, 1999 Annual
Report. The Company's line of credit remains unchanged from that noted in the
June 30, 1999 Annual Report to Shareholders.
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<PAGE>
<PAGE> Unaudited
Year 2000
The Company has substantially completed its migration to compliant financial
and operational software and thus has not developed contingency plans.
The consequence 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.
Forward-Looking Information
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. 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.
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<PAGE>
<PAGE>
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
International Aluminum Corporation
(Registrant)
Date: November 11, 1999 DAVID C. TREINEN
David C. Treinen
Senior Vice President - Finance
and Administration
(Principal Financial Officer)
Date: November 11, 1999 MITCHELL K. FOGELMAN
Mitchell K. Fogelman
Vice President - Controller
(Principal Accounting Officer)
- 10 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 2,505
<SECURITIES> 0
<RECEIVABLES> 41,893
<ALLOWANCES> 0
<INVENTORY> 40,974
<CURRENT-ASSETS> 91,040
<PP&E> 113,078
<DEPRECIATION> 56,806
<TOTAL-ASSETS> 156,957
<CURRENT-LIABILITIES> 23,194
<BONDS> 0
0
0
<COMMON> 8,888
<OTHER-SE> 120,470
<TOTAL-LIABILITY-AND-EQUITY> 156,957
<SALES> 62,863
<TOTAL-REVENUES> 62,863
<CGS> 44,269
<TOTAL-COSTS> 44,269
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 227
<INTEREST-EXPENSE> 44
<INCOME-PRETAX> 3,302
<INCOME-TAX> 1,330
<INCOME-CONTINUING> 1,972
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,972
<EPS-BASIC> .46
<EPS-DILUTED> .46
</TABLE>
