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, 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 February 1, 2000 there were 4,291,794 shares of Common Stock outstanding.
Page 1 of 11 Pages
<PAGE>
<PAGE>
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
INDEX
Page
PART I. Financial Information
Consolidated Balance Sheets -
December 31, 1999 and June 30, 1999 3
Consolidated Statements of Income -
three and six month periods ended
December 31, 1999 and 1998 4
Consolidated Statements of Cash Flows -
six months ended December 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. Other Information
Item 4(c). Submission of Matters to a Vote of
Security Holders 10
Signatures 11
- 2 -
<PAGE>
<PAGE>
<TABLE>
PART I
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Unaudited Audited
Assets Dec. 31, 1999 June 30, 1999
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,414,000 $ 2,269,000
Accounts receivable, net 36,924,000 39,371,000
Inventories 41,469,000 41,576,000
Prepaid expenses and deposits 4,598,000 4,909,000
Future income tax benefits 1,492,000 1,492,000
Total current assets 85,897,000 89,617,000
Property, plant and equipment, at cost 108,886,000 109,907,000
Accumulated depreciation (53,637,000) (55,591,000)
Net property, plant and equipment 55,249,000 54,316,000
Other assets:
Costs in excess of net assets of
purchased businesses 9,295,000 9,760,000
$150,441,000 $153,693,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 5,948,000 $ 8,079,000
Accrued liabilities 9,960,000 12,415,000
Advances payable to banks 2,332,000 -
Income taxes payable - 93,000
Total current liabilities 18,240,000 20,587,000
Deferred income taxes 4,405,000 4,405,000
Total liabilities 22,645,000 24,992,000
Shareholders' equity 127,796,000 128,701,000
$150,441,000 $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 Six Months Ended
December 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $51,054,000 $57,632,000 $109,715,000 $115,782,000
Cost of sales 38,526,000 39,724,000 79,611,000 79,342,000
Gross profit 12,528,000 17,908,000 30,104,000 36,440,000
Selling, gen. and admin. expenses 13,580,000 13,469,000 27,861,000 26,494,000
Income (loss) from operations (1,052,000) 4,439,000 2,243,000 9,946,000
Interest income (expense), net (9,000) 107,000 (4,000) 243,000
Income (loss) from continuing
operations before income taxes (1,061,000) 4,546,000 2,239,000 10,189,000
Provision for income taxes (389,000) 1,720,000 940,000 3,900,000
Income (loss) from continuing
operations (672,000) 2,826,000 1,299,000 6,289,000
Loss from discontinued operations (53,000) (36,000) (52,000) (90,000)
Gain on disposition of
discontinued operations 377,000 - 377,000 -
Net income (loss) $ (348,000) $ 2,790,000 $ 1,624,000 $ 6,199,000
Basic and diluted EPS:
Continuing operations $(.16) $ .66 $ .30 $1.46
Discontinued operations .08 (.01) .08 (.02)
$(.08) $ .65 $ .38 $1.44
Shares used to compute EPS:
Basic 4,291,794 4,291,494 4,291,794 4,291,208
Diluted 4,291,794 4,299,195 4,291,794 4,298,966
Cash dividends per share $.30 $.30 $.60 $.60
<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>
Six Months Ended
December 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,624,000 $ 6,199,000
Adjustments for noncash transactions:
Depreciation and amortization 3,612,000 3,059,000
Gain on disposition of discontinued operations (587,000) -
Changes in assets and liabilities:
Receivables 496,000 (3,650,000)
Inventories (1,175,000) (6,242,000)
Prepaid expenses and deposits 71,000 (390,000)
Accounts payable (1,532,000) 3,005,000
Accrued liabilities (2,033,000) 646,000
Income taxes payable (93,000) (630,000)
Net cash provided by operating activities 383,000 1,997,000
Cash flows from investing activities:
Capital expenditures (5,036,000) (8,056,000)
Disposition (acquisition) of businesses 3,921,000 (1,300,000)
Proceeds from sales of capital assets 120,000 600,000
Net cash used in investing activities (995,000) (8,756,000)
Cash flows from financing activities:
Dividends paid to shareholders (2,575,000) (2,576,000)
Net borrowings under lines of credit 2,332,000 -
Proceeds from exercises of stock options - 29,000
Net cash used in financing activities (243,000) (2,547,000)
Net change in cash and cash equivalents (855,000) (9,306,000)
Cash and cash equivalents at beginning
of period 2,269,000 14,320,000
Cash and cash equivalents at end of period $ 1,414,000 $ 5,014,000
<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 December 31, 1999 and
June 30, 1999, and the results of operations for the three and six month
periods ended December 31, 1999 and 1998 and the cash flows for the six month
periods ended December 31, 1999 and 1998. The results of operations for the
three and six month periods ended December 31, 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 second quarters ended December 31, 1999 and 1998 was $(275,000) and
$2,793,000, respectively. Comprehensive income for the six months ended
December 31, 1999 and 1998 was $1,670,000 and $6,089,000, respectively. Other
comprehensive income includes foreign currency translation adjustments
recorded directly in shareholders' equity.
<TABLE>
<CAPTION>
Balance Sheet Components Dec. 31, 1999 June 30, 1999
<S> <C> <C>
Inventories, lower of FIFO Cost or Market
Raw materials $ 33,747,000 $ 34,915,000
Work in process 1,913,000 1,466,000
Finished goods 5,809,000 5,195,000
$ 41,469,000 $ 41,576,000
Shareholders' Equity
Common stock $ 4,765,000 $ 4,765,000
Paid-in capital 4,123,000 4,123,000
Retained earnings 118,845,000 119,796,000
Accumulated other comprehensive income 63,000 17,000
$127,796,000 $128,701,000
</TABLE>
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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 Six Months Ended
December 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Commercial $ 26,696 $ 30,741 $ 56,498 $ 62,713
Residential 14,991 13,834 30,759 26,936
Aluminum Extrusion 24,636 29,941 49,587 58,853
Total Segments 66,323 74,516 136,844 148,502
Eliminations (15,269) (16,884) (27,129) (32,720)
Total $ 51,054 $ 57,632 $109,715 $115,782
Operating Income: Three Months Ended Six Months Ended
December 31, December 31,
1999 1998 1999 1998
Commercial $ 1,612 $ 3,109 $ 5,270 $ 7,649
Residential 662 860 1,729 1,496
Aluminum Extrusion (2,002) 2,936 (2,391) 5,329
Total Segments 272 6,905 4,608 14,474
Eliminations 415 (209) 1,389 (201)
Corporate (1,739) (2,257) (3,754) (4,327)
Total $ (1,052) $ 4,439 $ 2,243 $ 9,946
Total Assets: Dec. 31, June 30,
1999 1999
Commercial $ 69,576 $ 69,306
Residential 30,088 28,874
Aluminum Extrusion 40,307 38,543
Glass - 8,156
Total Segments 139,971 144,879
Corporate 10,470 8,814
Total $150,441 $153,693
</TABLE>
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<PAGE>
<PAGE> Unaudited
Discontinued Operations
The Company sold most all of the operating assets of its Glass segment,
excluding the land and buildings, for approximately $3.9 million. The land
and buildings were leased to the buyer. The Glass segment is accounted for
as a discontinued operation, and accordingly, amounts in the income statements
and related notes for all periods shown have been restated to reflect
discontinued operations accounting. Summarized results of the discontinued
businesses are shown separately as discontinued operations in the accompanying
income statements. Operating results of the discontinued segment, in
thousands of dollars, are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $ 2,712 $ 3,637 $6,914 $ 7,637
Loss before income taxes (83) (66) (82) (150)
Income tax benefit (30) (30) (30) (60)
Net (loss) from discontinued ops. (53) (36) (52) (90)
Gain on disposition of disc. ops.,
net of $210 income tax expense 377 - 377 -
Net income (loss) from
discontinued segment $ 324 $ (36) $ 325 $ (90)
Earnings per diluted share:
Discontinued operations $(.01) $(.01) $(.01) $(.02)
Gain on disposition of disc. ops. .09 - .09 -
</TABLE>
Year 2000
The Company completed its planned changes to obtain compliance prior to
December 31, 1999. To date, the Company has not had any material failures
related with non-compliance nor is it aware of any material failures of any
of its significant customers or suppliers.
- 8 -
<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
Sales decreased by $6,578,000 or 11.4% for the quarter ended December 31,
1999 and by $6,067,000 or 5.2% for the six months then ended when compared
with the 1998 periods. The decreases in sales include decreases of
$4,041,000 or 13.2% for the quarter and $9,051,000 or 13.8% for the six months
by the Commercial Products Group primarily resulting from an inadequate supply
of raw materials from our aluminum extrusion operations. Also included are
decreases of $3,673,000 or 27.9% for the quarter and by $3,627,000 or 13.7%
for the six months by the Aluminum Extrusion Group primarily resulting from
lower production due to equipment breakdowns and the implementation of
continuous flow manufacturing processing.
Cost of sales as a percentage of net sales increased by 6.6% for the quarter
ended December 31, 1999 and by 4.1% for the six months then ended when
compared with the 1998 periods. These increases are largely attributable to
higher labor and overhead expenses incurred in our extrusion operations
resulting from equipment breakdowns coupled with downtime associated with
retraining personnel and the aforementioned conversion to continuous flow
manufacturing.
Selling, general and administrative expenses increased by $111,000 for the
quarter and by $1,367,000 or 5.2% for the six month period. The increased
expenses for the six months are primarily attributable to additional
compensation, recruiting and relocation costs during the first quarter
associated with realigning and enlarging operating group management teams.
The swing from net interest income for the prior year periods to net
interest expense for the current year periods relates to the depletion of
funds available for investment due primarily to heavy capital expenditures.
The effective tax rate for the six months ended December 31, 1999 was 42.0%
whereas the comparable period of the prior year was 38.3%. This increase is
primarily attributable to reduced income in states with low effective tax
rates coupled with nondeductible expenses being spread over a lower income
base.
- 9 -
<PAGE>
<PAGE> Unaudited
Liquidity and Capital Resources
Working capital at December 31, 1999 stood at $67,657,000, a decrease of
$1,373,000 from June 30, 1999. The ratio of current assets to current
liabilities is currently 4.7 as compared to 4.4 as of the beginning of the
year.
The Company's projected capital expenditures for fiscal 2000 include
$11,000,000 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 the
utilization of its line of credit.
The Company's line of credit remains unchanged from that noted in the
June 30, 1999 Annual Report to Shareholders.
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.
PART II. OTHER INFORMATION
Item 4(c). Submission of Matters to a Vote of Security Holders
On October 28, 1999, the Company held its 1999 Annual Shareholders Meeting.
Shareholders voted proxies representing 4,055,780 shares which was 94.5% of
the 4,291,794 shares outstanding on the record date. The proposed slate of
directors was elected with 3,900,291 shares and the selected independent
accountants were ratified with 4,047,011 shares.
- 10 -
<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: February 14, 2000 DAVID C. TREINEN
David C. Treinen
Senior Vice President - Finance
and Administration
(Principal Financial Officer)
Date: February 14, 2000 MITCHELL K. FOGELMAN
Mitchell K. Fogelman
Vice President - Controller
(Principal Accounting Officer)
- 11 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 1,414
<SECURITIES> 0
<RECEIVABLES> 36,924
<ALLOWANCES> 0
<INVENTORY> 41,469
<CURRENT-ASSETS> 85,897
<PP&E> 108,886
<DEPRECIATION> 53,637
<TOTAL-ASSETS> 150,441
<CURRENT-LIABILITIES> 18,240
<BONDS> 0
0
0
<COMMON> 8,888
<OTHER-SE> 118,908
<TOTAL-LIABILITY-AND-EQUITY> 150,441
<SALES> 109,715
<TOTAL-REVENUES> 109,715
<CGS> 79,611
<TOTAL-COSTS> 79,611
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 344
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 2,239
<INCOME-TAX> 940
<INCOME-CONTINUING> 1,299
<DISCONTINUED> 325
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,624
<EPS-BASIC> .38
<EPS-DILUTED> .38
</TABLE>
