SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL
REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended June 30, 2004 |
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Commission File Number 1-7256 |
INTERNATIONAL ALUMINUM CORPORATION
(Exact name of Registrant as specified in its charter)
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California |
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95-2385235 |
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(Incorporation) |
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(I.R.S. Employer No.) |
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767 Monterey Pass Road |
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(Principal executive office) |
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class |
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Names of Exchanges on Which Registered |
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Common Stock ($1.00 Par Value) |
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New York Stock 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 ý No o
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. ý
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o No ý
At September 8, 2004 there were 4,244,794 shares of Registrant’s Common Stock outstanding. The aggregate market value of shares held by non-affiliates was $68,562,242 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, 2004 is incorporated by reference into Parts I and II.
Registrant’s Proxy Statement dated September 20, 2004 for the Annual Meeting of Shareholders to be held on October 28, 2004, other than the Stock Performance Graph, the Compensation Committee Report, and the Audit Committee Report, is incorporated by reference into Parts III and IV.
PART I
ITEM 1. BUSINESS
a. GENERAL DEVELOPMENT OF BUSINESS
International Aluminum Corporation is an integrated building products manufacturer of diversified lines of quality aluminum and vinyl 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 18 of the Registrant’s 2004 Annual Report to Shareholders and is hereby incorporated by reference.
c. NARRATIVE DESCRIPTION OF BUSINESS
Processes and Products
Residential
Residential products are fabricated from aluminum 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, 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 curtainwalls, window walls, slope glazed systems, storefront framing, entrance doors and frames and commercial operable windows for exterior applications and officefronts, office partitions, 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
Aluminum Extrusion
In the extrusion process, heated aluminum billets are hydraulically forced through steel dies to produce a piece of metal of the desired cross-sectional shape and length. 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. During fiscal 2004, approximately 51% of extrusions produced were sold to non-affiliated customers with the balance utilized by International Aluminum Corporation subsidiaries. The Company furnishes design services to assist its customers in developing or better utilizing custom extrusions.
Sales and Distribution
The Company markets its residential products primarily to lumber yards, home improvement centers, 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.
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 2004, 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.
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).
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Materials
The Company purchases its aluminum requirements from primary aluminum producers, under supply agreements at market prices, or spot metal brokers. Although increased worldwide demand produces periods of tight supply of aluminum, the Company has had satisfactory experience to date in obtaining sufficient raw materials to meet its requirements and does not anticipate material shortages that 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. Vinyl, hardware and small parts are purchased from outside sources.
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 may at times carry a significant inventory of aluminum. Depending on price and availability, bulk quantities may be 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.
Employees
As of June 30, 2004, the Company had approximately 1,500 full-time employees. Management believes that the Company’s employee relations are good.
Patents
The Company has no material patents, either issued or pending, and is not a party to any significant licensing agreements.
3
Competition
The Company’s business 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. 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.
Expansion of its product lines may result in the Company competing with certain of its present customers. While the Company cannot accurately predict the effect, if any, that such development would 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 the Company’s revenues. Experience has shown that high interest rates for construction financing, residential mortgage and home improvement loans may adversely affect the Company’s revenues.
Government Regulation
The Company’s 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.
The Company is subject to various federal and state labor laws which govern its relationship with employees, including with regard to minimum wage requirements, overtime pay and other working conditions. Significant new government-imposed increases in minimum wage rates, paid leave of absence or mandated health benefits could have an adverse effect on our results of operations.
d. FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
The information concerning income before taxes of foreign and domestic operations for fiscal years 2004, 2003 and 2002 is set forth in Note 9 to the consolidated financial statements included on page 17 of the Company’s 2004 Annual Report incorporated herein by reference. There is no other significant related information regarding foreign operations.
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ITEM 2. PROPERTIES
The following table sets forth information concerning the location, size and use of the Company’s present facilities:
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Location |
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Square |
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Use |
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Alhambra, CA |
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185,000 |
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Aluminum extrusions, foundry & finishing |
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Waxahachie, TX |
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269,000 |
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Aluminum extrusions & finishing |
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South Gate, CA |
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189,000 |
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Residential products |
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Hayward, CA |
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103,000 |
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Residential products |
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Phoenix, AZ |
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100,000 |
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Residential products |
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Vernon, CA |
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134,000 |
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Commercial products |
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Bedford Park, IL |
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81,000 |
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Commercial products |
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Boston, MA |
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21,000 |
(L) |
Commercial products |
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Detroit, MI |
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12,000 |
(L) |
Commercial products |
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Waxahachie, TX |
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159,000 |
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Commercial products |
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Denver, CO |
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16,000 |
(L) |
Commercial products |
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St. Louis, MO |
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14,000 |
(L) |
Commercial products |
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Dallas, TX |
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36,000 |
(L) |
Commercial products |
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Houston, TX |
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19,000 |
(L) |
Commercial products |
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Rock Hill, SC |
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74,000 |
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Commercial products |
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Atlanta, GA |
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37,000 |
(L) |
Commercial products |
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Baltimore, MD |
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20,000 |
(L) |
Commercial products |
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Langley, B.C., Canada |
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63,000 |
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Commercial products |
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Guelph, Ontario, Canada |
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72,000 |
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Commercial products |
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Houston, TX |
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57,000 |
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Commercial products |
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Waxahachie, TX |
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60,000 |
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Commercial products |
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Dallas, TX |
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14,000 |
(L) |
Commercial products |
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Monterey Park, CA |
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19,000 |
(L) |
Executive offices |
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(A) Includes manufacturing, warehouse and office space; excludes construction in process, parking and yard storage space.
(L) Indicates leased premises.
Of the 1,754,000 square feet exhibited above, 1,546,000 square feet are owned by the Company. The balance of 208,000 square feet is leased under agreements expiring at various dates. The Company believes that its facilities are adequate for its current and anticipated future levels of operations.
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ITEM 3. LEGAL PROCEEDINGS
The Company has litigation pending arising from the usual conduct of its business, none of which is 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 that are required to be reported under the instructions to this item.
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The market and dividend information is included on pages 8 and 20 of the Company’s 2004 Annual Report to Shareholders and is incorporated herein by reference.
There are no restrictions of future cash dividends.
There were approximately 350 shareholders of record of the Company’s common stock at June 30, 2004.
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 2004 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 7 of the Company’s 2004 Annual Report to Shareholders and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Fluctuating foreign exchange rates may impact the Company’s earnings. The Company’s foreign exchange exposure is related to activities associated with its Canadian subsidiaries. The Company does not attempt to manage these risks by entering into forward exchange contracts.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Part IV, Item 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements that are required to be reported under the instructions to this item.
ITEM 9A. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding the required disclosure.
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Within 90 days prior to the filing date of this report, a review was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”) and the Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that review, the Company’s management, including the CEO, COO and CFO, concluded that the Company’s disclosure controls and procedures were effective. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the completion of their review.
ITEM 9B. OTHER INFORMATION
Inapplicable
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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 28, 2004, which information is incorporated herein by reference.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following items are filed as part of this report:
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(a) |
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Financial Statements |
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Consolidated Financial Statements (See Note): |
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Statements for the three years ended June 30, 2004 - |
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Financial Statement Schedules |
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Report of Independent Registered Public Accounting Firm on Financial Statement Schedule |
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Schedule for the three years ended June 30, 2004 -II Valuation and qualifying accounts |
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NOTE: The consolidated financial statements referred to above are included in the 2004 Annual Report to Shareholders and are incorporated herein by reference.
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3. Exhibits
3.1 and 3.2 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.
13.1 Annual Report to Shareholders
14.1 Code of Business Conduct and Ethics as contained in Registrant’s Proxy Statement and incorporated herein by reference
14.2 Code of Ethics for Senior Executives and Senior Financial Officer as contained in Registrant’s Proxy Statement and incorporated herein by reference
21.1 Subsidiaries of the registrant
23.1 Consent of PricewaterhouseCoopers LLP
31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of the Chief Operating Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of the Chief Operating Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.3 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K filed during the quarter ended June 30, 2004:
May 11, 2004 – Reporting the press release dated May 11, 2004 announcing financial results for the third quarter ended March 31, 2004.
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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, thereunto duly authorized.
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INTERNATIONAL ALUMINUM CORPORATION |
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Date: September 21, 2004 |
By: |
MITCHELL K. FOGELMAN |
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Mitchell K. Fogelman |
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Senior Vice President-Finance |
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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.
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Signature |
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Title |
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Date |
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CORNELIUS C. VANDERSTAR |
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Chairman of the Board and |
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September 21, 2004 |
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Cornelius C. Vanderstar |
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Chief Executive Officer |
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DAVID C. TREINEN |
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Director; President; Secretary |
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September 21, 2004 |
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David C. Treinen |
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and Chief Operating Officer |
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RONALD L. RUDY |
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Director and Senior |
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September 21, 2004 |
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Ronald L. Rudy |
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Vice President-Operations |
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MITCHELL K. FOGELMAN |
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Senior Vice President-Finance |
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September 21, 2004 |
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Mitchell K. Fogelman |
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and Chief Financial Officer |
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MICHAEL J. NORRING |
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Controller and Chief |
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September 21, 2004 |
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Michael J. Norring |
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Accounting Officer |
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DAVID M. ANTONINI |
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Director |
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September 21, 2004 |
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David M. Antonini |
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JOHN P. CUNNINGHAM |
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Director |
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September 21, 2004 |
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John P. Cunningham |
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ALEXANDER L. DEAN |
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Director |
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September 21, 2004 |
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Alexander L. Dean |
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JOEL F. McINTYRE |
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Director |
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September 21, 2004 |
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Joel F. McIntyre |
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10
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM 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 19, 2004 appearing in the 2004 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 15(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 19, 2004
F-1
INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES
SCHEDULE II - - VALUATION AND QUALIFYING ACCOUNTS
For The Three Years Ended June 30, 2004
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Description |
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Balance at |
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Amounts |
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Amounts |
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Balance at |
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Reserves for doubtful accounts |
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2004 |
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$ |
1,384,000 |
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$ |
446,000 |
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$ |
383,000 |
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$ |
1,447,000 |
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2003 |
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1,092,000 |
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810,000 |
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518,000 |
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1,384,000 |
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2002 |
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775,000 |
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865,000 |
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548,000 |
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1,092,000 |
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F-2