WASHINGTON, D.C. 20549
FORM 10-Q
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended December 31, 2004
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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 Identification 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 ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
At February 3, 2005 there were 4,247,294 shares of common stock outstanding.
INTERNATIONAL ALUMINUM CORPORATION
AND SUBSIDIARIES
INDEX
2
PART I – FINANCIAL INFORMATION
Unaudited
International Aluminum Corporation
and Subsidiaries
Condensed Consolidated Balance Sheets
|
|
|
Dec. 31, 2004 |
|
June 30, 2004 |
|
||
|
Assets |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
7,976,000 |
|
$ |
15,964,000 |
|
|
Accounts receivable, net |
|
42,210,000 |
|
39,030,000 |
|
||
|
Inventories |
|
39,174,000 |
|
32,286,000 |
|
||
|
Prepaid expenses and deposits |
|
3,178,000 |
|
1,864,000 |
|
||
|
Deferred income taxes |
|
2,767,000 |
|
2,767,000 |
|
||
|
|
|
|
|
|
|
||
|
Total current assets |
|
95,305,000 |
|
91,911,000 |
|
||
|
|
|
|
|
|
|
||
|
Property, plant and equipment, at cost |
|
122,846,000 |
|
121,828,000 |
|
||
|
Accumulated depreciation |
|
(75,773,000 |
) |
(73,227,000 |
) |
||
|
|
|
|
|
|
|
||
|
Net property, plant and equipment |
|
47,073,000 |
|
48,601,000 |
|
||
|
|
|
|
|
|
|
||
|
Other assets: |
|
|
|
|
|
||
|
Goodwill |
|
654,000 |
|
609,000 |
|
||
|
Other |
|
1,343,000 |
|
761,000 |
|
||
|
|
|
|
|
|
|
||
|
Total other assets |
|
1,997,000 |
|
1,370,000 |
|
||
|
|
|
|
|
|
|
||
|
|
|
$ |
144,375,000 |
|
$ |
141,882,000 |
|
|
|
|
|
|
|
|
||
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
||
|
Accounts payable |
|
$ |
10,752,000 |
|
$ |
10,858,000 |
|
|
Accrued liabilities |
|
11,436,000 |
|
11,903,000 |
|
||
|
Advances payable to banks |
|
— |
|
202,000 |
|
||
|
Income taxes payable |
|
— |
|
1,088,000 |
|
||
|
|
|
|
|
|
|
||
|
Total current liabilities |
|
22,188,000 |
|
24,051,000 |
|
||
|
|
|
|
|
|
|
||
|
Deferred income taxes |
|
6,625,000 |
|
6,625,000 |
|
||
|
|
|
|
|
|
|
||
|
Total liabilities |
|
28,813,000 |
|
30,676,000 |
|
||
|
|
|
|
|
|
|
||
|
Shareholders’ equity |
|
115,562,000 |
|
111,206,000 |
|
||
|
|
|
|
|
|
|
||
|
|
|
$ |
144,375,000 |
|
$ |
141,882,000 |
|
See accompanying notes to condensed consolidated financial statements.
3
Unaudited
International Aluminum Corporation
and Subsidiaries
Condensed Consolidated Statements of Income
|
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
|
2004 |
|
2003 |
|
2004 |
|
2003 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net sales |
|
$ |
61,759,000 |
|
$ |
50,698,000 |
|
$ |
122,486,000 |
|
$ |
103,654,000 |
|
|
Cost of sales |
|
48,057,000 |
|
39,684,000 |
|
94,820,000 |
|
82,082,000 |
|
||||
|
Gross profit |
|
13,702,000 |
|
11,014,000 |
|
27,666,000 |
|
21,572,000 |
|
||||
|
Selling, gen. and admin. expenses |
|
9,195,000 |
|
8,468,000 |
|
18,181,000 |
|
16,423,000 |
|
||||
|
Income from operations |
|
4,507,000 |
|
2,546,000 |
|
9,485,000 |
|
5,149,000 |
|
||||
|
Interest (income) expense, net |
|
(34,000 |
) |
(19,000 |
) |
(40,000 |
) |
(15,000 |
) |
||||
|
Income from continuing operations before income taxes |
|
4,541,000 |
|
2,565,000 |
|
9,525,000 |
|
5,164,000 |
|
||||
|
Provision for income taxes |
|
1,750,000 |
|
1,003,000 |
|
3,700,000 |
|
2,064,000 |
|
||||
|
Income from continuing operations |
|
2,791,000 |
|
1,562,000 |
|
5,825,000 |
|
3,100,000 |
|
||||
|
Income from discontinued operations |
|
— |
|
88,000 |
|
— |
|
129,000 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income |
|
$ |
2,791,000 |
|
$ |
1,650,000 |
|
$ |
5,825,000 |
|
$ |
3,229,000 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic and diluted EPS: |
|
|
|
|
|
|
|
|
|
||||
|
Continuing operations |
|
$ |
.66 |
|
$ |
.37 |
|
$ |
1.37 |
|
$ |
.73 |
|
|
Discontinued operations |
|
— |
|
.02 |
|
— |
|
.03 |
|
||||
|
Total |
|
$ |
.66 |
|
$ |
.39 |
|
$ |
1.37 |
|
$ |
.76 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Shares used to compute EPS: |
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
4,244,794 |
|
4,244,794 |
|
4,244,794 |
|
4,244,794 |
|
||||
|
Diluted |
|
4,253,944 |
|
4,244,794 |
|
4,250,948 |
|
4,244,794 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash dividends per share |
|
$ |
.30 |
|
$ |
.30 |
|
$ |
.60 |
|
$ |
.60 |
|
See accompanying notes to condensed consolidated financial statements.
4
Unaudited
International Aluminum Corporation
and Subsidiaries
Condensed Consolidated Statements of Cash Flows
|
|
|
Six Months Ended |
|
||||
|
|
|
2004 |
|
2003 |
|
||
|
|
|
|
|
|
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
||
|
Net income |
|
$ |
5,825,000 |
|
$ |
3,229,000 |
|
|
Adjustments for noncash transactions: |
|
|
|
|
|
||
|
Depreciation and amortization |
|
3,177,000 |
|
3,331,000 |
|
||
|
Changes in assets and liabilities: |
|
|
|
|
|
||
|
Accounts receivable |
|
(2,834,000 |
) |
761,000 |
|
||
|
Inventories |
|
(6,674,000 |
) |
(2,656,000 |
) |
||
|
Prepaid expenses and other |
|
(1,878,000 |
) |
(1,034,000 |
) |
||
|
Accounts payable |
|
(413,000 |
) |
1,371,000 |
|
||
|
Accrued liabilities |
|
(490,000 |
) |
689,000 |
|
||
|
Income taxes payable |
|
(997,000 |
) |
(272,000 |
) |
||
|
|
|
|
|
|
|
||
|
Net cash (used in) provided by operating activities |
|
(4,284,000 |
) |
5,419,000 |
|
||
|
|
|
|
|
|
|
||
|
Cash flows from investing activities: |
|
|
|
|
|
||
|
Capital expenditures |
|
(1,071,000 |
) |
(2,388,000 |
) |
||
|
Proceeds from sales of capital assets |
|
95,000 |
|
126,000 |
|
||
|
|
|
|
|
|
|
||
|
Net cash used in investing activities |
|
(976,000 |
) |
(2,262,000 |
) |
||
|
|
|
|
|
|
|
||
|
Cash flows from financing activities: |
|
|
|
|
|
||
|
Dividends paid to shareholders |
|
(2,547,000 |
) |
(2,547,000 |
) |
||
|
Net repayments under lines of credit |
|
(224,000 |
) |
(204,000 |
) |
||
|
|
|
|
|
|
|
||
|
Net cash used in financing activities |
|
(2,771,000 |
) |
(2,751,000 |
) |
||
|
|
|
|
|
|
|
||
|
Effect of exchange rate changes |
|
43,000 |
|
19,000 |
|
||
|
|
|
|
|
|
|
||
|
Net change in cash and cash equivalents |
|
(7,988,000 |
) |
425,000 |
|
||
|
|
|
|
|
|
|
||
|
Cash and cash equivalents at beginning of period |
|
15,964,000 |
|
12,570,000 |
|
||
|
|
|
|
|
|
|
||
|
Cash and cash equivalents at end of period |
|
$ |
7,976,000 |
|
$ |
12,995,000 |
|
See accompanying notes to condensed consolidated financial statements.
5
Unaudited
International Aluminum Corporation
and Subsidiaries
Notes To Condensed 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, 2004 and June 30, 2004, and the results of operations and the cash flows for the six-month periods ended December 31, 2004 and 2003. The results of operations for the six-month period ended December 31, 2004 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, in the United States of America, 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. These financial statements should 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 quarters ended December 31, 2004 and 2003 were $3,308,000 and $2,039,000, respectively. Comprehensive income for the six months ended December 31, 2004 and 2003 were $6,904,000 and $3,600,000, respectively. Other comprehensive income includes foreign currency translation adjustments recorded directly in shareholders’ equity.
|
Balance Sheet Components |
|
Dec. 31, 2004 |
|
June 30, 2004 |
|
||
|
|
|
|
|
|
|
||
|
Inventories, lower of FIFO Cost or Market |
|
|
|
|
|
||
|
Raw materials |
|
$ |
32,664,000 |
|
$ |
26,790,000 |
|
|
Work in process |
|
744,000 |
|
553,000 |
|
||
|
Finished goods |
|
5,766,000 |
|
4,943,000 |
|
||
|
|
|
$ |
39,174,000 |
|
$ |
32,286,000 |
|
|
|
|
|
|
|
|
||
|
Shareholders’ Equity |
|
|
|
|
|
||
|
Common stock |
|
$ |
4,765,000 |
|
$ |
4,765,000 |
|
|
Paid-in capital |
|
4,123,000 |
|
4,123,000 |
|
||
|
Retained earnings |
|
104,418,000 |
|
101,140,000 |
|
||
|
Accumulated other comprehensive income |
|
2,256,000 |
|
1,178,000 |
|
||
|
|
|
$ |
115,562,000 |
|
$ |
111,206,000 |
|
6
Unaudited
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:
|
|
|
Three Months Ended |
|
Six Months Ended |
|
||||
|
|
|
2004 |
|
2003 |
|
2004 |
|
2003 |
|
|
Weighted-average shares outstanding used to compute basic EPS |
|
4,244,794 |
|
4,244,794 |
|
4,244,794 |
|
4,244,794 |
|
|
Incremental shares issuable upon the exercise of stock options |
|
9,150 |
|
— |
|
6,154 |
|
— |
|
|
Shares used to compute diluted EPS |
|
4,253,944 |
|
4,244,794 |
|
4,250,948 |
|
4,244,794 |
|
Incremental shares issuable upon the assumed exercise of outstanding stock options are computed using the average market price during the related period. Excluded from diluted earnings per share for the second quarter of 2004 and 2003 and six months of 2004 and 2003, are 13,500, 108,000, 17,250 and 108,000, respectively, stock options because their inclusion would be anti-dilutive, since the option price was greater than the Company’s average common stock price for these periods.
Stock Based Compensation
The Company granted stock options for the purchase of common stock to certain executive and managerial employees under the Company’s 1991 Stock Option Plan, whose expired granting authority has been transferred to the successor plan, the 2001 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 become exercisable over a five-year period. The Company applies Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees”, and related Interpretations in accounting for the plan. Under APB No. 25, compensation cost, if any, is recognized over the respective vesting period based on the difference, if any, on the date of grant, between the fair value of the Company’s common stock and the exercise price. All options issued have an exercise price equal to the fair value on the date of grant. Accordingly, no compensation cost has been recognized for those stock options. On December 31, 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure”, which amends SFAS No. 123, “Accounting for Stock-Based Compensation”. SFAS No. 148’s transition guidance and provisions for disclosures are effective for fiscal years ending after December 15, 2002. The Company did not adopt fair value accounting for employee stock options under SFAS No. 123 and SFAS No. 148. Since all outstanding stock awards are fixed stock options with no intrinsic value at the date of grant and were fully vested before the income statement periods presented, there would have been no 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.
7
Unaudited
Segment Information
The Company’s operations are organized and managed by product type. The Company currently operates in three segments of the building products industry: Commercial Products, Residential Products and Aluminum Extrusions. The Company evaluates performance based on operating income or loss before any allocation of corporate overhead, interest or taxes.
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.
|
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
|
2004 |
|
2003 |
|
2004 |
|
2003 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net Sales: |
|
|
|
|
|
|
|
|
|
||||
|
Commercial |
|
$ |
31,652 |
|
$ |
24,347 |
|
$ |
61,861 |
|
$ |
48,167 |
|
|
Residential |
|
17,803 |
|
16,088 |
|
36,367 |
|
32,158 |
|
||||
|
Aluminum Extrusion |
|
29,775 |
|
23,372 |
|
56,817 |
|
48,265 |
|
||||
|
Total Segments |
|
79,230 |
|
63,807 |
|
155,045 |
|
128,590 |
|
||||
|
Eliminations |
|
(17,471 |
) |
(13,109 |
) |
(32,559 |
) |
(24,936 |
) |
||||
|
Total |
|
$ |
61,759 |
|
$ |
50,698 |
|
$ |
122,486 |
|
$ |
103,654 |
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||
|
|
|
2004 |
|
2003 |
|
2004 |
|
2003 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating Income: |
|
|
|
|
|
|
|
|
|
||||
|
Commercial |
|
$ |
3,577 |
|
$ |
1,957 |
|
$ |
7,204 |
|
$ |
3,544 |
|
|
Residential |
|
3,025 |
|
2,789 |
|
6,127 |
|
5,662 |
|
||||
|
Aluminum Extrusion |
|
521 |
|
(96 |
) |
851 |
|
761 |
|
||||
|
Total Segments |
|
7,123 |
|
4,650 |
|
14,182 |
|
9,967 |
|
||||
|
Eliminations |
|
(15 |
) |
137 |
|
120 |
|
(354 |
) |
||||
|
Corporate |
|
(2,601 |
) |
(2,241 |
) |
(4,817 |
) |
(4,464 |
) |
||||
|
Total |
|
$ |
4,507 |
|
$ |
2,546 |
|
$ |
9,485 |
|
$ |
5,149 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
Dec. 31, |
|
June 30, |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total Assets: |
|
|
|
|
|
|
|
|
|
||||
|
Commercial |
|
$ |
67,236 |
|
$ |
60,922 |
|
|
|
|
|
||
|
Residential |
|
24,720 |
|
27,105 |
|
|
|
|
|
||||
|
Aluminum Extrusion |
|
40,655 |
|
38,130 |
|
|
|
|
|
||||
|
Total Segments |
|
132,611 |
|
126,157 |
|
|
|
|
|
||||
|
Corporate |
|
11,764 |
|
15,725 |
|
|
|
|
|
||||
|
Total |
|
$ |
144,375 |
|
$ |
141,882 |
|
|
|
|
|
||
8
Discontinued Operations
During the fourth quarter of fiscal year 2003, the Company announced the closure of International Window-Colorado, a vinyl window and door subsidiary, which was a component of the Residential Products segment. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company wrote-down the net assets of International Window-Colorado to their estimated net realizable value and reported International Window-Colorado’s results as discontinued operations. Due primarily to favorable results experienced in selling a portion of International Window-Colorado’s equipment and inventory and collection of accounts receivable balances, the Company recognized a net gain in fiscal year 2004 which was also classified as discontinued operations. The Company does not anticipate any further activity with respect to International Window-Colorado in the future.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations
General Overview
Net sales increased $11,061,000 or 21.8% for the quarter ended December 31, 2004 and $18,832,000 or 18.2% for the six months then ended when compared with the respective prior year periods. Cost of sales as a percentage of net sales was 77.8% for the quarter ended December 31, 2004 versus 78.3% for the same period last year and for the six-month period was 77.4% compared to 79.2% for the same period last year. Selling, general and administrative expenses increased $727,000 for the current quarter and $1,758,000 for the year compared to the same periods last year, although as a percentage of net sales decreased to 14.9% for the quarter and 14.8% year to date compared to 16.7% and 15.8% for the comparable periods last year.
The Company includes product costs, inbound freight, purchasing, receiving, inspection, internal transfer, warehousing and other costs of the Company’s distribution network in cost of goods sold, thereby reducing gross profit by these amounts. Cost of sales and gross profit as a percent of sales for the Company may not be comparable to those of other companies in our industry since other entities may record purchasing, warehousing and distribution costs as selling, general and administrative expense.
The contribution to these results by each segment is discussed below.
Commercial Products
Net sales of the Commercial Products Group increased $7,562,000 or 31.4% for the quarter and $13,938,000 or 29.4% for the six months compared to the same periods last year. These gains reflect increased commercial construction activity together with increased sales prices and expanded geographic market penetration. Cost of sales as a percentage of sales was 77.2% for the quarter ended December 31, 2004 versus 77.9% for the same period last year and for the six-month period was 76.8% compared to 79.1% for the same period last year. Although year to date material cost percentage remained relatively constant compared to the prior year six-month period, the current quarter was slightly higher reflecting the absorption of increased aluminum costs. Decreased labor and overhead cost percentages were achieved during the current quarter and year to date periods compared to the same periods last year due to volume efficiencies as a result of the aforementioned sales increases. Selling, general and administrative expenses increased $225,000 for the current quarter
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and $615,000 for the year compared to the same periods last year, although as a percentage of sales decreased to 11.5% for the quarter and 11.6% year to date compared to 14.0% and 13.6% for the comparable periods last year. These increases reflect additional employment and sales representation costs of $407,000 for the quarter and $752,000 for the year related to the increase in sales and achievement of incentive compensation targets. Partially offsetting these increases during the current year was income relating to retrospective workers’ compensation and general liability policies totaling $126,000 and $94,000 recorded for the three and six-month periods respectively, compared to additional expense of $136,000 and $151,000 incurred in the comparable periods of the prior year.
Residential Products
Net sales of the Residential Products Group increased $1,725,000 or 10.8% for the quarter and $4,228,000 or 13.2% for the six months compared to the same periods last year. Low interest rates and sustained consumer confidence continue to stimulate new home construction, resales of existing homes and home improvement spending. New product development and more aggressive promotional programs have also contributed to the increase. Cost of sales as a percentage of sales was 70.8% for the quarter ended December 31, 2004 versus 70.0% for the same period last year and for the six-month period was 70.5% compared to 70.2% for the same period last year. All components, material, labor and overhead, as a percentage of sales remained virtually unchanged from the respective prior year periods, as slight increases in material and labor cost percentages were mostly offset by declines in overhead cost percentages. Selling, general and administrative expenses remained relatively unchanged for the current quarter but increased $696,000 for the year compared to the same periods last year, although as a percentage of sales decreased to 12.1% for the quarter compared to 12.6% for the comparable quarter of the prior year but increased to 12.7% for the six-month period compared to 12.1% for the same period last year. The year to date increase reflects increased costs of $575,000 for advertising, current year general liability insurance, and retrospective workers’ compensation and general liability policies.
Aluminum Extrusion
Net sales of the Aluminum Extrusion Group increased $1,774,000 or 16.6% for the quarter and $666,000 or 2.8% for the six months compared to the same periods last year. During the current quarter the group benefited from an increase in selling prices along with a 4.4% increase in net tonnage shipped. However, for the six-month period, increased selling prices were offset by a 7.5% decrease in net tonnage shipped to outside customers, particularly in the area served by our Texas facility. Cost of sales as a percentage of sales was 95.6% for the quarter ended December 31, 2004 compared to 97.1% for the same period last year and for the six-month period was relatively constant at 95.7% versus 95.3% for the comparable period last year. Due to the highly competitive marketplace, selling prices were increased directly in line with the increased cost of aluminum, resulting in increased material cost percentages and decreased labor and overhead cost percentages for the current three and six-month periods. Additionally, labor and overhead production efficiencies gained from higher total tonnage output, including intercompany customers, decreased labor and overhead cost percentages for the same periods. For the current quarter these gains more than offset increased material cost percentages but for the six-month period only partially offset the material cost percentage increase. Selling, general and administrative expenses were relatively unchanged for the current quarter and six months compared to the same periods last year, although as a percentage of sales decreased to 2.7% for the quarter and 2.8% year to date compared to 3.3% and 3.1% for the comparable periods last year.
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Corporate
General and administrative expenses increased $360,000 for the current quarter and $353,000 for the six months compared to the same periods last year, although as a percentage of consolidated net sales decreased to 4.2% for the quarter and 3.9% year to date compared to 4.4% and 4.3% for the comparable periods last year. The three and six-month increases include a $210,000 charge for initial costs related to complying with the internal control sections of the Sarbanes-Oxley legislation. The other additional costs for the current three and six-month periods were primarily incurred for employment, legal services, and retrospective workers’ compensation policies.
The effective tax rate for the six months ended December 31, 2004 was 38.8% as compared to 40.0% in the comparable period of the prior year.
Working capital at December 31, 2004 stood at $73,117,000, an increase of $5,257,000 from June 30, 2004. The ratio of current assets to current liabilities was 4.3 as compared to 3.8 at the beginning of the year.
The Company projects net capital expenditures of $5,900,000 for fiscal 2005 for expansion of production capacity, as well as normal recurring capitalized replacement items. The Company anticipates financing these expenditures through internal cash flow and cash reserves. The Company’s lines of credit remain unchanged from those described in the June 30, 2004 Annual Report to Shareholders.
Recent Accounting Pronouncements
Current and pending accounting pronouncements are not expected to have a significant impact on the Company’s results of operations or financial position.
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. The principal important risk factors and uncertainties include, but are not limited to, changes in general economic conditions, material prices, labor costs, interest rates, and other adverse changes in general economic conditions, consumer confidence, competition, currency exchange rates as they affect our Canadian operations, environmental factors, unanticipated legal proceedings, and conditions in the commercial and residential construction markets. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statements were 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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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Fluctuating foreign exchange rates and commodity pricing may impact our earnings. Our foreign exchange exposure is related to activities associated with our Canadian subsidiaries. We do not attempt to manage these risks by entering into forward exchange contracts, forward commodity delivery agreements or otherwise.
Item 4. Controls and Procedures.
We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to assure that information required to be disclosed in our 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 our management, including our Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide reasonable assurance only of achieving the desired control objectives, and management necessarily is required to apply its judgment in weighting the costs and benefits of possible new or different controls and procedures. Limitations are inherent in all control systems, so no evaluation of controls can provide absolute assurance that all control issues and any fraud within the company have been detected.
As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report we carried out, under the supervision and with the participation of our CEO, COO and CFO, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our CEO, COO and CFO concluded that, subject to the inherent limitations noted above, our disclosure controls and procedures were effective to provide reasonable assurance that material Company information is recorded, processed, summarized and reported to our management on a timely basis to ensure the quality and timeliness of our public disclosures.
In our evaluation above, we identified no changes during the period covered by this report that, individually or in the aggregate, materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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Item 6. Exhibits.
(a) Exhibits:
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31.1 |
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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31.2 |
Certification of the Chief Operating Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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31.3 |
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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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 |
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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 |
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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 |
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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.
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International Aluminum Corporation |
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(Registrant) |
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Date: |
February 10, 2005 |
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MITCHELL K. FOGELMAN |
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Mitchell K. Fogelman |
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Senior Vice President – Finance |
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(Principal Financial Officer) |
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Date: |
February 10, 2005 |
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MICHAEL J. NORRING |
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Michael J. Norring |
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Controller |
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(Principal Accounting Officer) |
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INDEX TO EXHIBITS
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Page |
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Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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16 |
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31.2 |
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Certification of the Chief Operating Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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17 |
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31.3 |
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Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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18 |
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32.1 |
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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 |
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19 |
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32.2 |
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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 |
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20 |
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32.3 |
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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 |
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21 |
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