INTERNATIONAL
ALUMINUM
CORPORATION
2002 Annual Report
COMPANY PROFILE
INTERNATIONAL ALUMINUM CORPORATION is an integrated building products manufacturer of diversified lines of quality aluminum and vinyl products. The Company is headquartered in Monterey Park, California and has approximately 1,500 employees. Operations are conducted through thirteen North American subsidiaries. The Company’s primary internet website is located at www.intlalum.com .
PRODUCTS BY SEGMENT
COMMERCIAL — Curtainwalls, window walls, slope glazed systems, storefront framing, entrance doors and frames, commercial operable windows, interior officefronts, office partitions and interior doors and frames for the commercial building and tenant improvement markets. Product information is available at www.usalum.com and www.racointeriors.com.
RESIDENTIAL — Extensive lines of windows and patio doors manufactured from vinyl and aluminum and aluminum wardrobe mirror doors for the residential building and remodeling markets. Product information is available at www.intlwindow.com.
ALUMINUM EXTRUSION — Mill finish, anodized, painted and fabricated aluminum extrusions. Product information is available at www.intlextrusion.com.
CONTENTS
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Consolidated Financial Statements |
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Fiscal Years Ended June 30, 2002, 2001 and 2000
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| 2002 |
| 2001 |
| 2000 |
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Operating Results: |
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Net sales |
| $ | 193,728,000 |
| $ | 209,909,000 |
| $ | 214,652,000 |
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Income from continuing operations |
| $ | 1,017,000 |
| $ | 4,915,000 |
| $ | 1,187,000 |
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Income (loss) from discontinued operations |
| (1,065,000 | ) | (281,000 | ) | 392,000 |
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Cumulative effect of accounting change |
| (7,935,000 | ) | — |
| — |
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Net income (loss) |
| $ | (7,983,000 | ) | $ | 4,634,000 |
| $ | 1,579,000 |
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Financial Data: |
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Net cash provided by operating activities |
| $ | 11,778,000 |
| $ | 23,151,000 |
| $ | 1,861,000 |
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Capital expenditures including acquisitions |
| 11,783,000 |
| 7,749,000 |
| 10,253,000 |
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Working capital |
| 58,057,000 |
| 66,097,000 |
| 63,586,000 |
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Long-term debt |
| — |
| — |
| — |
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Shareholders’ equity |
| 110,805,000 |
| 123,755,000 |
| 124,326,000 |
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Per Share Data: |
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Continuing operations — Diluted |
| $ | .24 |
| $ | 1.16 |
| $ | .28 |
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Income (loss) from discontinued operations — Diluted |
| (.25 | ) | (.07 | ) | .09 |
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Cumulative effect of accounting change — Diluted |
| (1.87 | ) | — |
| — |
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Net income (loss) — Diluted |
| $ | (1.88 | ) | $ | 1.09 |
| $ | .37 |
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Dividends declared |
| 1.20 |
| 1.20 |
| 1.20 |
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Book value at yearend |
| 26.10 |
| 29.15 |
| 29.29 |
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Market price at yearend |
| 20.50 |
| 21.15 |
| 17.25 |
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1
Income from continuing operations plummeted to $1,017,000 or $.24 per share for the year, down sharply from the $4,915,000 or $1.16 per share of income from continuing operations for fiscal 2001. Sales revenues declined 7.7% to $193,728,000 for the year. Other significant items effecting net income for all sources for the year were:
• A $1,065,000 or $.25 per share loss from discontinued operations
resulting from the closure of Maestro Products, our residential wood
window and door operation.
• A negative $7,935,000 or $1.87 per share cumulative effect of a change
in accounting to reflect the write-down of impaired goodwill as a result of
the required adoption of SFAS 142 (see note 12 to the accompanying
financial statements).
The net loss for the year, including the loss from discontinued operations and goodwill impairment, was $7,983,000 or $1.88 per share versus net income of $4,634,000 or $1.09 per share for fiscal 2001.
The high level of optimism with which we entered fiscal 2002 was quickly shattered by two completely unrelated events, each of which occurred on consecutive days in early September of 2001:
• On September 10, 2001, our South Gate, California Residential Products
subsidiary was hit with an unanticipated labor strike which officially ended
in mid-March 2002 but from which we are still feeling the after-effects.
• The tragic terrorist attacks of September 11th which continue to this day
to have a dampening effect on the nation’s economic recovery.
Net sales for this product segment declined 15.8% with a predominant portion attributable to the above mentioned labor strike at our South Gate, California facility. Overnight we found ourselves in the unenviable position of locating and training an entire workforce while at the same time attempting to maintain our high quality, service and delivery standards. Although we experienced a period where some customers found it necessary to temporarily shift to alternative suppliers, we are extremely appreciative of the loyalty of the majority of our dealer network who stuck with us through this very trying period. At mid-year we received notice that due to quality and delivery problems, we were permanently losing the account of a large home improvement retailer, supplied by all our residential locations on a regional basis, which had theretofore accounted for 12% of segment sales. We have redirected our marketing focus to expand and better serve our dealer network and will no longer pursue the high volume, low margin, high maintenance cost big-box retailers.
After operating Maestro Products for a number of years with less than satisfactory results and with declining sales volume, we made the decision in December 2001 to cease operations in order to minimize losses. This will allow us to concentrate our efforts on our core aluminum and vinyl product lines. Several new product offerings are planned for fiscal 2003. Aggressive marketing programs were introduced during the year and custom designed user friendly quote preparation and order processing software programs were released to our dealers late in the year.
2
Commercial Products
Sales for this product segment declined 5.2% from fiscal 2001. Operating income declined 6.5% to $10,862,000 from fiscal 2001’s operating income of $11,616,000. Following the September 2001 terrorist attacks the population’s seemingly greater confidence in national security plus low mortgage rates sparked a revival in housing demand. The same cannot be said for the commercial sector as the less-than-robust economy continued to cause commercial entities to defer large cash outlays on projects not deemed as vital. Late in the second quarter of fiscal 2002, United States Aluminum of Canada — Ontario moved to a newly constructed 70,000 square foot facility located in Guelph, Ontario, a suburb of greater Toronto. This full line facility, including fabrication, fill and debridge, and a state-of-the-art horizontal paint line greatly expands our presence in the Toronto marketplace as well as enhancing our service capabilities in the upper Midwest and Northeastern U.S. markets. In April 2002 a new horizontal paint line was put into service at our Vernon, California facility. In-house painting results in lower costs and significantly improves our competitive position on painted orders.
During the year we successfully completed the testing of a new storefront system designed to meet the rigid code requirements for the high wind-zone and hurricane prone Gulf states. This new product offering has been well accepted by the market and plans are to expand this offering to include a curtainwall system. Late in the year United States Aluminum-Texas introduced the 7200 and 7400 Series commercial window lines. The 7200, which has been highly successful in western Canada, is designed for standard commercial applications whereas the 7400 Series high performance window meets the design specifications called out in major institutional applications. The design phase of a unitized curtainwall system has been completed and the required extrusion dies are nearing completion. Testing is scheduled for mid-October with product availability scheduled for mid-November.
Extruded Products
The Extruded Products Group continued to be impacted by both soft demand and depressed pricing. Net tonnage shipped remained relatively flat as compared to fiscal 2001 while sales revenues declined approximately 4% for the year. Much needed capital expenditure projects were completed in FY 2002. At our Alhambra facility the primary anodizing line was completely refurbished and an additional extrusion press was overhauled during the year. Our Texas facility added oil filtration systems on all its extrusion presses, implemented a water reduction discharge system and made significant improvements to its anodizing line. In an attempt to minimize the impact of high energy costs at the Alhambra facility, we have modified production hours so that selective manufacturing processes are only operated during off-peak billing periods. With no end to the soft market in sight, we will seek added business from existing accounts as well as aggressively pursuing new business. At the same time, we will explore every avenue available to continue to reduce expenses.
Financial Condition
Our financial condition continues to be excellent. We finished the year with no debt and a working capital ratio of 4.6 to 1, up from the 4.4 to 1 at which we closed fiscal 2001. With the completion of an extensive three year capital expenditure program, expenditures for fiscal 2003 are projected at $5,000,000, down significantly from the $12,000,000 expended during the 2002 year.
Cornelius C. Vanderstar |
| David C. Treinen |
Chairman of the Board |
| President |
Chief Executive Officer |
| Chief Operating Officer |
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September 6, 2002 |
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3
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| Year Ended June 30 |
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| 2002 |
| 2001 |
| 2000 |
| 1999 |
| 1998 |
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Sales by segment |
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Commercial |
| $ | 108,510,000 |
| $ | 114,436,000 |
| $ | 112,522,000 |
| $ | 124,839,000 |
| $ | 112,179,000 |
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Residential |
| 46,651,000 |
| 55,388,000 |
| 55,444,000 |
| 47,680,000 |
| 44,707,000 |
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Aluminum Extrusion |
| 38,567,000 |
| 40,085,000 |
| 46,686,000 |
| 56,417,000 |
| 51,021,000 |
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Total net sales |
| $ | 193,728,000 |
| $ | 209,909,000 |
| $ | 214,652,000 |
| $ | 228,936,000 |
| $ | 207,907,000 |
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Earnings |
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Gross profit |
| $ | 33,811,000 |
| $ | 39,985,000 |
| $ | 39,304,000 |
| $ | 52,873,000 |
| $ | 49,818,000 |
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Continuing operations |
| $ | 1,017,000 |
| $ | 4,915,000 |
| $ | 1,187,000 |
| $ | 10,476,000 |
| $ | 11,467,000 |
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Income (loss) from disc. ops. |
| (1,065,000 | ) | (281,000 | ) | 392,000 |
| (137,000 | ) | 655,000 |
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Cum. effect of acctg. change |
| (7,935,000 | ) | — |
| — |
| — |
| — |
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Net income (loss) |
| $ | (7,983,000 | ) | $ | 4,634,000 |
| $ | 1,579,000 |
| $ | 10,339,000 |
| $ | 12,122,000 |
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Per share: |
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Net income (loss)—Diluted |
| $ | (1.88 | ) | $ | 1.09 |
| $ | .37 |
| $ | 2.41 |
| $ | 2.82 |
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Dividends declared |
| 1.20 |
| 1.20 |
| 1.20 |
| 1.20 |
| 1.15 |
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Financial Data at Yearend |
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Working capital |
| $ | 58,057,000 |
| $ | 66,097,000 |
| $ | 63,586,000 |
| $ | 69,030,000 |
| $ | 72,170,000 |
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Total assets |
| 132,724,000 |
| 148,070,000 |
| 154,585,000 |
| 153,693,000 |
| 147,298,000 |
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Long-term debt |
| — |
| — |
| — |
| — |
| — |
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Shareholders’ equity |
| 110,805,000 |
| 123,755,000 |
| 124,326,000 |
| 128,701,000 |
| 123,449,000 |
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4
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2002 vs. 2001
Net sales for fiscal 2002 decreased by $16,181,000 or 7.7% from fiscal 2001. The economic slowdown has been felt to varying degrees at all of our operating groups. Included is an $8,737,000 or 15.8% decrease by the Residential Products Group. A prolonged trade union strike at our South Gate, California facility limited our ability to maintain normal delivery schedules to our customers in the territory serviced from this location. This led directly to the loss of a large home improvement chain that was supplied on a regional basis and at mid-year had accounted for 12% of residential group sales. Strike related service, quality, and delivery problems also resulted in some customers temporarily shifting to alternative suppliers during the heart of the strike. The strike terminated in March with an unconditional offer to return to work. Sales for the Commercial Products Group declined $5,926,000 or 5.2%. Most all of the North American marketing areas experienced declines as the softening in the commercial construction industry continued to take its toll. Sales for the Aluminum Extrusion Group decreased $1,518,000 or 3.8% when compared to last year as they experienced continued pressure on volume and prices. Although overall group sales were down, demand strengthened during the last half of the year in the area served by our Texas facility.
Gross profit decreased to 17.5% of sales in 2002 as compared to 19.0% in 2001. Several factors contributed to this decline. Due to the aforementioned strike, the Residential Products Group incurred higher costs due to production inefficiencies resulting from the hiring and training of replacement personnel. In addition, higher labor and overhead costs, including significantly increased utility costs, were incurred at our California extrusion facility as their decline in overall volume increased unit cost of production. An increase in overall labor costs also reflects a significant swing from last year’s recovery to additional expense this year for current year workers’ compensation claims.
Selling, general and administrative expenses increased to 16.8% of sales in fiscal 2002 as compared to 15.4% in fiscal 2001. The increase reflects additional expense for retrospective workers’ compensation adjustments for prior year claims and strike related high security and legal costs. Partially offsetting these costs was a reduction in employment related costs and the discontinuance of goodwill amortization (see Note 12).
Net interest expense decreased compared to the prior year reflecting lower utilization of our domestic line of credit.
The effective tax rate decreased to 23.0% in fiscal 2002 compared to 34.8% last year. This decline reflects available tax credits offsetting a lower income base.
5
2001 vs. 2000
Net sales for fiscal 2001 decreased by $4,743,000 or 2.2% from net sales of fiscal 2000. Included is a $6,601,000 or 14.1% decrease by the Aluminum Extrusion Group, which continues its marketing efforts to regain customer confidence, which had been eroded as a result of last year’s severe operational problems. Partially offsetting the decrease is a $1,914,000 or 1.7% increase in commercial products largely reflecting the full year contribution of our Ontario, Canada facility purchased in March 2000. Sales of residential products were flat compared to the prior year. Contributing to this was the closure of the Home Base stores, a large chain of big box stores, to which we provided product to approximately 80 stores in their Western region. Through increased marketing efforts most of this volume had been replaced by yearend.
Gross profit increased to 19.0% of sales in 2001 as compared to 18.3% in 2000. Contributing to the increase are reduced costs at our extrusion operations reflecting the continuing recovery from the prior year’s severe operational problems. As a group they achieved an 18% increase in shipments per man-hour in spite of an 8.7% decrease in total pounds shipped during the year. Somewhat offsetting these savings were higher production costs incurred by our Residential Group.
Selling, general and administrative expenses decreased by $4,702,000 or 12.7% from the prior year. The decreased expenses are primarily attributable to lower employment costs directly related to the aforementioned decrease in sales coupled with the prior year containing nonrecurring costs associated with realigning operating group management teams.
The decrease in net interest expense relates to increased funds available for investment during the year. Prior year net interest expense reflected credit line utilization, repaid during the September 2000 quarter, to fund heavy capital expenditures and increases in raw material inventories.
6
Liquidity and Capital Resources
Working capital at June 30, 2002 was $58,057,000 compared to $66,097,000 at June 30, 2001 and $63,586,000 at June 30, 2000. The ratio of current assets to current liabilities was 4.6 at the end of 2002 compared to 4.4 at the end of 2001 and 3.5 at the end of 2000. 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 $11,783,000 in 2002, $7,749,000 in 2001 and $9,031,000 in 2000 were financed through internal cash flow, cash reserves and utilization of the lines of credit. Cash flows include proceeds for sales of excess facilities of $1,655,000 in fiscal 2002 and $3,060,000 in fiscal 2001. Additional cash flows include the fiscal year 2000 expenditure of $1,222,000 for an acquisition and the receipt of $3,921,000 from the sale of operating assets of the glass segment (see Note 8). The Company projects net capital expenditures of $5,000,000 for fiscal 2003. These expenditures are for expansion of production capacity as well as normal recurring capitalized replacement items. The Company anticipates financing these expenditures through internal cash flow, cash reserves and the utilization of its line of credit.
The Company had $20,000,000 in available credit at the end of 2002 under a short-term borrowing arrangement with a domestic 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.
7
Critical Accounting Policies
The summary of Accounting Policies within the Notes to the Consolidated Financial Statements includes the significant policies and procedures used in the preparation of the Company’s consolidated financial statements. The following is a discussion of each of the Company’s critical accounting policies:
Sales are recognized when products are shipped or when services are provided assuming no significant Company obligations remain and the collection of related receivables is probable. Revenue recognition on product sales is not subject to significant estimates, as the Company has not experienced significant product returns.
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company performs ongoing credit evaluations of its customers. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Changes in the credit worthiness of customers, general economic conditions and other factors may impact the level of future write-offs.
The Company periodically reviews inventory items and overall stocking levels to ensure that adequate reserves exist for inventory deemed obsolete or excessive. In making this determination, the Company considers historical stocking levels, recent sales of similar items and anticipated demand for these items. Changes in factors such as customer demand, new product offerings and other matters could affect the level of inventory obsolescence in the future.
8
Current and Pending Accounting Changes
In May 2002, the Financial Accounting Standards Board (FASB) issued Statement No. 145 (SFAS 145) “Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13, and Technical Corrections”. SFAS 145 revises the accounting for early extinguishment of debt. Management believes that SFAS 145 will not have a material effect on the Company’s consolidated financial position or results of operations.
In June 2002, the Financial Accounting Standards Board (FASB) issued Statement No. 146 (SFAS 146) “Accounting for Costs Associated with Exit or Disposal Activities”. SFAS 146 revises the accounting for exit or disposal activities requiring that costs associated with these activities be initially measured at fair value and recognized when the liability is incurred. In periods subsequent to the initial measurement, adjustments to the liability are recorded in the period of change and charged to the same line items in the statement of income used when the related costs were initially recognized. The provisions of SFAS No. 146 are required to be applied prospectively to exit or disposal activities initiated after December 31, 2002.
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.
9
QUARTERLY FINANCIAL DATA (UNAUDITED)
For the years ended June 30, 2002 and 2001
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| First |
| Second |
| Third |
| Fourth |
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2002 |
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Net sales |
| $ | 53,264,000 |
| $ | 47,302,000 |
| $ | 46,473,000 |
| $ | 46,689,000 |
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Gross profit |
| 9,673,000 |
| 7,554,000 |
| 8,209,000 |
| 8,375,000 |
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Income from continuing operations |
| 1,108,000 |
| (722,000 | ) | 392,000 |
| 239,000 |
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Net income (loss) |
| (7,003,000 | ) | (1,611,000 | ) | 392,000 |
| 239,000 |
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Earnings per share — Basic and Diluted: |
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Continuing operations |
| .26 |
| (.17 | ) | .09 |
| .06 |
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Net income (loss) |
| (1.65 | ) | (.38 | ) | .09 |
| .06 |
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Dividends declared |
| .30 |
| .30 |
| .30 |
| .30 |
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Stock price — High |
| 26.68 |
| 25.15 |
| 23.85 |
| 22.07 |
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Stock price — Low |
| 21.05 |
| 21.20 |
| 15.50 |
| 18.50 |
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2001 |
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Net sales |
| $ | 54,132,000 |
| $ | 52,673,000 |
| $ | 49,658,000 |
| $ | 53,446,000 |
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Gross profit |
| 10,269,000 |
| 10,510,000 |
| 8,076,000 |
| 11,130,000 |
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Income from continuing operations |
| 1,667,000 |
| 1,721,000 |
| (106,000 | ) | 1,633,000 |
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Net income (loss) |
| 1,533,000 |
| 1,733,000 |
| (216,000 | ) | 1,584,000 |
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Earnings per share — Basic and Diluted: |
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Continuing operations |
| .39 |
| .41 |
| (.02 | ) | .38 |
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Net income (loss) |
| .36 |
| .41 |
| (.05 | ) | .37 |
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Dividends declared |
| .30 |
| .30 |
| .30 |
| .30 |
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Stock price — High |
| 18.44 |
| 21.19 |
| 19.94 |
| 22.48 |
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Stock price — Low |
| 16.69 |
| 14.81 |
| 18.00 |
| 17.99 |
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10
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, cash flows and shareholders’ equity present fairly, in all material respects, the financial position of International Aluminum Corporation and its subsidiaries at June 30, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2002, in conformity with accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America, 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 our opinion.
PricewaterhouseCoopers LLP
Los Angeles, California
August 21, 2002
11
CONSOLIDATED STATEMENTS OF INCOME
For the years ended June 30, 2002, 2001 and 2000
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| 2002 |
| 2001 |
| 2000 |
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Net sales |
| $ | 193,728,000 |
| $ | 209,909,000 |
| $ | 214,652,000 |
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Cost of sales |
| 159,917,000 |
| 169,924,000 |
| 175,348,000 |
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Gross profit |
| 33,811,000 |
| 39,985,000 |
| 39,304,000 |
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Selling, general and administrative expenses |
| 32,464,000 |
| 32,355,000 |
| 37,057,000 |
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Income from operations |
| 1,347,000 |
| 7,630,000 |
| 2,247,000 |
| |||
Interest income |
| 44,000 |
| 71,000 |
| 3,000 |
| |||
Interest expense |
| (69,000 | ) | (155,000 | ) | (428,000 | ) | |||
Income from continuing operations before income taxes |
| 1,322,000 |
| 7,546,000 |
| 1,822,000 |
| |||
Provision for income taxes |
| 305,000 |
| 2,631,000 |
| 635,000 |
| |||
Income from continuing operations |
| 1,017,000 |
| 4,915,000 |
| 1,187,000 |
| |||
Income (loss) from discontinued operations |
| (1,065,000 | ) | (281,000 | ) | 15,000 |
| |||
Gain on disposition of discontinued operations |
| — |
| — |
| 377,000 |
| |||
Cumulative effect of accounting change |
| (7,935,000 | ) | — |
| — |
| |||
Net income (loss) |
| $ | (7,983,000 | ) | $ | 4,634,000 |
| $ | 1,579,000 |
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Earnings per share — Basic and Diluted: |
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Continuing operations |
| $ | .24 |
| $ | 1.16 |
| $ | .28 |
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Discontinued operations |
| (.25 | ) | (.07 | ) | .09 |
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Cumulative effect of accounting change |
| (1.87 | ) | — |
| — |
| |||
Total |
| $ | (1.88 | ) | $ | 1.09 |
| $ | .37 |
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See accompanying notes to consolidated financial statements.
12
June 30, 2002 and 2001
Assets |
| 2002 |
| 2001 |
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Current assets: |
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|
| ||
Cash and cash equivalents |
| $ | 3,495,000 |
| $ | 5,915,000 |
|
Accounts receivable, less reserve of $1,092,000 in 2002 |
| 31,811,000 |
| 37,711,000 |
| ||
Inventories |
| 33,401,000 |
| 37,731,000 |
| ||
Prepaid expenses and deposits |
| 3,665,000 |
| 2,597,000 |
| ||
Future income tax benefits |
| 1,675,000 |
| 1,406,000 |
| ||
Total current assets |
| 74,047,000 |
| 85,360,000 |
| ||
|
|
|
|
|
| ||
Property, plant and equipment, at cost |
| 122,759,000 |
| 114,693,000 |
| ||
Accumulated depreciation |
| (65,466,000 | ) | (61,145,000 | ) | ||
Net property, plant and equipment |
| 57,293,000 |
| 53,548,000 |
| ||
|
|
|
|
|
| ||
Other assets: |
|
|
|
|
| ||
Costs in excess of net assets of purchased businesses |
| 1,030,000 |
| 8,966,000 |
| ||
Other |
| 354,000 |
| 196,000 |
| ||
Total other assets |
| 1,384,000 |
| 9,162,000 |
| ||
|
| $ | 132,724,000 |
| $ | 148,070,000 |
|
|
|
|
|
|
| ||
Liabilities and Shareholders’ Equity |
|
|
|
|
| ||
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 6,575,000 |
| $ | 9,235,000 |
|
Accrued liabilities |
| 8,295,000 |
| 9,347,000 |
| ||
Advances payable to banks |
| 1,034,000 |
| 165,000 |
| ||
Income taxes payable |
| 86,000 |
| 516,000 |
| ||
Total current liabilities |
| 15,990,000 |
| 19,263,000 |
| ||
|
|
|
|
|
| ||
Deferred income taxes |
| 5,929,000 |
| 5,052,000 |
| ||
Total liabilities |
| 21,919,000 |
| 24,315,000 |
| ||
|
|
|
|
|
| ||
Commitments (Note 4) |
|
|
|
|
| ||
|
|
|
|
|
| ||
Shareholders’ equity: |
|
|
|
|
| ||
Common stock |
| 4,765,000 |
| 4,765,000 |
| ||
Paid-in capital |
| 4,123,000 |
| 4,123,000 |
| ||
Retained earnings |
| 101,941,000 |
| 115,018,000 |
| ||
Accumulated other comprehensive income |
| (24,000 | ) | (151,000 | ) | ||
Total shareholders’ equity |
| 110,805,000 |
| 123,755,000 |
| ||
|
| $ | 132,724,000 |
| $ | 148,070,000 |
|
See accompanying notes to consolidated financial statements.
13
For the years ended June 30, 2002, 2001 and 2000
|
| 2002 |
| 2001 |
| 2000 |
| |||
Cash flows from operating activities: |
|
|
|
|
|
|
| |||
Net income (loss) |
| $ | (7,983,000 | ) | $ | 4,634,000 |
| $ | 1,579,000 |
|
Adjustments for noncash transactions: |
|
|
|
|
|
|
| |||
Depreciation and amortization |
| 6,987,000 |
| 7,507,000 |
| 7,156,000 |
| |||
Change in deferred income taxes |
| 608,000 |
| 174,000 |
| 559,000 |
| |||
Gain on disposition of businesses |
| — |
| — |
| (587,000 | ) | |||
Gain on sale of fixed assets |
| (631,000 | ) | (390,000 | ) | — |
| |||
Cumulative effect of accounting change |
| 7,935,000 |
| — |
| — |
| |||
Changes in assets and liabilities: |
|
|
|
|
|
|
| |||
Receivables |
| 5,900,000 |
| 2,260,000 |
| (2,051,000 | ) | |||
Inventories |
| 4,330,000 |
| 5,653,000 |
| (2,679,000 | ) | |||
Prepaid expenses and other |
| (1,226,000 | ) | 419,000 |
| 1,519,000 |
| |||
Accounts payable |
| (2,660,000 | ) | 2,732,000 |
| (1,244,000 | ) | |||
Accrued liabilities |
| (1,052,000 | ) | (105,000 | ) | (2,547,000 | ) | |||
Income taxes payable |
| (430,000 | ) | 267,000 |
| 156,000 |
| |||
Net cash provided by operating activities |
| 11,778,000 |
| 23,151,000 |
| 1,861,000 |
| |||
|
|
|
|
|
|
|
| |||
Cash flows from investing activities: |
|
|
|
|
|
|
| |||
Capital expenditures |
| (11,783,000 | ) | (7,749,000 | ) | (9,031,000 | ) | |||
Proceeds from sales of capital assets |
| 1,810,000 |
| 3,234,000 |
| 381,000 |
| |||
Acquisition of businesses |
| — |
| — |
| (1,222,000 | ) | |||
Disposition of businesses |
| — |
| — |
| 3,921,000 |
| |||
Net cash used in investing activities |
| (9,973,000 | ) | (4,515,000 | ) | (5,951,000 | ) | |||
|
|
|
|
|
|
|
| |||
Cash flows from financing activities: |
|
|
|
|
|
|
| |||
Dividends paid to shareholders |
| (5,094,000 | ) | (5,094,000 | ) | (5,122,000 | ) | |||
Net borrowings under lines of credit |
| 869,000 |
| (9,305,000 | ) | 9,396,000 |
| |||
Common stock repurchased |
| — |
| — |
| (775,000 | ) | |||
Net cash provided by (used in) financing activities |
| (4,225,000 | ) | (14,399,000 | ) | 3,499,000 |
| |||
|
|
|
|
|
|
|
| |||
Net change in cash and cash equivalents |
| (2,420,000 | ) | 4,237,000 |
| (591,000 | ) | |||
Cash and cash equivalents at beginning of year |
| 5,915,000 |
| 1,678,000 |
| 2,269,000 |
| |||
Cash and cash equivalents at end of year |
| $ | 3,495,000 |
| $ | 5,915,000 |
| $ | 1,678,000 |
|
|
|
|
|
|
|
|
| |||
Supplemental cash flow information: |
|
|
|
|
|
|
| |||
Interest payments |
| $ | 67,000 |
| $ | 242,000 |
| $ | 513,000 |
|
Income tax payments |
| $ | 1,011,000 |
| $ | 1,841,000 |
| $ | 2,129,000 |
|
See accompanying notes to consolidated financial statements.
14
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the years ended June 30, 2002, 2001 and 2000
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| Common Stock |
| Paid-in |
| Retained |
|
|
|
| ||||||||||||
|
| Shares |
| Amount |
| Capital |
| Earnings |
| Income |
| Total |
| |||||||||
Balance, June 30, 1999 |
| 4,291,794 |
| $ | 4,765,000 |
| $ | 4,123,000 |
| $ | 119,796,000 |
| $ | 17,000 |
| $ | 128,701,000 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net income |
|
|
|
|
|
|
| 1,579,000 |
|
|
| 1,579,000 |
| |||||||||
Translation adjustment |
|
|
|
|
|
|
|
|
| (57,000 | ) | (57,000 | ) | |||||||||
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
| 1,522,000 |
| |||||||||
Repurchase of stock |
| (47,000 | ) |
|
|
|
| (775,000 | ) |
|
| (775,000 | ) | |||||||||
Cash dividends |
|
|
|
|
|
|
| (5,122,000 | ) |
|
| (5,122,000 | ) | |||||||||
Balance, June 30, 2000 |
| 4,244,794 |
| 4,765,000 |
| 4,123,000 |
| 115,478,000 |
| (40,000 | ) | 124,326,000 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net income |
|
|
|
|
|
|
| 4,634,000 |
|
|
| 4,634,000 |
| |||||||||
Translation adjustment |
|
|
|
|
|
|
|
|
| (111,000 | ) | (111,000 | ) | |||||||||
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
| 4,523,000 |
| |||||||||
Cash dividends |
|
|
|
|
|
|
| (5,094,000 | ) |
|
| (5,094,000 | ) | |||||||||
Balance, June 30, 2001 |
| 4,244,794 |
| 4,765,000 |
| 4,123,000 |
| 115,018,000 |
| (151,000 | ) | 123,755,000 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net income (loss) |
|
|
|
|
|
|
| (7,983,000 | ) |
|
| (7,983,000 | ) | |||||||||
Translation adjustment |
|
|
|
|
|
|
|
|
| 127,000 |
| 127,000 |
| |||||||||
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
| (7,856,000 | ) | |||||||||
Cash dividends |
|
|
|
|
|
|
| (5,094,000 | ) |
|
| (5,094,000 | ) | |||||||||
Balance, June 30, 2002 |
| 4,244,794 |
| $ | 4,765,000 |
| $ | 4,123,000 |
| $ | 101,941,000 |
| $ | (24,000 | ) | $ | 110,805,000 |
| ||||
See accompanying notes to consolidated financial statements.
15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies and Procedures
Description of Business and Principles of Consolidation
International Aluminum Corporation (the Company) is an integrated building products manufacturer of diversified lines of quality aluminum and vinyl products. The consolidated financial statements include the accounts of 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.
Sales are recognized when products are shipped or services are provided assuming no significant Company obligations remain and the collection of related receivables is probable.
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.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and marketable securities with original maturities of three months or less.
Foreign Currency Translation
Assets and liabilities of the Company’s foreign subsidiaries 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 into accumulated other comprehensive income, a separate component of shareholders’ equity. Foreign currency transaction gains and losses are included in results of operations as incurred.
Depreciation and Amortization
Depreciation and amortization are provided over the estimated useful lives of the assets (up to 40 years for buildings and 3 to 20 years for machinery and equipment) 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”. Upon adoption of FAS No. 142 in fiscal 2002, the amortization of these costs was discontinued. At June 30, 2002 the related amount of $1,745,000 had accumulated amortization of $715,000. At June 30, 2001 the related amount of $12,655,000 had accumulated amortization of $3,689,000.
16
Investment Tax Credits
Investment tax credits are accounted for in the period earned in accordance with the flow-through method.
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, 2002, the carrying values of such assets are appropriate.
Shipping and handling charges incurred by the Company are included in Cost of Sales and shipping charges billed to customers are included in Net Sales.
Note 2. Balance Sheet Components
Inventories, at the Lower of FIFO Cost or Market |
| 2002 |
| 2001 |
| ||
Raw materials |
| $ | 28,576,000 |
| $ | 32,153,000 |
|
Work in process |
| 560,000 |
| 1,332,000 |
| ||
Finished goods |
| 4,265,000 |
| 4,246,000 |
| ||
|
| $ | 33,401,000 |
| $ | 37,731,000 |
|
Property, Plant and Equipment, at Cost |
| 2002 |
| 2001 |
| ||
Land |
| $ | 7,665,000 |
| $ | 7,738,000 |
|
Buildings and improvements |
| 29,900,000 |
| 29,149,000 |
| ||
Machinery and equipment |
| 84,636,000 |
| 76,463,000 |
| ||
Construction in process |
| 558,000 |
| 1,343,000 |
| ||
|
| $ | 122,759,000 |
| $ | 114,693,000 |
|
Accrued Liabilities |
| 2002 |
| 2001 |
| ||
Wages and compensated absences |
| $ | 4,064,000 |
| $ | 4,246,000 |
|
Taxes, other than income taxes |
| 1,447,000 |
| 1,678,000 |
| ||
Dividends |
| 1,273,000 |
| 1,273,000 |
| ||
Other |
| 1,511,000 |
| 2,150,000 |
| ||
|
| $ | 8,295,000 |
| $ | 9,347,000 |
|
Note 3. Short-Term Debt and Lines of Credit
The Company has a loan agreement with a domestic bank providing for a $20,000,000 unsecured short-term line of credit. There were no amounts outstanding under the agreement at June 30, 2002 or June 30, 2001. Additionally the Company’s foreign subsidiaries have loan agreements with foreign banks providing for $1,600,000 in secured short-term lines of credit, at the prevailing Canadian prime interest rate.There was $1,034,000 outstanding under the foreign agreements at June 30, 2002 and $165,000 outstanding at June 30, 2001.
Note 4. Commitments
The Company is committed under real property lease agreements expiring at various dates to 2006. Certain of the leases have renewal options for periods up to five years and others provide for rent revisions at various
17
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 $1,000,000 in 2002, $1,065,000 in 2001 and $1,125,000 in 2000. Real property rental commitments are $891,000 in 2003, $615,000 in 2004, $328,000 in 2005 and $250,000 in 2006.
Note 5. 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 4,244,794 shares outstanding at June 30, 2002 and 2001.
Note 6. Stock Options
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 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, 2002 were:
|
| Outstanding |
| Exercisable |
| ||||||
|
| Number Of Shares |
| Weighted-Average Exercise Price |
| Number Of Shares |
| Weighted-Average Exercise Price |
| ||
|
|
|
|
|
| ||||||
Outstanding, June 30, 1999 |
| 215,200 |
| $ | 28.87 |
| 105,720 |
| $ | 28.35 |
|
Forfeited |
| (67,500 | ) | 29.11 |
|
|
|
|
| ||
Outstanding, June 30, 2000 |
| 147,700 |
| 28.76 |
| 103,300 |
| 28.43 |
| ||
Forfeited |
| (27,200 | ) | 29.64 |
|
|
|
|
| ||
Outstanding, June 30, 2001 |
| 120,500 |
| 28.56 |
| 111,100 |
| 28.36 |
| ||
Forfeited |
| (12,500 | ) | 28.71 |
|
|
|
|
| ||
Outstanding, June 30, 2002 |
| 108,000 |
| 28.54 |
| 103,800 |
| 28.45 |
| ||
|
|
|
|
|
|
|
|
|
| ||
Stock Option Summary at June 30, 2002: |
|
|
|
|
|
|
|
|
| ||
$ 28.00-$31.56 (Life: 3.4-5.6 years) |
| 108,000 |
| 28.54 |
| 103,800 |
| 28.45 |
| ||
Available for future grants |
| 389,700 |
|
|
|
|
|
|
| ||
Note 7. 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:
|
| 2002 |
| 2001 |
| 2000 |
|
Weighted average shares outstanding used to compute basic EPS |
| 4,244,794 |
| 4,244,794 |
| 4,277,332 |
|
Incremental shares issuable upon the exercise of stock options |
| — |
| — |
| — |
|
Shares used to compute diluted EPS |
| 4,244,794 |
| 4,244,794 |
| 4,277,332 |
|
Incremental shares issuable upon the assumed exercise of outstanding stock options are computed using the average market price during the related period.
18
Note 8. Acquisitions and Divestitures
During the second quarter of the current year, the Company announced the closure of Maestro Products, its wood window and door subsidiary, which was a component of the Residential Products segment. In accordance with the adoption of SFAS No. 144, Maestro Products is accounted for as a discontinued operation, therefore, amounts in the income statements and related notes for all periods shown have been restated to reflect discontinued operations accounting. Included in Maestro Products results for the current year are $1,175,000 of charges related to the write down of various assets, primarily inventory.
During fiscal 2000, the Company sold most all of the operating assets of its Glass segment, excluding land and buildings, for cash in the amount of $3,921,000. The land and buildings were leased to the buyer. The Glass segment is accounted for as a discontinued operation, 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. Results of the discontinued operations, in thousands of dollars, are as follows:
|
| 2002 |
| 2001 |
| 2000 |
| |||
Net sales |
| $ | 1,398 |
| $ | 2,896 |
| $ | 12,283 |
|
|
|
|
|
|
|
|
| |||
Income (loss) before income taxes |
| $ | (1,770 | ) | $ | (432 | ) | $ | 20 |
|
Income tax provision (benefit) |
| (705 | ) | (151 | ) | 5 |
| |||
Income (loss) from discontinued operations |
| (1,065 | ) | (281 | ) | 15 |
| |||
Gain on disposition of discontinued operations, |
| — |
| — |
| 377 |
| |||
|
|
|
|
|
|
|
| |||
Net income (loss) from discontinued operations |
| $ | (1,065 | ) | $ | (281 | ) | $ | 392 |
|
|
|
|
|
|
|
|
| |||
Earnings per share: |
|
|
|
|
|
|
| |||
Discontinued operations |
| $ | (.25 | ) | $ | (.07 | ) | $ | — |
|
Gain on disposition of discontinued operations |
| — |
| — |
| .09 |
| |||
Also during fiscal 2000, the Company formed a wholly owned subsidiary named United States Aluminum of Canada-Ontario, Ltd., a member of the Commercial Products Group. In March 2000, the new subsidiary completed the $1,222,000 cash purchase of selected assets and liabilities of a Toronto, Ontario commercial storefront and curtain wall company. The $502,000 excess of the purchase price over the estimated fair value of the net assets was allocated to goodwill. Proforma information has not been presented, as it is not materially different from historical results.
19
Note 9. Income Taxes
The components of income before United States and foreign income taxes are:
|
| 2002 |
| 2001 |
| 2000 |
| |||
Domestic |
| $ | (8,365,000 | ) | $ | 6,495,000 |
| $ | 1,768,000 |
|
Foreign |
| (18,000 | ) | 619,000 |
| 661,000 |
| |||
|
| $ | (8,383,000 | ) | $ | 7,114,000 |
| $ | 2,429,000 |
|
The provision for income taxes is comprised of the following:
|
| 2002 |
| 2001 |
| 2000 |
| |||
Current — |
|
|
|
|
|
|
| |||
Federal |
| $ | (945,000 | ) | $ | 1,857,000 |
| $ | 197,000 |
|
State |
| (337,000 | ) | 191,000 |
| (157,000 | ) | |||
Foreign |
| 274,000 |
| 258,000 |
| 251,000 |
| |||
|
| (1,008,000) |
| 2,306,000 |
| 291,000 |
| |||
Deferred — |
|
|
|
|
|
|
| |||
Federal |
| 918,000 |
| 200,000 |
| 524,000 |
| |||
State |
| 19,000 |
| (2,000 | ) | 35,000 |
| |||
Foreign |
| (329,000 | ) | (24,000 | ) | — |
| |||
|
| 608,000 |
| 174,000 |
| 559,000 |
| |||
|
| $ | (400,000 | ) | $ | 2,480,000 |
| $ | 850,000 |
|
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:
|
| 2002 |
| 2001 |
| 2000 |
| |||
Taxes on book income at statutory rate |
| $ | (2,850,000 | ) | $ | 2,419,000 |
| $ | 826,000 |
|
Increases (decreases) resulting from: |
|
|
|
|
|
|
| |||
State income taxes, net of Federal income tax benefit |
| (210,000 | ) | 125,000 |
| (81,000 | ) | |||
Nondeductible goodwill |
| 2,698,000 |
| 22,000 |
| 143,000 |
| |||
Federal tax credits |
| 13,000 |
| (94,000 | ) | (116,000 | ) | |||
Other |
| (51,000 | ) | 8,000 |
| 78,000 |
| |||
Provision for income taxes |
| $ | (400,000 | ) | $ | 2,480,000 |
| $ | 850,000 |
|
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 that comprise the deferred tax assets and liabilities at yearend are as follows:
|
| 2002 |
| 2001 |
| ||
Accounts receivable |
| $ | 396,000 |
| $ | 279,000 |
|
Inventory |
| 346,000 |
| 389,000 |
| ||
Accrued liabilities |
| 885,000 |
| 855,000 |
| ||
Other |
| 48,000 |
| (117,000 | ) | ||
Net deferred tax asset |
| $ | 1,675,000 |
| $ | 1,406,000 |
|
|
|
|
|
|
| ||
Property, plant and equipment |
| $ | 5,757,000 |
| $ | 4,866,000 |
|
Other |
| 172,000 |
| 186,000 |
| ||
Net deferred tax liability |
| $ | 5,929,000 |
| $ | 5,052,000 |
|
No provision for U.S. taxes has been made for undistributed earnings of the foreign subsidiaries since it is expected that the major portion of such earnings will continue to be reinvested for an indefinite period.
20
Note 10. 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. See the front cover for a description of the products of each segment and the back cover for a listing of the subsidiaries of each segment.
The Company uses a portion of its aluminum extrusion production in its Commercial and Residential segments. Transfers are made at market prices. Accounting policies for the segments are the same as those described in Note 1. The Company evaluates performance based on operating income or loss before any allocation of corporate overhead, interest or taxes.
The following is significant financial information by operating segment, reconciling to the Company’s totals.
|
| Sales |
| Operating Income |
| ||||||||||||||
(In thousands) |
| 2002 |
| 2001 |
| 2000 |
| 2002 |
| 2001 |
| 2000 |
| ||||||
Commercial |
| $ | 108,945 |
| $ | 114,822 |
| $ | 112,587 |
| $ | 10,862 |
| $ | 11,616 |
| $ | 8,618 |
|
Residential |
| 47,240 |
| 56,005 |
| 55,875 |
| (446 | ) | 3,647 |
| 3,875 |
| ||||||
Aluminum Extrusion |
| 85,946 |
| 91,860 |
| 100,148 |
| (2,181 | ) | 677 |
| (3,583 | ) | ||||||
Total segments |
| 242,131 |
| 262,687 |
| 268,610 |
| 8,235 |
| 15,940 |
| 8,910 |
| ||||||
Eliminations |
| (48,403 | ) | (52,778 | ) | (53,958 | ) | 693 |
| (184 | ) | 893 |
| ||||||
Corporate |
| — |
| — |
| — |
| (7,581 | ) | (8,126 | ) | (7,556 | ) | ||||||
Total |
| $ | 193,728 |
| $ | 209,909 |
| $ | 214,652 |
| $ | 1,347 |
| $ | 7,630 |
| $ | 2,247 |
|
|
| Capital Expenditures |
| Depreciation and Amortization |
| ||||||||||||||
(In thousands) |
| 2002 |
| 2001 |
| 2000 |
| 2002 |
| 2001 |
| 2000 |
| ||||||
Commercial |
| $ | 6,347 |
| $ | 2,075 |
| $ | 825 |
| $ | 1,861 |
| $ | 2,172 |
| $ | 2,096 |
|
Residential |
| 949 |
| 2,739 |
| 3,760 |
| 2,126 |
| 2,262 |
| 2,005 |
| ||||||
Aluminum Extrusion |
| 4,031 |
| 2,585 |
| 4,188 |
| 2,483 |
| 2,323 |
| 2,241 |
| ||||||
Total segments |
| 11,327 |
| 7,399 |
| 8,773 |
| 6,470 |
| 6,757 |
| 6,342 |
| ||||||
Corporate |
| 456 |
| 350 |
| 258 |
| 517 |
| 750 |
| 814 |
| ||||||
Total |
| $ | 11,783 |
| $ | 7,749 |
| $ | 9,031 |
| $ | 6,987 |
| $ | 7,507 |
| $ | 7,156 |
|
|
| Total Assets | ||||
(In thousands) |
| 2002 |
| 2001 | ||
Commercial |
| $ | 63,537 |
| $ | 66,994 |
Residential |
| 28,776 |
| 32,405 | ||
Aluminum Extrusion |
| 34,915 |
| 38,032 | ||
Total segments |
| 127,228 |
| 137,431 | ||
Corporate |
| 5,496 |
| 10,639 | ||
Total |
| $ | 132,724 |
| $ | 148,070 |
21
Note 11. Current and Pending Accounting Changes
In May 2002, the Financial Accounting Standards Board (FASB) issued Statement No. 145 (SFAS 145) “Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13, and Technical Corrections”. SFAS 145 revises the accounting for early extinguishment of debt. Management believes that SFAS 145 will not have a material effect on the Company’s consolidated financial position or results of operations.
In June 2002, the Financial Accounting Standards Board (FASB) issued Statement No. 146 (SFAS 146) “Accounting for Costs Associated with Exit or Disposal Activities”. SFAS 146 revises the accounting for exit or disposal activities requiring that costs associated with these activities be initially measured at fair value and recognized when the liability is incurred. In periods subsequent to the initial measurement, adjustments to the liability are recorded in the period of change and charged to the same line items in the statement of income used when the related costs were initially recognized. The provisions of SFAS No. 146 are required to be applied prospectively to exit or disposal activities initiated after December 31, 2002.
Note 12. Change in Accounting
The Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets” effective July 1, 2001 and as a result has not amortized goodwill for the twelve months ended June 30, 2002. Excluding goodwill amortization for fiscal years 2001 and 2000 would have increased reported net income to $5,190,000 or $1.22 per basic and diluted share, and to $2,063,000 or $.48 per basic and diluted share, respectively. SFAS No. 142 also requires that existing goodwill be reviewed for impairment using a revised methodology. The Company has completed the transitional goodwill impairment test and determined that a non-cash transition charge was required. As a result, the Company recorded a charge of $7,935,000 to reduce goodwill related to a reporting unit within the Commercial Products Group. The transition charge is reflected as a cumulative effect of an accounting change effective July 1, 2001 and previously reported results for the quarter ended September 30, 2001 have been retroactively adjusted.
22
DIRECTORS |
| OFFICERS |
|
|
|
Cornelius C. Vanderstar |
| David C. Treinen |
Chairman of the Board |
| President; Secretary |
Chief Executive Officer |
| Chief Operating Officer |
|
|
|
David C. Treinen |
| Ronald L. Rudy |
|
| Senior Vice President — Operations |
Ronald L. Rudy |
|
|
|
| Mitchell K. Fogelman |
David M. Antonini |
| Senior Vice President — Finance |
Partner in White, Nelson & Co. LLP |
|
|
|
| Stanley M. Kutch |
John P. Cunningham |
| Vice President — Information Systems |
Retired President of |
|
|
International Aluminum Corporation |
| Susan L. Leone |
|
| Vice President — Human Resources |
Alexander L. Dean |
|
|
President of David Brooks Company |
|
|
|
|
|
Joel F. McIntyre |
|
|
Attorney At Law |
|
|
|
|
|
STOCK TRANSFER AGENT AND REGISTRAR |
| ELECTRONIC TRANSFER OF DIVIDENDS |
|
|
|
Continental Stock Transfer & Trust Company |
| For information and forms, write to: |
17 Battery Place |
| 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 |
|
|
|
STOCK EXCHANGE LISTINGS |
| ANNUAL SHAREHOLDERS MEETING |
|
|
|
The Company’s common stock (trading |
| 2 p.m., Thursday, October 31, 2002 |
symbol: IAL) is listed on the New York |
| International Aluminum Corporation |
Stock Exchange |
| 767 Monterey Pass Road |
|
| Monterey Park, CA 91754 |
23
COMMERCIAL |
| RESIDENTIAL |
|
|
|
Douglas R. Ellerbrock |
| George L. Hall |
Executive Vice President |
| Executive Vice President |
Commercial Products Group |
| Residential Products Group |
|
|
|
Exterior Products |
| International Window Corporation |
|
| South Gate, California |
United States Aluminum Corporation |
|
|
Vernon, California |
| International Window-Northern California |
|
| Hayward, California |
United States Aluminum Corporation-Illinois |
|
|
Bedford Park, Illinois |
| International Window-Arizona, Inc. |
Boston, Massachusetts |
| Phoenix, Arizona |
Detroit, Michigan |
|
|
|
| International Window-Colorado, Inc. |
United States Aluminum Corporation-Texas |
| Denver, Colorado |
Waxahachie, Texas |
|
|
Denver, Colorado |
|
|
St. Louis, Missouri |
|
|
Dallas, Texas |
|
|
Houston, Texas |
|
|
|
|
|
United States Aluminum Corporation-Carolina |
|
|
Rock Hill, South Carolina |
|
|
Atlanta, Georgia |
|
|
Baltimore, Maryland |
|
|
|
|
|
United States Aluminum Of Canada—British Columbia, Ltd. |
|
|
Langley, British Columbia, Canada |
|
|
|
| ALUMINUM EXTRUSION |
United States Aluminum Of Canada—Ontario, Ltd. |
|
|
Guelph, Ontario, Canada |
| Robert Dunn |
|
| Executive Vice President |
|
| Aluminum Extrusion Group |
Interior Products | ||
|
| International Extrusion Corporation |
Raco Interior Products, Inc. |
| Alhambra, California |
Houston, Texas |
|
|
Waxahachie, Texas |
| International Extrusion Corporation-Texas |
Dallas, Texas |
| Waxahachie, Texas |
|
|
|
24
International Aluminum Corporation |
|
|
767 Monterey Pass Road |
|
|
Monterey Park, California 91754 |
|
|
Tel: (323) 264-1670 |
|
|
Fax: (323) 266-3838 |
|
|
Web: www.intlalum.com |
|
|
25
