SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ý | | Annual report pursuant to section 13 or 15(d)of the Securities Exchange Act of 1934 |
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| | for the fiscal year ended June 30, 2005 |
| | |
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 |
(Incorporation) | | (I.R.S. Employer No.) |
| | |
767 Monterey Pass Road
Monterey Park, California | | 91754 |
(Address of principal executive office) | | (Zip Code) |
Registrant’s telephone number, including area code (323) 264-1670
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | | Names of Exchanges on Which Registered |
| | |
Common Stock ($1.00 Par Value) | | 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 ý No o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes ý No
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant on December 31, 2004, the last business day of the registrant’s most recently completed second fiscal quarter, was $78,116,187 (based on the closing sales price of the registrant’s common stock on that date). As of September 2, 2005, 4,279,281 shares of the registrant’s common stock were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Registrant’s Annual Report to Shareholders for fiscal year ended June 30, 2005 is incorporated by reference into Parts I and II.
Portions of the Registrant’s definitive Proxy Statement for the 2005 Annual Meeting of Shareholders are incorporated by reference into Part III.
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 24 of the Registrant’s 2005 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, including storm and blast resistant 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.
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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 2005, approximately 49% 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 2005, 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, 2005, the Company had approximately 1,500 full-time employees, approximately 800 of whom were covered by various collective bargaining agreements. Management believes that the Company’s employee relations are good. Two agreements are due to expire in the upcoming year and management believes that the prospects are reasonably good for renewal.
Patents
The Company has no material patents, either issued or pending, and is not a party to any significant licensing agreements.
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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 could 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.
Our performance is dependent to a significant extent upon levels of new construction, repair and remodeling for residential and commercial construction, all of which are affected by such factors as interest rates, consumer confidence and economic outlook. In the near term, we expect to operate in an environment of relatively stable levels of construction and remodeling activity. However, increases in interest rates could have a negative impact on the level of housing construction and remodeling activity. The Company cannot predict whether, or when, such rates might increase, but the company’s experience has shown that high interest rates for construction financing, mortgages and 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.
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d. FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
The information concerning income before taxes of foreign and domestic operations for fiscal years 2005, 2004 and 2003 is set forth in Note 9 to the consolidated financial statements included on page 23 of the Company’s 2005 Annual Report incorporated herein by reference. There is no other significant related information regarding foreign operations.
e. AVAILABLE INFORMATION
The Company maintains a website at www.intalum.com. The Company makes available on its website, free of charge, its periodic reports filed with the Securities and Exchange Commission (www.sec.gov) pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934, and all amendments, as soon as is reasonably practicable after filing.
The Company posts on its website its Code of Business Conduct and Ethics for all employees as well as its separate Code of Ethics for Senior Executive Officers and Senior Financial Officers. The Company will furnish, without charge, a copy of its Code of Business Conduct and Ethics and Code of Ethics for Senior Executive Officers and Senior Financial Officers to any person upon request. Such request should be made to the Company at 767 Monterey Pass Road, Monterey Park, California 91754, Attention: Corporate Secretary.
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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:
Location | | Square
Feet (A) | | Use | |
| | | | | |
Alhambra, CA | | 185,000 | | Aluminum extrusions, foundry & finishing | |
Waxahachie, TX | | 269,000 | | Aluminum extrusions & finishing | |
South Gate, CA | | 189,000 | | Residential products | |
Hayward, CA | | 103,000 | | Residential products | |
Phoenix, AZ | | 100,000 | | Residential products | |
Vernon, CA | | 134,000 | | Commercial products | |
Bedford Park, IL | | 81,000 | | Commercial products | |
Boston, MA | | 21,000 | (L) | Commercial products | |
Detroit, MI | | 12,000 | (L) | Commercial products | |
Waxahachie, TX | | 159,000 | | Commercial products | |
Denver, CO | | 16,000 | (L) | Commercial products | |
St. Louis, MO | | 14,000 | (L) | Commercial products | |
Dallas, TX | | 36,000 | (L) | Commercial products | |
Houston, TX | | 19,000 | (L) | Commercial products | |
Rock Hill, SC | | 74,000 | | Commercial products | |
Atlanta, GA | | 37,000 | (L) | Commercial products | |
Baltimore, MD | | 20,000 | (L) | Commercial products | |
Langley, B.C., Canada | | 63,000 | | Commercial products | |
Guelph, Ontario, Canada | | 72,000 | | Commercial products | |
Houston, TX | | 57,000 | | Commercial products | |
Waxahachie, TX | | 60,000 | | Commercial products | |
Dallas, TX | | 14,000 | (L) | Commercial products | |
Monterey Park, CA | | 19,000 | (L) | Executive offices | |
(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 REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock is traded on the New York Stock Exchange under the symbol IAL. The market and dividend information is included on page 11 of the Company’s 2005 Annual Report to Shareholders and is incorporated herein by reference.
There are no restrictions of future cash dividends.
There were approximately 300 shareholders of record of the Company’s common stock at June 30, 2005.
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 2005 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 10 of the Company’s 2005 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, which is incorporated herein by reference.
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
In accordance with Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, the Company carried out an evaluation, under the supervision and with the participation of management, including its chief executive officer and principal financial officer (the “Executives”), of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Executives concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2005 to provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
See MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING for management’s report on our internal control over financial reporting appearing in the Company’s 2005 Annual Report to Shareholders.
See REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM for our independent registered public accounting firm’s report on our internal control over financial reporting appearing in the Company’s 2005 Annual Report to Shareholders.
In addition, no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fourth quarter of the year ended June 30, 2005 that has materially affected, or is reasonably likely to materially affect , our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Inapplicable
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PART III
The information required under Part III will be contained in the Company’s definitive Proxy Statement for the 2005 Annual Meeting of Shareholders, which information is incorporated herein by reference.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following items contained in the Company’s 2005 Annual Report to Shareholders are incorporated herein by reference:
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3. Exhibits
3.1 Articles of incorporation
3.2 By-laws
13.1 Annual Report to Shareholders
14.1 Code of Business Conduct and Ethics
14.2 Code of Ethics for Senior Executives and Senior Financial Officers
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 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 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, 2005:
May 10, 2005 - Reporting the press release dated May 10, 2005 announcing that William G. (Greg) Gainer joined the Company as Vice President-Sales and Marketing.
May 12, 2005 - Reporting the press release dated May 12, 2005 announcing financial results for the third quarter ended March 31, 2005.
June 15, 2005 - Reporting the post-retirement arrangement with David C. Treinen, former Company President, and compensation arrangements with the Company’s directors and certain of its officers and reporting the press release dated June 20, 2005 announcing that Ronald L. Rudy will assume the additional office of Chief Executive Officer effective July 1, 2005.
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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.
| INTERNATIONAL ALUMINUM CORPORATION |
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Date: September 7, 2005 | By: | MITCHELL K. FOGELMAN |
| | Mitchell K. Fogelman |
| | Senior Vice President-Finance; |
| | Chief Financial Officer and |
| | Secretary |
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.
Signature | | Title | | Date |
| | | | |
CORNELIUS C. VANDERSTAR | | Chairman of the Board | | September 7, 2005 |
Cornelius C. Vanderstar | | | | |
| | | | |
| | | | |
RONALD L. RUDY | | Director; President and | | September 7, 2005 |
Ronald L. Rudy | | Chief Executive Officer | | |
| | | | |
| | | | |
MITCHELL K. FOGELMAN | | Senior Vice President-Finance; | | September 7, 2005 |
Mitchell K. Fogelman | | Chief Financial Officer and | | |
| | Secretary | | |
| | | | |
MICHAEL J. NORRING | | Controller and Chief | | September 7, 2005 |
Michael J. Norring | | Accounting Officer | | |
| | | | |
| | | | |
DAVID M. ANTONINI | | Director | | September 7, 2005 |
David M. Antonini | | | | |
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JOHN P. CUNNINGHAM | | Director | | September 7, 2005 |
John P. Cunningham | | | | |
| | | | |
| | | | |
ALEXANDER L. DEAN | | Director | | September 7, 2005 |
Alexander L. Dean | | | | |
| | | | |
| | | | |
JOEL F. McINTYRE | | Director | | September 7, 2005 |
Joel F. McIntyre | | | | |
| | | | |
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DAVID C. TREINEN | | Director | | September 7, 2005 |
David C. Treinen | | | | |
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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, of management’s assessment of the effectiveness of internal control over financial reporting and of the effectiveness of internal control over financial reporting referred to in our report dated September 2, 2005 appearing in the 2005 Annual Report to Shareholders of International Aluminum Corporation (which report, consolidated financial statements and assessment 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
September 2, 2005
F-1
INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For The Three Years Ended June 30, 2005
Description | | Balance at
Beginning
of Year | | Amounts
Charged
to Income | | Amounts
Written
Off | | Balance at
End
of Year | |
| | | | | | | | | |
Reserves for doubtful accounts | | | | | | | | | |
| | | | | | | | | |
2005 | | $ | 1,447,000 | | $ | 417,000 | | $ | 620,000 | | $ | 1,244,000 | |
| | | | | | | | | |
2004 | | 1,384,000 | | 446,000 | | 383,000 | | 1,447,000 | |
| | | | | | | | | |
2003 | | 1,092,000 | | 810,000 | | 518,000 | | 1,384,000 | |
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F-2
