Exhibit 13.1
INTERNATIONAL |
| ALUMINUM |
| CORPORATION |
| | |
2006 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 1,600 employees. Operations are conducted through twelve 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, including products for storm and blast-resistant applications; 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 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
Financial Highlights | 1 |
Letter to Shareholders | 2 |
Selected Financial Data | 4 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
Quarterly Financial Data | 10 |
Certifications | 11 |
Management’s Report on Internal Control Over Financial Reporting | 11 |
Report of Independent Registered Public Accounting Firm | 12 |
Consolidated Financial Statements | 14 |
Notes to Consolidated Financial Statements | 18 |
Corporate Information | 27 |
Subsidiaries by Segment | 28 |
FINANCIAL HIGHLIGHTS
Fiscal Years Ended June 30, 2006, 2005 and 2004
| | 2006 | | 2005 | | 2004 | |
Operating Results: | | | | | | | |
| | | | | | | |
Net sales | | $ | 280,826,000 | | $ | 251,588,000 | | $ | 213,034,000 | |
| | | | | | | | | | |
Income from continuing operations | | $ | 16,244,000 | | $ | 12,942,000 | | $ | 6,529,000 | |
Income from discontinued operations | | — | | — | | 129,000 | |
Net income | | $ | 16,244,000 | | $ | 12,942,000 | | $ | 6,658,000 | |
| | | | | | | |
Financial Data: | | | | | | | |
| | | | | | | |
Net cash provided by operating activities | | $ | 18,237,000 | | $ | 5,199,000 | | $ | 12,146,000 | |
Capital expenditures | | 6,358,000 | | 4,246,000 | | 3,482,000 | |
Cash and cash equivalents | | 20,446,000 | | 12,437,000 | | 15,964,000 | |
Working capital | | 88,384,000 | | 77,554,000 | | 67,860,000 | |
Long-term debt | | — | | — | | — | |
Shareholders’ equity | | 133,657,000 | | 120,503,000 | | 111,206,000 | |
| | | | | | | |
Per Share Data: | | | | | | | |
| | | | | | | |
Continuing operations — Diluted | | $ | 3.78 | | $ | 3.04 | | $ | 1.54 | |
Income from discontinued operations — Diluted | | — | | — | | .03 | |
Net income — Diluted | | $ | 3.78 | | $ | 3.04 | | $ | 1.57 | |
Dividends declared | | $ | 1.20 | | $ | 1.20 | | $ | 1.20 | |
Book value at year end | | 31.04 | | 28.22 | | 26.20 | |
Market price at year end | | 38.00 | | 31.95 | | 29.10 | |
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TO OUR SHAREHOLDERS
Fiscal 2006 was an outstanding year for International Aluminum Corporation. We continued to benefit from a strong Residential housing market and the resurgence of the Commercial building market. Our sales revenue was a record $280,826,000, a 12% increase from our previous high of $251,588,000 for fiscal 2005. Net income was a record $16,244,000 or $3.78 per share, a 24% increase over the $3.04 for fiscal 2005.
Residential Products
Our Residential Products Group finished the year with a solid income from operations of $15.0 million accompanied by a record sales achievement of $85.7 million. Buoyed by an aggressive new construction market for most of the past year, single-family housing attained yet another record level for new housing starts. Also sustaining the upsurge, the home improvement sector has continued to grow at a moderate rate and is expected to exceed the $300 billion mark in calendar 2006(1). These factors, coupled with the still affordable cost of financing a remodeling project resulted in another solid year for this segment of our business.
Design and development of new products and customer-friendly order placement systems are important means to achieve continued growth. During the year we developed a number of new products that have had a favorable impact on our sales. In addition, we recently signed an agreement with a major chain of Home Improvement Centers to load our price book into their special order electronic catalog. We are midway through this process and anticipate an increase in special order business from this new sales tool.
We were also successful in protecting our margins by implementing a significant price increase during the year to offset rising material costs resulting from shortages in aluminum and vinyl resins and higher costs associated with the manufacture of glass. As always, customer satisfaction is our priority and we continue to strive to provide our customers with the highest product quality and value along with the best delivery performance available in the market.
Commercial Products
The Commercial Products Group posted record income from operations of $19.1 million generated from excellent sales of $135.0 million. As the year progressed, overall performance steadily improved, especially during the fourth quarter of the year. This was primarily due to a strong non-residential construction market, price increases and market share growth. As a result, profits increased 23% on sales growth of 9%.
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Strategic geographic expansions, coupled with the introduction of new products, continue to be a major focus. New regional fabrication centers located in Phoenix, Arizona and Orlando, Florida are slated to open in Fall 2006. The upgrading of manufacturing equipment and development of continuous improvement processes will keep us efficient and cost effective as we strive for continued growth.
Aluminum Extrusions
Although this group continues to perform below expectations, the improvements implemented during fiscal 2006 began showing positive results as Income from Operations increased by 167% over the prior year. Competitive price pressure, including the continued penetration of lower-priced offshore suppliers, along with escalating domestic energy, transportation and environmental compliance costs, continue to challenge our extrusion business.
Aluminum raw material prices rose over most of the fiscal year reaching their peak in May. Driven primarily by the rising aluminum market prices, sales revenue for the group, including shipments to internal customers, rose by 14% while total tonnage shipped increased 4.2%.
The improvements put in place during 2006, along with additional improvements planned for 2007 are anticipated to move the Group closer to meeting performance expectations. Executive management will continue to work closely with Group personnel to execute the planned improvement initiatives.
Financial Condition
Our financial condition continues to be excellent as we concluded the year with more than $20 million in cash and cash equivalents, in excess of $88 million in working capital, a current ratio of 3.6 and no long-term debt. Capital expenditures for fiscal 2007 are currently projected to be $6.4 million, approximately the same level as fiscal 2006 and slightly higher than our current non-cash depreciation charges.
| | 
| |
Cornelius C. Vanderstar | | Ronald L. Rudy |
Chairman of the Board | | President and Chief Executive Officer |
| | |
September 2, 2006 | | |
(1) Data provided by the Home Improvement Research Institute/Global Insight.
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SELECTED FINANCIAL DATA
Year Ended June 30 | | 2006 | | 2005 | | 2004 | | 2003 | | 2002 | |
| | | | | | | | | | | |
Sales by Segment | | | | | | | | | | | |
Commercial | | $ | 134,559,000 | | $ | 123,034,000 | | $ | 98,789,000 | | $ | 97,345,000 | | $ | 108,510,000 | |
Residential | | 85,289,000 | | 74,131,000 | | 64,947,000 | | 53,586,000 | | 44,352,000 | |
Aluminum Extrusion | | 60,978,000 | | 54,423,000 | | 49,298,000 | | 41,618,000 | | 38,567,000 | |
Total net sales | | $ | 280,826,000 | | $ | 251,588,000 | | $ | 213,034,000 | | $ | 192,549,000 | | $ | 191,429,000 | |
| | | | | | | | | | | |
Earnings | | | | | | | | | | | |
Gross profit | | $ | 65,299,000 | | $ | 58,111,000 | | $ | 43,998,000 | | $ | 35,350,000 | | $ | 33,999,000 | |
| | | | | | | | | | | | | | | | |
Continuing operations | | $ | 16,244,000 | | $ | 12,942,000 | | $ | 6,529,000 | | $ | 4,426,000 | | $ | 1,485,000 | |
Discontinued operations* | | — | | — | | 129,000 | | (1,697,000 | ) | (1,533,000 | ) |
Cum. effect of acctg. change | | — | | — | | — | | — | | (7,935,000 | ) |
Net income (loss) | | $ | 16,244,000 | | $ | 12,942,000 | | $ | 6,658,000 | | $ | 2,729,000 | | $ | (7,983,000 | ) |
| | | | | | | | | | | |
Per share: | | | | | | | | | | | |
Continuing operations | | $ | 3.78 | | $ | 3.04 | | $ | 1.54 | | $ | 1.04 | | $ | .35 | |
Discontinued operations* | | — | | — | | .03 | | (.40 | ) | (.36 | ) |
Cum. effect of acctg. change | | — | | — | | — | | — | | (1.87 | ) |
Net income (loss) — diluted | | $ | 3.78 | | $ | 3.04 | | $ | 1.57 | | $ | .64 | | $ | (1.88 | ) |
Dividends declared | | $ | 1.20 | | $ | 1.20 | | $ | 1.20 | | $ | 1.20 | | $ | 1.20 | |
| | | | | | | | | | | |
Financial Data at Year End | | | | | | | | | | | |
Cash and cash equivalents | | $ | 20,446,000 | | $ | 12,437,000 | | $ | 15,964,000 | | $ | 12,570,000 | | $ | 3,495,000 | |
Working capital | | 88,384,000 | | 77,554,000 | | 67,860,000 | | 62,929,000 | | 58,057,000 | |
Total assets | | 172,948,000 | | 151,631,000 | | 141,882,000 | | 133,243,000 | | 132,724,000 | |
Long-term debt | | — | | — | | — | | — | | — | |
Shareholders’ equity | | 133,657,000 | | 120,503,000 | | 111,206,000 | | 109,536,000 | | 110,805,000 | |
* For further details relating to discontinued operations refer to Note 8.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Significant Changes in Results of Operations
2006 vs. 2005
General Overview
Net sales for fiscal 2006 increased $29,238,000 or 11.6% from fiscal 2005. All Groups achieved increased sales during 2006 compared to the prior year. Gross profit remained relatively unchanged at 23.3% of sales in 2006 compared to 23.1% in 2005. Reductions to cost of sales percentages achieved by the Commercial Products and Aluminum Extrusion Groups during fiscal 2006 were partially offset by slightly increased cost of sales percentages incurred by the Residential Products Group. Selling, general and administrative expenses increased $2,776,000, although as a percentage of net sales decreased to 14.3% of sales in fiscal 2006 compared to 14.8% in fiscal 2005.
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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 percentage of sales for the Company may not be comparable to those of other companies in our industry since other companies 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
Sales of the Commercial Products Group increased $11,524,000 or 9.4% compared to the 2005 year, bolstered to a significant extent by a very strong fourth quarter. This gain reflects increased commercial construction activity together with increased sales prices and expanded geographic market penetration. Gross profit improved to 25.9% in fiscal 2006 versus 24.3% for last year. Despite experiencing increased costs for aluminum and energy surcharges, this Group was able to achieve slightly lower material cost percentages for the current year compared to last year. Also contributing to the lower cost of sales percentages were decreased labor and overhead cost percentages compared to last year reflecting cost containment efforts coupled with volume efficiencies as a result of the aforementioned sales increases. Selling, general and administrative expenses increased $1,350,000, and as a percentage of sales in fiscal 2006 was 11.8%, the same as last year. This increase was mainly attributable to additional employment and sales representation costs of $1,239,000 relating to the increased sales.
Residential Products
Sales of the Residential Products Group increased $11,158,000 or 15.1% compared to the 2005 year. Consumer demand, although tapering off in the fourth quarter, continued to stimulate new home construction, re-sales of existing homes and home improvement spending in the areas served by this group. New product development, aggressive promotional and sales efforts and increased sales prices also contributed to the increase. Cost of sales as a percentage of sales increased in fiscal 2006 to 69.8% versus 68.7% last year. Higher material cost percentages were incurred mainly due to absorption of higher aluminum and energy surcharge costs. This group also experienced a slight increase in labor cost percentages as additional labor efficiency expected from the increased volume was offset by higher costs incurred for overtime and temporary help in order to meet on-time delivery commitments. Partially offsetting these increases were decreased overhead cost percentages achieved from production efficiencies attained from the higher sales volume. Selling, general and administrative expenses increased $1,401,000, and as a percentage of sales in fiscal 2006 was 12.7%, the same as last year. During fiscal 2006, this group incurred $1,026,000 in additional legal costs primarily relating to defense of a product liability lawsuit that was certified as a class-action in November 2005. The Company expects that a portion of these legal expenses may be reimbursed by our insurers. Additional increases of $539,000 were incurred for employment costs related to the increase in sales. Partially offsetting the increases in fiscal 2006 were decreases of $272,000 and $114,000, respectively, relating to workers’ compensation and general liability policies.
Aluminum Extrusion
Sales to outside customers of the Aluminum Extrusion Group increased $6,556,000 or 12.0% compared to the 2005 year. During fiscal 2006 the Group benefited from an increase in selling prices and a modest 2.6% increase in net tonnage shipped to outside customers. Current year sales to outside customers at our California facility increased by $4,931,000 or 17.1% compared to last year. Increased selling prices coupled with increased demand from existing and new customers, improved lead times, product quality and on-time delivery performance fueled the gain at this facility. Total tonnage shipped to outside and internal customers improved by 3.4% for the year, although tonnage shipped to outside customers that increased by 6.9% was partially offset by a decline in tonnage shipped to internal customers. Current year sales to outside customers at our Texas facility increased by $1,625,000 or 6.4% compared to last year, as increased selling prices more than offset a decline of 2.4% in tonnage shipped to outside customers. Loss of volume from key outside customers due to the recent period of volatile price fluctuations, a switch to alternate or offshore suppliers and planned customer inventory reductions contributed to the tonnage decrease. Sales and tonnage gains were also hampered due to reduced shipments to the sales areas impacted by the hurricanes suffered during the December quarter in the Gulf Coast region, as well as reductions in shipments to the Florida customer base due to insufficient margins. Despite the aforementioned decline in tonnage shipped to outside customers, total tonnage shipped from our Texas facility increased 5.0% as shipments to internal customers increased a substantial 10.6% reflecting strong demand from our Commercial Group. Cost of sales for the Group as a percentage of sales was 95.4% for
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fiscal 2006, an improvement from 96.1% in the prior year. The improvement was contributed solely by our Texas facility, which achieved a cost of sales percentage of 93.4% this year versus 94.8% in fiscal 2005, as our California plant did not improve upon the 97.8% posted 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 for the current year. During fiscal 2006, labor and overhead cost percentages at both facilities declined as a result of the increased selling prices coupled with efficiencies achieved as a result of increased total volume. The impact of increased utility costs was lessened due to the implementation of energy surcharges levied on our customers during the year. Selling, general and administrative expenses decreased slightly by $28,000, and as a percentage of sales decreased to 2.7% of sales compared to 3.1% last year.
Corporate
General and administrative expenses increased slightly by $53,000, and as a percentage of consolidated net sales decreased to 3.5% of net sales in fiscal 2006 compared to 3.9% in 2005. The negligible increase includes two offsetting factors. The prior year benefited from a recovery of $265,000 for then-current and prior year legal fees that was recorded as a result of a settlement. The current year realized a reduction of $281,000 for costs related to complying with the internal control requirements of the Sarbanes-Oxley legislation.
The increase in interest income relates to increased funds available for investment during the year combined with higher rates of return compared to last year.
The effective tax rate in fiscal 2006 was 36.4% compared to 38.0% last year. The decline was primarily attributable to the Domestic Manufacturers Deduction, which contributed to 1% of the decline in the rate, available as a result of the enactment of the American Jobs Creation Act of 2004. We also experienced a decrease of Federal income tax reserves resulting from settlement of an Internal Revenue Service Appeals case for tax years 1997 and 1999 through 2004.
2005 vs. 2004
General Overview
Net sales for fiscal 2005 increased $38,554,000 or 18.1% from fiscal 2004. All Groups achieved increased sales during 2005 compared to 2004. Gross profit increased to 23.1% of sales in fiscal 2005 compared to 20.7% in fiscal 2004. All Groups realized reductions, to varying degrees, in their cost of sales percentages during fiscal 2005 compared to fiscal 2004. Selling, general and administrative expenses increased $3,763,000, but declined as a percentage of net sales to 14.8% of sales in fiscal 2005 compared to 15.8% in fiscal 2004.
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
Sales of the Commercial Products Group increased $24,245,000 or 24.5% compared to the 2004 year. This gain reflected increased commercial construction activity together with increased sales prices, expanded geographic market penetration and new product introductions. Gross profit increased to 24.3% of sales in fiscal 2005 compared to 21.5% in 2004. Despite experiencing higher aluminum costs, this Group achieved decreased material, labor and overhead cost percentages mainly due to improved margins generated as a result of the substantially higher sales volume coupled with increased prices. Selling, general and administrative expenses increased $1,433,000, although as a percentage of sales decreased to 11.8% of sales compared to 13.1% of sales in 2004. These increased expenses reflect additional employment and sales representation costs of $1,532,000 for the 2005 year related to the increase in sales and achievement of incentive compensation targets. Partially offsetting the increase was $180,000 of income related to retrospective adjustments to workers’ compensation insurance policies.
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Residential Products
Sales of the Residential Products Group increased $9,184,000 or 14.1% compared to the 2004 year. Consumer demand continued to stimulate new home construction, re-sales of existing homes and home improvement spending in the areas served by this Group. New product introductions and more aggressive promotional programs also contributed to the increase. Gross profit increased to 31.3% of sales in fiscal 2005 compared to 29.9% in 2004. Although the material cost percentage was unchanged from the prior year, this Group experienced decreased labor and overhead cost percentages compared to 2004 reflecting production efficiencies attained from the substantially higher sales volume coupled with a decrease of $368,000 for fiscal 2005 workers’ compensation claims. Selling, general and administrative expenses increased $981,000, but decreased as a percentage of sales to 12.7% of sales in fiscal 2005 compared to 13.0% of sales in 2004. This increase was mainly attributable to increases of $317,000 for advertising and promotional costs, $299,000 for fiscal 2005 general liability insurance costs, and $178,000 for additional employment related to the increase in sales.
Aluminum Extrusion
Sales of the Aluminum Extrusion Group increased $5,125,000 or 10.4% compared to the 2004 year. Although net tonnage shipped to outside customers decreased 2.5%, particularly in the area served by our California facility, the Group benefited from an increase in selling prices. Cost of sales as a percentage of sales at 96.1% for fiscal 2005, was only slightly better than the 96.2% recorded in fiscal 2004. 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 2005 year. Additionally, labor and overhead production efficiencies gained from higher total tonnage output, including shipments to intercompany customers, decreased labor and overhead cost percentages for the 2005 year. These gains served to offset increased material cost percentages. Selling, general and administrative expenses increased $584,000, although as a percentage of sales remained unchanged at 3.1% of sales compared to the 2004 year. This increase reflects increased costs of $560,000 for retrospective adjustments to workers’ compensation insurance policies.
Corporate
General and administrative expenses increased $765,000, but decreased as a percentage of consolidated net sales to 3.9% of net sales in fiscal 2005 compared to 4.2% in 2004. The increase is mainly attributable to $780,000 for costs related to complying with the internal control requirements of the Sarbanes-Oxley legislation. Additional costs of $199,000 were incurred during the 2005 year relating to higher employment and recruitment expense and $104,000 for increased costs for retrospective adjustments to workers’ compensation and general liability insurance policies. Partially offsetting these increases was a recovery of $265,000 for 2005 and prior year legal fees that was recorded as a result of a settlement.
The increase in interest income related to increased funds available for investment during the 2005 year combined with higher rates of return compared to 2004.
The effective tax rate increased to 38.0% in fiscal 2005 compared to 37.7% in 2004.
Liquidity and Capital Resources
Cash and cash equivalents at June 30, 2006 were $20,446,000 compared to $12,437,000 at June 30, 2005 and $15,964,000 at June 30, 2004. Working capital at June 30, 2006 was $88,384,000 compared to $77,554,000 at June 30, 2005 and $67,860,000 at June 30, 2004. The ratio of current assets to current liabilities was 3.6 at the end of 2006 compared to 4.1 at the end of 2005 and 3.8 at the end of 2004. 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.
Net cash provided by operating activities was approximately $18.2 million, $5.2 million and $12.1 million in fiscal 2006, 2005 and 2004, respectively. Cash used in investing activities was utilized for capital expenditures for property, plant and equipment of approximately $6,358,000 in 2006, $4,246,000 in 2005 and $3,482,000 in 2004 which were financed through internal cash flow and cash reserves. The Company projects net capital expenditures of approximately $6,400,000 for fiscal 2007 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. Cash used in financing activities during the past three years was utilized mainly for payment of shareholder dividends as authorized by the Board of Directors.
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The Company had no long-term debt outstanding at the end of 2006, 2005, or 2004. The Company had $22,690,000 in available credit at the end of 2006 under short-term borrowing arrangements (see Note 3).
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.
Inflation, Trends, and General Considerations
From 2004 to 2006, inflation has not had a material effect on our results of operations. 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 prevailing interest rates, consumer confidence levels and general economic outlook. In the near term, we expect to operate in an environment of increasing levels of commercial construction activity. Increases in interest rates are expected to have a negative impact on the level of residential housing construction activity as evidenced by recent declines in new housing starts; however we expect residential remodeling activity to remain strong for the foreseeable future. The demand for our products is seasonal, particularly in the colder regions of North America where inclement weather during the winter months usually reduces the level of building and remodeling activity. Partially as a result we usually experience lower sales levels during the second and third quarters of our fiscal year.
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:
Revenue Recognition
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’s net sales exclude any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer. Standard shipping terms are FOB shipping point.
Valuation of Receivables
The majority of the Company’s accounts receivable arises from sales of products under typical industry trade terms. Trade accounts receivable are stated at cash due from customers less allowances for doubtful accounts. Past due amounts are determined based on established terms and charged-off when deemed uncollectible.
The Company records an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The allowance is based on management’s assessment of the business environment, customers’ financial condition, accounts receivable aging and historical collection expense. Changes in any of these items may impact the level of future write-offs. The Company did not have sales exceeding 5% to any single customer in 2006, 2005 or 2004.
Valuation of Inventory
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.
Deferred Income Taxes
Deferred income taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax laws and rates (see Note 9).
Current and Pending Accounting Changes
The American Jobs Creation Act of 2004 (the “AJCA”) was signed into law on October 22, 2004. The AJCA contains numerous changes to U.S. tax law, both temporary and permanent in nature, including a potential tax deduction with respect to certain qualified domestic manufacturing activities, changes in the carryback and carryforward utilization periods for foreign
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tax credits and a dividend received deduction with respect to accumulated income earned abroad. The law has an impact on our effective tax rate, future taxable income and cash and tax planning strategies, among other effects. The initial benefit we derived from the manufacturer’s tax deduction was recorded in the second quarter of fiscal 2006. See Note 11 for additional information.
In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, “Inventory Costs” (SFAS 151), which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material. SFAS 151 was effective for inventory costs incurred beginning July 1, 2005. Adoption of SFAS 151 has not had a material impact on our financial statements.
In December 2004, the FASB issued SFAS No. 123R (revised 2004), “Share-Based Payment”, which replaced SFAS No. 123 and superseded APB Opinion No. 25. SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values in the first interim or annual period beginning after June 15, 2005. The pro forma disclosures previously permitted under SFAS No. 123 will no longer be an alternative to financial statement recognition. As disclosed in Note 1 under Stock Based Compensation, adoption of SFAS 123R has not had an impact on our financial statements.
In March 2005, the FASB issued Financial Interpretation No. 47 (FIN 47), “Accounting for Conditional Asset Retirement Obligations”. FIN 47 is an interpretation of FASB Statement No. 143, “Accounting for Asset Retirement Obligations” and clarifies (i) that an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated and (ii) when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The Company adopted FIN 47 effective June 30, 2006. Adoption of FIN 47 has not had an impact on our financial statements.
In May 2005, the FASB issued SFAS No. 154 (SFAS 154), “Accounting Changes and Error Corrections — a replacement of APB Opinion No. 20 and FASB Statement No. 3”. Under the previous guidance, most voluntary changes in accounting principle were required to be recognized as the cumulative effect of a change in accounting principle within the net income of the periods in which the change is made. SFAS 154 requires retrospective application to prior period financial statements of a voluntary change in accounting principle, unless it is impracticable to do so. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.
In June 2006, the FASB issued Financial Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109”, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. This Interpretation also provides guidance on de-recognition, classification, interest, penalties, accounting in interim periods, disclosure and transition. The evaluation of a tax position in accordance with this Interpretation will be a two-step process. The first step will determine if it is more likely than not that a tax position will be sustained upon examination and should therefore be recognized. The second step will measure a tax position that meets the more likely than not recognition threshold to determine the amount of benefit to recognize in the financial statements. This Interpretation is effective for fiscal years beginning after December 15, 2006. Upon adoption in fiscal 2008 we do not anticipate that FIN 48 will have a material impact on our financial statements.
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, including the risks and uncertainties set forth in our Annual Report on Form 10-K filed with the Securities and Exchange Commission. 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.
Off-Balance Sheet Transactions, Arrangements and Other Relationships
The Company is not a party to any off-balance sheet transactions, arrangements or other relationships.
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QUARTERLY FINANCIAL DATA (UNAUDITED)
For the years ended June 30, 2006 and 2005
| | First | | Second | | Third | | Fourth | |
| | Quarter | | Quarter | | Quarter | | Quarter | |
2006 | | | | | | | | | |
Net sales | | $ | 68,257,000 | | $ | 65,730,000 | | $ | 69,732,000 | | $ | 77,107,000 | |
Gross profit | | 15,315,000 | | 14,673,000 | | 15,529,000 | | 19,782,000 | |
Net income | | 3,587,000 | | 3,578,000 | | 3,468,000 | | 5,611,000 | |
Earnings per share - Basic and Diluted: | | | | | | | | | |
Net income | | .84 | | .83 | | .81 | | 1.30 | |
Dividends declared | | .30 | | .30 | | .30 | | .30 | |
Stock price — High | | 39.40 | | 41.30 | | 42.80 | | 44.99 | |
Stock price — Low | | 30.25 | | 36.80 | | 37.90 | | 37.91 | |
| | | | | | | | | |
2005 | | | | | | | | | |
Net sales | | $ | 60,727,000 | | $ | 61,759,000 | | $ | 62,088,000 | | $ | 67,014,000 | |
Gross profit | | 13,964,000 | | 13,702,000 | | 13,894,000 | | 16,551,000 | |
Net income | | 3,034,000 | | 2,791,000 | | 2,731,000 | | 4,386,000 | |
Earnings per share — Basic and Diluted: | | | | | | | | | |
Net income | | .71 | | .66 | | .64 | | 1.03 | |
Dividends declared | | .30 | | .30 | | .30 | | .30 | |
Stock price — High | | 30.33 | | 34.40 | | 35.74 | | 35.49 | |
Stock price — Low | | 25.70 | | 28.25 | | 31.10 | | 30.40 | |
10
CERTIFICATIONS
International Aluminum Corporation (a) has filed the CEO and CFO certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 as Exhibits to its Annual Report on Form 10-K for the year ended June 30, 2006 and (b) will submit to the New York Stock Exchange (NYSE) the 2006 Annual CEO Certification regarding compliance with the NYSE corporate governance listing standards.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
International Aluminum Corporation’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements and related disclosures in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements and related disclosures in accordance with generally accepted accounting principles; (3) provide reasonable assurance that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (4) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements and related disclosures.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
The Company assessed the effectiveness of its internal control over financial reporting as of June 30, 2006. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in INTERNAL CONTROL-INTEGRATED FRAMEWORK.
Based upon management’s assessment using the criteria contained in COSO, the Company’s management has concluded that, as of June 30, 2006, International Aluminum Corporation’s internal control over financial reporting was effective.
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2006 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.
11
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
International Aluminum Corporation:
We have completed integrated audits of International Aluminum Corporation’s 2006 and 2005 consolidated financial statements and of its internal control over financial reporting as of June 30, 2006 and an audit of its 2004 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.
Consolidated financial statements
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, shareholders’ equity and cash flows present fairly, in all material respects, the financial position of International Aluminum Corporation and its subsidiaries at June 30, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2006 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements 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.
Internal control over financial reporting
Also, in our opinion, management’s assessment, included in the accompanying Management’s Report On Internal Control Over Financial Reporting, that the Company maintained effective internal control over financial reporting as of June 30, 2006 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2006, based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.
12
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| |
|
PricewaterhouseCoopers LLP |
Los Angeles, California |
September 8, 2006 |
13
INTERNATIONAL ALUMINUM CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the years ended June 30, 2006, 2005 and 2004
| | 2006 | | 2005 | | 2004 | |
Net sales | | $ | 280,826,000 | | $ | 251,588,000 | | $ | 213,034,000 | |
Cost of sales | | 215,527,000 | | 193,477,000 | | 169,036,000 | |
Gross profit | | 65,299,000 | | 58,111,000 | | 43,998,000 | |
Selling, general and administrative expenses | | 40,094,000 | | 37,318,000 | | 33,555,000 | |
Income from operations | | 25,205,000 | | 20,793,000 | | 10,443,000 | |
Interest income | | 339,000 | | 85,000 | | 50,000 | |
Interest expense | | — | | (6,000 | ) | (20,000 | ) |
Income from continuing operations before income taxes | | 25,544,000 | | 20,872,000 | | 10,473,000 | |
Provision for income taxes | | 9,300,000 | | 7,930,000 | | 3,944,000 | |
Income from continuing operations | | 16,244,000 | | 12,942,000 | | 6,529,000 | |
Income from discontinued operations, net of tax | | — | | — | | 129,000 | |
Net income | | $ | 16,244,000 | | $ | 12,942,000 | | $ | 6,658,000 | |
| | | | | | | |
Earnings per share — Basic and Diluted: | | | | | | | |
Continuing operations | | $ | 3.78 | | $ | 3.04 | | $ | 1.54 | |
Discontinued operations | | — | | — | | .03 | |
Total | | $ | 3.78 | | $ | 3.04 | | $ | 1.57 | |
See accompanying notes to consolidated financial statements.
14
INTERNATIONAL ALUMINUM CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 2006 and 2005
| | 2006 | | 2005 | |
Assets | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 20,446,000 | | $ | 12,437,000 | |
Accounts receivable, less allowance of $903,000 in 2006 and $1,244,000 in 2005 | | 49,825,000 | | 43,543,000 | |
Inventories | | 46,917,000 | | 41,270,000 | |
Prepaid expenses and deposits | | 1,856,000 | | 2,055,000 | |
Deferred income taxes | | 3,104,000 | | 3,310,000 | |
Total current assets | | 122,148,000 | | 102,615,000 | |
| | | | | |
Property, plant and equipment, at cost | | 129,639,000 | | 125,081,000 | |
Accumulated depreciation | | (81,846,000 | ) | (78,179,000 | ) |
Net property, plant and equipment | | 47,793,000 | | 46,902,000 | |
| | | | | |
Other assets: | | | | | |
Goodwill | | 689,000 | | 645,000 | |
Other | | 2,318,000 | | 1,469,000 | |
Total other assets | | 3,007,000 | | 2,114,000 | |
Total Assets | | $ | 172,948,000 | | $ | 151,631,000 | |
| | | | | |
Liabilities and Shareholders’ Equity | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 16,619,000 | | $ | 9,958,000 | |
Accrued liabilities | | 15,282,000 | | 13,531,000 | |
Income taxes payable | | 1,863,000 | | 1,572,000 | |
Total current liabilities | | 33,764,000 | | 25,061,000 | |
| | | | | |
Deferred income taxes | | 5,527,000 | | 6,067,000 | |
Total liabilities | | 39,291,000 | | 31,128,000 | |
| | | | | |
Commitments and contingencies (Note 4) | | | | | |
| | | | | |
Shareholders’ equity: | | | | | |
Common stock | | 4,826,000 | | 4,791,000 | |
Paid-in capital | | 5,639,000 | | 4,689,000 | |
Retained earnings | | 120,060,000 | | 108,975,000 | |
Accumulated other comprehensive income | | 3,132,000 | | 2,048,000 | |
Total shareholders’ equity | | 133,657,000 | | 120,503,000 | |
Total Liabilities and Shareholders’ Equity | | $ | 172,948,000 | | $ | 151,631,000 | |
See accompanying notes to consolidated financial statements.
15
INTERNATIONAL ALUMINUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30, 2006, 2005 and 2004
| | 2006 | | 2005 | | 2004 | |
Cash flows from operating activities: | | | | | | | |
Net income | | $ | 16,244,000 | | $ | 12,942,000 | | $ | 6,658,000 | |
Adjustments for noncash transactions: | | | | | | | |
Depreciation and amortization | | 5,873,000 | | 6,269,000 | | 6,526,000 | |
Deferred income taxes | | (334,000 | ) | (1,101,000 | ) | (260,000 | ) |
Changes in assets and liabilities: | | | | | | | |
Receivables | | (5,927,000 | ) | (4,232,000 | ) | (4,667,000 | ) |
Inventories | | (5,439,000 | ) | (8,811,000 | ) | (3,714,000 | ) |
Prepaid expenses and other | | (636,000 | ) | (886,000 | ) | 490,000 | |
Accounts payable | | 6,328,000 | | (1,148,000 | ) | 3,434,000 | |
Accrued liabilities | | 1,729,000 | | 1,609,000 | | 2,883,000 | |
Income taxes payable | | 399,000 | | 557,000 | | 796,000 | |
Net cash provided by operating activities | | 18,237,000 | | 5,199,000 | | 12,146,000 | |
| | | | | | | |
Cash flows from investing activities: | | | | | | | |
Capital expenditures | | (6,358,000 | ) | (4,246,000 | ) | (3,482,000 | ) |
Proceeds from sales of capital assets | | 209,000 | | 221,000 | | 212,000 | |
Net cash used in investing activities | | (6,149,000 | ) | (4,025,000 | ) | (3,270,000 | ) |
| | | | | | | |
Cash flows from financing activities: | | | | | | | |
Dividends paid to shareholders | | (5,159,000 | ) | (5,107,000 | ) | (5,094,000 | ) |
Exercise of stock options | | 985,000 | | 592,000 | | — | |
Net repayments under lines of credit | | — | | (220,000 | ) | (394,000 | ) |
Net cash used in financing activities | | (4,174,000 | ) | (4,735,000 | ) | (5,488,000 | ) |
| | | | | | | |
Effect of exchange rate changes | | 95,000 | | 34,000 | | 6,000 | |
| | | | | | | |
Net change in cash and cash equivalents | | 8,009,000 | | (3,527,000 | ) | 3,394,000 | |
Cash and cash equivalents at beginning of year | | 12,437,000 | | 15,964,000 | | 12,570,000 | |
Cash and cash equivalents at end of year | | $ | 20,446,000 | | $ | 12,437,000 | | $ | 15,964,000 | |
| | | | | | | |
Supplemental cash flow information: | | | | | | | |
Interest payments | | $ | — | | $ | 6,000 | | $ | 20,000 | |
Income tax payments | | $ | 9,112,000 | | $ | 8,088,000 | | $ | 3,184,000 | |
See accompanying notes to consolidated financial statements.
16
INTERNATIONAL ALUMINUM CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the years ended June 30, 2006, 2005 and 2004
| | | | | | | | | | Accumulated | | | |
| | | | | | | | | | Other | | | |
| | Common Stock | | Paid-in | | Retained | | Comprehensive | | | |
| | Shares | | Amount | | Capital | | Earnings | | Income | | Total | |
Balance, June 30, 2003 | | 4,244,794 | | $ | 4,765,000 | | $ | 4,123,000 | | $ | 99,576,000 | | $ | 1,072,000 | | $ | 109,536,000 | |
Net income | | | | | | | | 6,658,000 | | | | 6,658,000 | |
Translation adjustment | | | | | | | | | | 106,000 | | 106,000 | |
Total comprehensive income | | | | | | | | | | | | 6,764,000 | |
Cash dividends | | | | | | | | (5,094,000 | ) | | | (5,094,000 | ) |
Balance, June 30, 2004 | | 4,244,794 | | 4,765,000 | | 4,123,000 | | 101,140,000 | | 1,178,000 | | 111,206,000 | |
| | | | | | | | | | | | | |
Net income | | | | | | | | 12,942,000 | | | | 12,942,000 | |
Translation adjustment | | | | | | | | | | 870,000 | | 870,000 | |
Total comprehensive income | | | | | | | | | | | | 13,812,000 | |
Exercise of stock options | | 25,938 | | 26,000 | | 566,000 | | | | | | 592,000 | |
Cash dividends | | | | | | | | (5,107,000 | ) | | | (5,107,000 | ) |
Balance, June 30, 2005 | | 4,270,732 | | 4,791,000 | | 4,689,000 | | 108,975,000 | | 2,048,000 | | 120,503,000 | |
| | | | | | | | | | | | | |
Net income | | | | | | | | 16,244,000 | | | | 16,244,000 | |
Translation adjustment | | | | | | | | | | 1,084,000 | | 1,084,000 | |
Total comprehensive income | | | | | | | | | | | | 17,328,000 | |
Exercise of stock options | | 34,606 | | 35,000 | | 950,000 | | | | | | 985,000 | |
Cash dividends | | | | | | | | (5,159,000 | ) | | | (5,159,000 | ) |
Balance, June 30, 2006 | | 4,305,338 | | $ | 4,826,000 | | $ | 5,639,000 | | $ | 120,060,000 | | $ | 3,132,000 | | $ | 133,657,000 | |
See accompanying notes to consolidated financial statements.
17
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 may have been made to conform to the current presentation.
Revenue Recognition
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. Net sales exclude any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer. Shipping charges billed to customers are included in Net Sales and shipping and handling charges incurred by the Company are included in Cost of Sales. Standard shipping terms are FOB shipping point.
Estimates and Assumptions
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 at the date of purchase.
Concentrations of Credit Risk
The majority of the Company’s accounts receivable arises from sales of products under typical industry trade terms. Trade accounts receivable are stated at cash due from customers less allowances for doubtful accounts. Past due amounts are determined based on established terms and charged-off when deemed uncollectible.
The Company records an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The allowance is based on management’s assessment of the business environment, customers’ financial condition, accounts receivable aging and historical collection expense. Changes in any of these items may impact the level of future write-offs. The Company did not have sales exceeding 5% to any single customer in 2006, 2005 or 2004.
Inventory
Inventories are valued at the lower of cost or market. The cost is determined by the first-in, first-out (FIFO) method and inventories are reviewed for excess quantities and obsolescence. Inventories at fiscal year ends were as follows:
| | 2006 | | 2005 | |
Raw materials | | $ | 39,531,000 | | $ | 34,720,000 | |
Work in process | | 898,000 | | 1,333,000 | |
Finished goods | | 6,488,000 | | 5,217,000 | |
Total inventories | | $ | 46,917,000 | | $ | 41,270,000 | |
18
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, 5 to 20 years for machinery and plant equipment, 3 to 5 years for office equipment and computers and 2.5 to 7 years for vehicles) 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.
Goodwill
The excess of the purchase price over the underlying book value of any businesses or assets acquired is classified as “Goodwill.” The nominal increase in goodwill during 2006 relates to the effect of applying fluctuating foreign exchange rates to balances pertaining to our Canadian subsidiaries. The Company accounts for its goodwill under Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill is not amortized, but it is tested for impairment at least annually. Each year the Company tests for impairment of goodwill according to a two-step approach. In the first step, the Company tests for impairment of goodwill by estimating the fair values of its reporting units using the present value of future cash flows approach, subject to a comparison for reasonableness to its market capitalization at the date of valuation. If the carrying amount exceeds the fair value, the second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any. In the second step the implied fair value of the goodwill is estimated as the fair value of the reporting unit used in the first step less the fair value of all other net tangible and intangible assets of the reporting unit. If the carrying amount of the goodwill exceeds its implied fair market value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill. In addition, goodwill of a reporting unit is tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. No impairments have been recorded since the initial adoption of SFAS 142.
Income Taxes
The Company accounts for income taxes under SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires an asset and liability approach for financial reporting for income taxes. Under SFAS No. 109, deferred taxes are provided for temporary differences between the carrying values of assets and liabilities for financial reporting and tax purposes at the enacted rates at which these differences are expected to reverse.
Long-Lived Assets
Whenever events indicate that the carrying values of long-lived assets may not be recoverable, the Company evaluates the carrying values of such assets using future undiscounted cash flows to determine if an impairment exists. If an impairment is determined to exist, any related impairment loss is calculated based upon comparison of the fair value to the carrying value of the assets.
19
Advertising Expense
The Company expenses advertising costs as incurred. Advertising expenses of approximately $2,345,000, $2,424,000 and $2,011,000 were charged to selling, general and administrative expenses for the years ended June 30, 2006, 2005 and 2004, respectively.
Stock Based Compensation
The Company granted incentive 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. The 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, or vested, in equal installments over a five-year period from the date of grant so long as the employees remain in the continuous employ of the Company. Prior to July 1, 2005, the Company applied Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees”, and related Interpretations in accounting for stock options granted under 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 were 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 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. In addition, on July 1, 2005 the Company adopted SFAS No. 123R (revised 2004), “Share-Based Payment”, which replaced SFAS No. 123 and superseded APB Opinion No. 25, using the modified prospective application. SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values in the first interim or annual period beginning after June 15, 2005. The pro forma disclosures previously permitted under SFAS No. 123 will no longer be an alternative to financial statement recognition. The adoption of SFAS 123R did not result in compensation cost being recorded, as all outstanding options were fully vested on the date of adoption. During the three-year period ended June 30, 2006 no stock options or other stock awards were granted.
Note 2. Balance Sheet Components
| | 2006 | | 2005 | |
Property, Plant and Equipment, at Cost | | | | | |
Land | | $ | 7,068,000 | | $ | 6,953,000 | |
Buildings and improvements | | 32,988,000 | | 29,932,000 | |
Machinery and equipment | | 77,608,000 | | 74,016,000 | |
Office Equipment/Computers | | 7,356,000 | | 7,427,000 | |
Vehicles | | 4,619,000 | | 4,478,000 | |
Construction in process | | — | | 2,275,000 | |
| | $ | 129,639,000 | | $ | 125,081,000 | |
| | 2006 | | 2005 | |
Accrued Liabilities | | | | | |
Wages, deferred compensation and compensated absences | | $ | 8,921,000 | | $ | 8,167,000 | |
Taxes, other than income taxes | | 1,319,000 | | 1,393,000 | |
Dividends | | 1,292,000 | | 1,281,000 | |
Other | | 3,750,000 | | 2,690,000 | |
| | $ | 15,282,000 | | $ | 13,531,000 | |
20
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 at 55 basis points below the prevailing prime interest rate. There were no amounts outstanding under the agreement at June 30, 2006 or June 30, 2005. Additionally, the Company’s Canadian subsidiaries have loan agreements with a foreign bank providing for $2,690,000 in collateralized short-term lines of credit, at the prevailing Canadian prime interest rate. There were no amounts outstanding under the agreements at June 30, 2006 or June 30, 2005.
Note 4. Commitments and Contingencies
The Company is committed under real property lease agreements expiring at various dates to 2014. Certain of the leases have renewal options for periods up to five years, and others provide for rent revisions at various 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 $859,000 in 2006, $806,000 in 2005, and $801,000 in 2004. Real property rental commitments are $1,068,000 in 2007, $1,014,000 in 2008, $824,000 in 2009, $741,000 in 2010, $636,000 in 2011, and $727,000 in 2012-2014.
The Company was named in a class action filed in California: Klotzer v. International Window Corporation, et.al., filed in December 2002. The plaintiffs assert various causes of action, including strict product liability and breach of warranty. The plaintiffs also purport to represent a statewide class of persons who own buildings in California that contain the Company’s Series 6200 horizontal sliding, vertical hung, or fixed aluminum windows manufactured during the period 1993 to the present. In November 2005, the Court certified the plaintiff class. The named plaintiffs seek actual and punitive damages as well as injunctive and restitutionary relief on their claims, including the cost to remove and replace all of the Series 6200 windows in the class. The Company denies any liability.
The Company’s insurers have accepted the defense of this lawsuit under reservation of rights. The scope of the Company’s insurance coverage may depend upon the ultimate disposition of the plaintiffs’ claims. The Company believes the plaintiffs’ claims are without merit, and it intends to vigorously defend this lawsuit. The lawsuit is in the discovery phase, and the Company cannot predict its outcome or the extent to which insurance would be available to cover any eventual judgment or settlement in the lawsuit.
The Company is party to various other claims, legal actions and complaints arising in the ordinary course of business which in the opinion of management are without merit or are of such kind, or involve such amounts, that an unfavorable disposition would not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.
Note 5. Stock Options
The options outstanding under the 1991 and 2001 Stock Option Plans for fiscal year ended June 30, 2006 were:
| | Outstanding | | Exercisable | |
| | Number Of | | Weighted-Average | | Number Of | | Weighted-Average | |
| | Shares | | Exercise Price | | Shares | | Exercise Price | |
Outstanding, June 30, 2005 | | 55,526 | | $ | 28.89 | | 55,526 | | $ | 28.89 | |
Granted | | — | | | | | | | |
Exercised | | 44,526 | | 28.43 | | 11,000 | | 30.75 | |
Expired | | (2,500 | ) | 28.00 | | — | | — | |
Outstanding, June 30, 2006 | | 8,500 | | 31.56 | | 8,500 | | 31.56 | |
| | | | | | | | | |
Stock Option Summary at June 30, 2006: | | | | | | | | | |
$31.56 (Life: 1.6 years) | | 8,500 | | 31.56 | | 8,500 | | 31.56 | |
Available for future grants | | 392,200 | | | | | | | |
| | | | | | | | | | | |
The total intrinsic value of options outstanding at June 30, 2006 was $54,740. The total intrinsic value of options exercised during the fiscal year ended June 30, 2006 was $373,192.
Upon exercise, stock options are settled through issuance of previously authorized but unissued shares.
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Note 6. Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the related period. Diluted earnings per share is computed by dividing net income by the weighted-average common shares and potentially dilutive common equivalent shares outstanding determined as follows:
| | 2006 | | 2005 | | 2004 | |
Numerator: | | | | | | | |
Income from continuing operations | | $ | 16,244,000 | | $ | 12,942,000 | | $ | 6,529,000 | |
Income from discontinued operations, net of tax | | — | | — | | 129,000 | |
Net income | | $ | 16,244,000 | | $ | 12,942,000 | | $ | 6,658,000 | |
| | | | | | | |
Denominator: | | | | | | | |
Weighted-average shares outstanding used to compute basic EPS | | 4,294,427 | | 4,252,728 | | 4,244,794 | |
Incremental shares issuable upon the exercise of stock options | | 2,561 | | 6,928 | | 3,401 | |
Shares used to compute diluted EPS | | 4,296,988 | | 4,259,656 | | 4,248,195 | |
| | | | | | | |
Basic and Diluted net earnings per share: | | | | | | | |
Before effect of discontinued operations | | $ | 3.78 | | $ | 3.04 | | $ | 1.54 | |
Discontinued operations | | — | | — | | .03 | |
Basic and Diluted net earnings per share | | $ | 3.78 | | $ | 3.04 | | $ | 1.57 | |
Incremental shares issuable upon the assumed exercise of outstanding stock options are computed using the average market price of common stock during the related period. The incremental shares for the fiscal years ending 2005 and 2004 exclude 8,625 and 60,750 stock option shares, respectively, because their inclusion would be anti-dilutive, since the option price was greater than the Company’s average common stock price for related periods.
Note 7. Capital Stock
The Company has 500,000 shares of preferred stock authorized, with a $10 par value, none of which is outstanding. There are 10,000,000 shares of common stock authorized, $1 par value, of which 4,305,338 shares were outstanding at June 30, 2006 and 4,270,732 were outstanding at June 30, 2005.
Note 8. Acquisitions and Divestitures
During fiscal 2003, the Company ceased operations of its International Window-Colorado 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 this subsidiary to their estimated net realizable value and reported its results as discontinued operations. Due to favorable accounts receivable collections and the sale of a portion of the Window-Colorado equipment and inventory, the Company recognized a pre-tax gain of $215,000 ($129,000 net of tax) in fiscal 2004, which has been classified as discontinued operations. The Company does not anticipate any future activity with respect to this subsidiary.
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Note 9. Income Taxes
The components of income before U.S. and foreign income taxes are:
| | 2006 | | 2005 | | 2004 | |
Domestic | | $ | 24,474,000 | | $ | 20,535,000 | | $ | 10,567,000 | |
Foreign | | 1,070,000 | | 337,000 | | 121,000 | |
| | $ | 25,544,000 | | $ | 20,872,000 | | $ | 10,688,000 | |
The provision for income taxes is comprised of the following:
| | 2006 | | 2005 | | 2004 | |
Current — | | | | | | | |
Federal | | $ | 7,963,000 | | $ | 7,776,000 | | $ | 3,487,000 | |
State | | 1,535,000 | | 984,000 | | 568,000 | |
Foreign | | 136,000 | | 271,000 | | 235,000 | |
| | 9,634,000 | | 9,031,000 | | 4,290,000 | |
| | | | | | | |
Deferred — | | | | | | | |
Federal | | (823,000 | ) | (876,000 | ) | (6,000 | ) |
State | | (33,000 | ) | (75,000 | ) | (33,000 | ) |
Foreign | | 522,000 | | (150,000 | ) | (221,000 | ) |
| | (334,000 | ) | (1,101,000 | ) | (260,000 | ) |
| | $ | 9,300,000 | | $ | 7,930,000 | | $ | 4,030,000 | |
| | | | | | | |
Allocation of total provision — | | | | | | | |
Continuing operations | | $ | 9,300,000 | | $ | 7,930,000 | | $ | 3,944,000 | |
Discontinued operations | | — | | — | | 86,000 | |
Total provision | | $ | 9,300,000 | | $ | 7,930,000 | | $ | 4,030,000 | |
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:
| | 2006 | | 2005 | | 2004 | |
Tax provision on book income at statutory rate | | $ | 8,940,000 | | $ | 7,305,000 | | $ | 3,641,000 | |
Increases (decreases) resulting from: | | | | | | | |
State income taxes, net of Federal income tax benefit | | 976,000 | | 591,000 | | 353,000 | |
AJCA Manufacturer’s Deduction | | (265,000 | ) | — | | — | |
Reduction to Federal tax reserve | | (512,000 | ) | — | | — | |
Other | | 161,000 | | 34,000 | | 36,000 | |
Provision for income taxes | | $ | 9,300,000 | | $ | 7,930,000 | | $ | 4,030,000 | |
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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 year end are as follows:
| | 2006 | | 2005 | |
Accounts receivable | | $ | 309,000 | | $ | 423,000 | |
Inventory | | 470,000 | | 387,000 | |
Accrued liabilities | | 1,789,000 | | 1,478,000 | |
Canadian operating loss carryforwards | | 328,000 | | 999,000 | |
Other | | 208,000 | | 23,000 | |
Net deferred tax asset | | $ | 3,104,000 | | $ | 3,310,000 | |
| | | | | |
Property, plant and equipment | | $ | 5,450,000 | | $ | 5,953,000 | |
Other | | 77,000 | | 114,000 | |
Net deferred tax liability | | $ | 5,527,000 | | $ | 6,067,000 | |
No provision for U.S. taxes has been made for undistributed earnings of the Canadian subsidiaries since it is expected that the major portion of such earnings will continue to be reinvested for an indefinite period. The Company has Canadian net operating loss carryforwards that expire between 2009 and 2011. Management believes that it is more likely than not that the Company will generate sufficient taxable income in the appropriate carryforward periods to realize the benefit of the Canadian net operating loss carryforwards.
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 — Curtainwalls, window walls, slope glazed systems, storefront framing, entrance doors and frames, commercial operable windows, including products for storm and blast-resistant applications; interior officefronts, office partitions and interior doors and frames for the commercial building and tenant improvement markets.
RESIDENTIAL — Extensive lines of windows and patio doors manufactured from vinyl and aluminum for the residential building and remodeling markets.
ALUMINUM EXTRUSION — Mill finish, anodized, painted and fabricated aluminum extrusions.
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.
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The following is significant financial information by operating segment, reconciling to the Company’s totals.
| | Sales | | Operating Income | |
(In thousands) | | 2006 | | 2005 | | 2004 | | 2006 | | 2005 | | 2004 | |
Commercial | | $ | 134,998 | | $ | 123,604 | | $ | 99,807 | | $ | 19,054 | | $ | 15,518 | | $ | 8,335 | |
Residential | | 85,668 | | 74,443 | | 65,355 | | 14,955 | | 13,791 | | 11,049 | |
Aluminum Extrusion | | 130,829 | | 114,807 | | 97,378 | | 2,540 | | 951 | | 709 | |
Total segments | | 351,495 | | 312,854 | | 262,540 | | 36,549 | | 30,260 | | 20,093 | |
Eliminations | | (70,669 | ) | (61,266 | ) | (49,506 | ) | (1,526 | ) | 273 | | (668 | ) |
Corporate | | — | | — | | — | | (9,818 | ) | (9,740 | ) | (8,982 | ) |
Total | | $ | 280,826 | | $ | 251,588 | | $ | 213,034 | | $ | 25,205 | | $ | 20,793 | | $ | 10,443 | |
&# 160;
| | Capital Expenditures | | Depreciation and Amortization | |
(In thousands) | | 2006 | | 2005 | | 2004 | | 2006 | | 2005 | | 2004 | |
Commercial | | $ | 1,073 | | $ | 688 | | $ | 542 | | $ | 1,597 | | $ | 1,698 | | $ | 1,820 | |
Residential | | 4,194 | | 3,110 | | 2,075 | | 1,869 | | 1,798 | | 1,847 | |
Aluminum Extrusion | | 473 | | 367 | | 519 | | 2,167 | | 2,410 | | 2,481 | |
Total segments | | 5,740 | | 4,165 | | 3,136 | | 5,633 | | 5,906 | | 6,148 | |
Corporate | | 618 | | 81 | | 346 | | 240 | | 363 | | 378 | |
Total | | $ | 6,358 | | $ | 4,246 | | $ | 3,482 | | $ | 5,873 | | $ | 6,269 | | $ | 6,526 | |
| | Total Assets | |
(In thousands) | | 2006 | | 2005 | |
Commercial | | $ | 78,464 | | $ | 66,353 | |
Residential | | 34,320 | | 32,076 | |
Aluminum Extrusion | | 40,143 | | 42,010 | |
Total segments | | 152,927 | | 140,439 | |
Corporate | | 20,021 | | 11,192 | |
Total | | $ | 172,948 | | $ | 151,631 | |
Note 11. Current and Pending Accounting Changes
The American Jobs Creation Act of 2004 (the “AJCA”) was signed into law on October 22, 2004. The AJCA contains numerous changes to U.S. tax law, both temporary and permanent in nature, including a potential tax deduction with respect to certain qualified domestic manufacturing activities, changes in the carryback and carryforward utilization periods for foreign tax credits and a dividend received deduction with respect to accumulated income earned abroad. The law impacts the Company’s effective tax rate, future taxable income and cash and tax planning strategies, amongst other effects. In December 2004, the FASB issued Staff Position No. 109-1 (“FSP 109-1”), Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004 and Staff Position No. 109-2 (“FSP 109-2”), Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. FSP 109-1 clarifies that the manufacturer’s tax deduction provided for under the AJCA should be accounted for as a special deduction in accordance with SFAS No. 109 and not as a tax rate reduction. FSP 109-2 provides accounting and disclosure guidance for the repatriation of certain foreign earnings to a U.S. taxpayer as provided for in the AJCA. The Company has no plans to repatriate foreign earnings. The initial benefit we derived from the manufacturer’s tax deduction was recorded in the second quarter of fiscal 2006.
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In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 151, “Inventory Costs” (SFAS 151), which clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material. SFAS 151 was effective for inventory costs incurred beginning July 1, 2005. Adoption of SFAS 151 has not had a material impact on our financial statements.
In December 2004, the FASB issued SFAS No. 123R (revised 2004), “Share-Based Payment,” which replaced SFAS No. 123 and superseded APB Opinion No. 25. SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values in the first interim or annual period beginning after June 15, 2005. The pro forma disclosures previously permitted under SFAS No. 123 will no longer be an alternative to financial statement recognition. As previously disclosed in Note 1 under Stock Based Compensation, adoption of SFAS 123R has not had an impact on our financial statements.
In March 2005, the FASB issued Financial Interpretation No. 47 (FIN 47), “Accounting for Conditional Asset Retirement Obligations.” FIN 47 is an interpretation of FASB Statement No. 143, “Accounting for Asset Retirement Obligations” and clarifies (i) that an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated and (ii) when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The Company adopted FIN 47 effective June 30, 2006. Adoption of FIN 47 has not had an impact on our financial statements.
In May 2005, the FASB issued SFAS No. 154 (SFAS 154), “Accounting Changes and Error Corrections — a replacement of APB Opinion No. 20 and FASB Statement No. 3.” Under the previous guidance, most voluntary changes in accounting principle were required to be recognized as the cumulative effect of a change in accounting principle within the net income of the periods in which the change is made. SFAS 154 requires retrospective application to prior period financial statements of a voluntary change in accounting principle, unless it is impracticable to do so. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.
In June 2006, the FASB issued Financial Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109,” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. This Interpretation also provides guidance on de-recognition, classification, interest, penalties, accounting in interim periods, disclosure and transition. The evaluation of a tax position in accordance with this Interpretation will be a two-step process. The first step will determine if it is more likely than not that a tax position will be sustained upon examination and should therefore be recognized. The second step will measure a tax position that meets the more likely than not recognition threshold to determine the amount of benefit to recognize in the financial statements. This Interpretation is effective for fiscal years beginning after December 15, 2006. Upon adoption in fiscal 2008 we do not anticipate that FIN 48 will have a material impact on our financial statements.
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CORPORATE INFORMATION
DIRECTORS | |
| |
Cornelius C. Vanderstar | |
Chairman of the Board | |
| |
Ronald L. Rudy | |
| |
John P. Cunningham | |
Retired President of International Aluminum Corporation | |
| |
Alexander L. Dean | |
President, David Brooks Company | |
| |
Joel F. McIntyre | |
Attorney At Law | |
| |
Norma A. Provencio | |
President, Provencio Advisory Services, Inc. | |
| |
David C. Treinen | |
Retired President of International Aluminum Corporation | |
| |
STOCK TRANSFER AGENT AND REGISTRAR | |
| |
Continental Stock Transfer & Trust Company | |
17 Battery Place | |
New York, NY 10004 | |
(212) 509-4000 | |
Internet at www.continentalstock.com | |
| |
STOCK EXCHANGE LISTING | |
| |
The Company’s common stock (trading symbol: IAL) is listed on the New York Stock Exchange | |
| |
OFFICERS | |
| |
Ronald L. Rudy | |
President & Chief Executive Officer | |
| |
Mitchell K. Fogelman | |
Senior Vice President — Finance & Secretary | |
| |
| |
William G. Gainer | |
Senior Vice President — Operations | |
| |
Susan L. Leone | |
Vice President — Human Resources | |
| |
FINANCIAL INFORMATION ON CORPORATE WEBSITE | |
| |
The Company makes available on its website, www.intlalum.com, its periodic reports on Form 10-K and 10-Q as soon as reasonably practicable after they have been filed. | |
| |
ELECTRONIC TRANSFER OF DIVIDENDS | |
| |
For information and forms, write to: | |
Corporate Secretary | |
International Aluminum Corporation | |
P. O. Box 6 | |
Monterey Park, CA 91754 | |
| |
ANNUAL SHAREHOLDERS MEETING | |
| |
2 p.m., Thursday, October 26, 2006 | |
International Aluminum Corporation | |
767 Monterey Pass Road | |
Monterey Park, CA 91754 | |
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SUBSIDIARIES BY SEGMENT | |
| |
COMMERCIAL | |
| |
Douglas R. Ellerbrock | |
Executive Vice President | |
Commercial Products Group | |
| |
United States Aluminum Corporation | |
Vernon, California | |
Phoenix, Arizona (opening Fall 2006) | |
| |
United States Aluminum Corporation-Illinois | |
Bedford Park, Illinois | |
Boston, Massachusetts | |
Detroit, Michigan | |
| |
United States Aluminum Corporation-Texas | |
Waxahachie, Texas | |
Denver, Colorado | |
St. Louis, Missouri | |
Dallas, Texas | |
Houston, Texas | |
| |
United States Aluminum Corporation-Carolina | |
Rock Hill, South Carolina | |
Orlando, Florida (opening Fall 2006) | |
Atlanta, Georgia | |
Baltimore, Maryland | |
| |
United States Aluminum Of Canada–British Columbia, Ltd. | |
Langley, British Columbia, Canada | |
| |
United States Aluminum Of Canada–Ontario, Ltd. | |
Guelph, Ontario, Canada | |
| |
Raco Interior Products, Inc. | |
Houston, Texas | |
Waxahachie, Texas | |
Dallas, Texas | |
| |
RESIDENTIAL | |
| |
George L. Hall | |
Executive Vice President | |
Residential Products Group | |
| |
International Window Corporation | |
South Gate, California | |
| |
International Window-Northern California | |
Hayward, California | |
| |
International Window-Arizona, Inc | |
Phoenix, Arizona | |
| |
ALUMINUM EXTRUSION | |
| |
International Extrusion Corporation | |
Alhambra, California | |
| |
International Extrusion Corporation-Texas | |
Waxahachie, Texas | |
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International Aluminum Corporation |
|
767 Monterey Pass Road |
Monterey Park, California 91754 |
Tel: | (323) 264-1670 |
Fax: | (323) 266-3838 |
Web: | www.intlalum.com |
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