Mail Stop 0510
January 26, 2005
Via U.S. mail and facsimile
Mr. Cornelius C. Vanderstar
Chief Executive Officer, International Aluminum Corporation
767 Monterey Pass Road
Monterey Park, California 91754
RE: Form 10-K for the fiscal year ended June 30, 2004
Form 10-Q for the quarter ended September 30, 2004
File No. 1-7256
Dear Mr. Vanderstar:
We have reviewed these filings and have the following
comments. If you disagree with a comment, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the year ended June 30, 2004
General
1. Where a comment below requests additional disclosures or other
revisions to be made, please show us in your supplemental response
what the revisions will look like. These revisions should be
included in your future filings.
Cover page
2. Disclose the market value of shares held by non-affiliates as
of
the last business day of your most recently completed second
fiscal
quarter on the cover page.
Employees, page 3
3. Please disclose whether any of your employees are covered by
collective bargaining agreements as required by SOP 94-6,
paragraph
..24.
Item 9A. Controls and Procedures, page 7
4. The evaluation date should be as of the end of the period
covered
by the report and not as of a date within 90 days prior to the
filing
date of the report. See Exchange Act Rules 13a-15(b) and 15d-
15(b)
and Regulation S-K, Item 307. Please revise.
Exhibit 13.1 Annual Report to Shareholders
To Our Shareholders
Residential Products, page 2
5. Please state the source of the forecasted $220 billion of
revenues
in the home improvement market. Also, in order to add perspective
to
your disclosure, state your share of the overall market.
Management`s Discussion and Analysis
Significant Changes in Results of Operations, page 4
6. Please discuss in greater detail the business reasons for the
changes between periods in the gross margin and operating income
of
each of your segments discussed in Note 10 of your financial
statements, along with the amounts shown in the corporate line
item.
In doing so, please disclose the amount of each significant change
in
line items between periods and the business reasons for it. In
circumstances where there is more than one business reason for the
change, attempt to quantify the incremental impact of each
individual
business reason discussed on the overall change in the line item.
Also quantify the impact of the business reasons you discuss
throughout MD&A. See Item 303(a)(3) of Regulation S-K and
Financial
Reporting Codification 501.04.
Liquidity and Capital Resources, page 6
7. Please include a table summarizing all of your contractual
obligations, including operating lease commitments, purchase
obligations, and other long-term liabilities. The table should
also
include estimated interest payments on your debt, estimated
payments
under interest rate swap agreements, and planned funding of
pension
and other postretirement benefit obligations in order to increase
transparency of cash flow. Please also disclose any assumptions
you
made to derive these amounts. See Item 303(a)(5) of Regulation S-
K.
Financial Statements
Note 1. Significant Accounting Policies and Procedures, page 13
8. Please disclose the types of expenses that you include in the
cost
of sales line item and the types of expenses that you include in
the
selling, general and administrative expenses line item. Please
disclose whether you include inbound freight charges, purchasing
and
receiving costs, inspection costs, warehousing costs, internal
transfer costs, and the other costs of your distribution network
in
the cost of sales line item. With the exception of warehousing
costs, if you currently exclude a portion of these costs from cost
of
sales, please disclose:
? in a footnote the line items that these excluded costs are
included in and the amounts included in each line item for each
period presented, and
? in MD&A that your gross margins may not be comparable to
those
of other entities, since some entities include all of the costs
related to their distribution network in cost of sales and others
like you exclude a portion of them from gross margin, including
them
instead in a line item, such as selling, general and
administrative
expenses.
Revenue Recognition, page 13
9. You disclose that revenues are recognized when products are
shipped to customers. Please disclose in your revenue recognition
policy whether your stated shipping terms are FOB shipping point
or
FOB destination pursuant to your sales agreements with customers.
In
addition, please disclose whether your sales agreements contain
right
of inspection or acceptance provisions and whether you replace
goods
damaged or lost in transit. Even if your sales agreements state
that
title passes upon shipment, customer acceptance provisions or a
history of your replacing goods damaged or lost in transit may
also
make the recognition of revenue upon delivery to and acceptance by
the customer more appropriate. See the Interpretive Response to
Question 3 of SAB Topic 13:A.3.b.
Stock Based Compensation, page 14
10. We note that you did not adopt fair value accounting for
employee
stock options under SFAS 123. Regardless of the method used to
account for stock-based employee compensation arrangements, your
financial statements should include the disclosures specified in
paragraphs 46 to 48 of SFAS 123 in the Significant Accounting
Policies and Procedures note. See SFAS 123, paragraph 45, as
amended
by SFAS 148 for guidance.
Note 2. Balance Sheet Components, page 14
11. Please breakout the machinery and equipment line item into
smaller and more meaningful components. In addition, we see from
page 13 that the range of useful lives for your machinery and
equipment of 3 to 20 years is very broad. Please separately
disclose
the range of useful lives for each new category presented. For
categories that still have very broad useful lives, you should
separately discuss the types of assets that fall in each part of
the
range.
Note 6. Earnings Per Share, page 16
12. In accordance with SFAS 128, paragraph 40c, please disclose
the
securities that could potentially dilute basic EPS in the future
that
were not included in the computation of diluted EPS because to do
so
would have been antidilutive for the periods presented.
Note 10. Segment Information, page 18
13. Disclose segment tax expense information pursuant to SFAS 131,
paragraph 27, or explain to us why it is not necessary to do so.
Form 10-Q for the quarter ended September 30, 2004
General
14. Please address the comments above in your interim filings as
well.
* * * *
Please respond to these comments within 10 business
days,
or tell us when you will provide us with a response. Please
provide
us with a supplemental response letter that keys your responses to
our comments and provides any requested supplemental information.
Detailed letters greatly facilitate our review. Please file your
supplemental response on EDGAR as a correspondence file. Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in their filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
If you have any questions regarding these comments, please
direct them to Marie Trimeloni, Staff Accountant, at (202) 942-
1860
or, in her absence, to the undersigned at (202) 942-1774.
Sincerely,
Rufus Decker
Accounting Branch Chief
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Mr. Cornelius C. Vanderstar
January 26, 2005
Page 5 of 5
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0510
DIVISION OF
CORPORATION FINANCE