SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For quarter ended September 30, 2000 Commission File Number 1-7256 INTERNATIONAL ALUMINUM CORPORATION (Exact name of Registrant as specified in its charter) California 95-2385235 (State of incorporation) (I.R.S. Employer No.) 767 Monterey Pass Road Monterey Park, California 91754 (323) 264-1670 (Principal executive office) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No At November 1, 2000 there were 4,244,794 shares of Common Stock outstanding. Page 1 of 10 Pages INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES INDEX Page PART I. Financial Information Consolidated Balance Sheets - September 30, 2000 and June 30, 2000 3 Consolidated Statements of Income - three months ended September 30, 2000 and 1999 4 Consolidated Statements of Cash Flows - three months ended September 30, 2000 and 1999 5 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Signatures 10 - - 2 - PART I INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Unaudited Audited Assets Sept. 30, 2000 June 30, 2000 Current assets: Cash and cash equivalents $ 1,586,000 $ 1,678,000 Accounts receivable, net 37,906,000 39,971,000 Inventories 38,075,000 43,384,000 Prepaid expenses and deposits 3,460,000 3,114,000 Future income tax benefits 1,113,000 1,113,000 Total current assets 82,140,000 89,260,000 Property, plant and equipment, at cost 112,067,000 111,149,000 Accumulated depreciation (56,839,000) (55,455,000) Net property, plant and equipment 55,228,000 55,694,000 Other assets: Costs in excess of net assets of purchased businesses 9,386,000 9,533,000 Other 115,000 98,000 Total other assets 9,501,000 9,631,000 $146,869,000 $154,585,000 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 8,570,000 $ 6,503,000 Accrued liabilities 8,522,000 9,452,000 Advances payable to banks - 9,470,000 Income taxes payable 681,000 249,000 Total current liabilities 17,773,000 25,674,000 Deferred income taxes 4,585,000 4,585,000 Total liabilities 22,358,000 30,259,000 Shareholders' equity 124,511,000 124,326,000 $146,869,000 $154,585,000 <FN> See accompanying notes to consolidated financial statements. - - 3 - Unaudited INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, 2000 1999 Net sales $53,784,000 $58,741,000 Cost of sales 39,689,000 41,165,000 Gross profit 14,095,000 17,576,000 Selling, general and administrative expenses 11,501,000 14,281,000 Income from operations 2,594,000 3,295,000 Interest (income) expense, net 141,000 (5,000) Income from continuing operations before income taxes 2,453,000 3,300,000 Provision for income taxes 920,000 1,329,000 Income from continuing operations 1,533,000 1,971,000 Loss from discontinued operations - 1,000 Net income $ 1,533,000 $ 1,972,000 Basic and diluted EPS: Continuing operations $ .36 $ .46 Discontinued operations - - $ .36 $ .46 Shares used to compute EPS: Basic 4,244,794 4,291,794 Diluted 4,244,981 4,291,794 Cash dividends per share $.30 $.30 <FN> See accompanying notes to consolidated financial statements. - - 4 - Unaudited INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended September 30, 2000 1999 Cash flows from operating activities: Net income $ 1,533,000 $ 1,972,000 Adjustments for noncash transactions: Depreciation and amortization 1,868,000 1,778,000 Changes in assets and liabilities: Receivables 2,065,000 (2,522,000) Inventories 5,309,000 602,000 Prepaid expenses and deposits (363,000) 733,000 Accounts payable 2,067,000 (393,000) Accrued liabilities (930,000) (1,594,000) Income taxes payable 432,000 1,337,000 Net cash provided by operating activities 11,981,000 1,913,000 Cash flows from investing activities: Capital expenditures (1,373,000) (3,708,000) Proceeds from sales of capital assets 43,000 61,000 Net cash used in investing activities (1,330,000) (3,647,000) Cash flows from financing activities: Dividends paid to shareholders (1,273,000) (1,287,000) Net borrowing under lines of credit (9,470,000) 3,257,000 Net cash provided by financing activities (10,743,000) 1,970,000 Net change in cash and cash equivalents (92,000) 236,000 Cash and cash equivalents at beginning of period 1,678,000 2,269,000 Cash and cash equivalents at end of period $ 1,586,000 $ 2,505,000 <FN> See accompanying notes to consolidated financial statements. - - 5 - Unaudited INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Basis of Presentation In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which consist solely of normal recurring adjustments unless otherwise disclosed) necessary to present fairly, in all material respects, its financial position as of September 30, 2000 and June 30, 2000, and the results of operations and cash flows for the three month periods ended September 30, 2000 and 1999. The results of operations for the three month periods ended September 30, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report on Form 10-K. Comprehensive Income Comprehensive income, defined as net income and other comprehensive income, for the first quarters ended September 30, 2000 and 1999 was $1,458,000 and $1,945,000, respectively. Other comprehensive income includes foreign currency translation adjustments recorded directly in shareholders' equity. Balance Sheet Components Sept. 30, 2000 June 30, 2000 Inventories, lower of FIFO Cost or Market Raw materials $ 32,276,000 $ 36,693,000 Work in process 1,610,000 2,054,000 Finished goods 4,189,000 4,637,000 $ 38,075,000 $ 43,384,000 Shareholders' Equity Common stock $ 4,765,000 $ 4,765,000 Paid-in capital 4,123,000 4,123,000 Retained earnings 115,738,000 115,478,000 Accumulated other comprehensive income (115,000) (40,000) $124,511,000 $124,326,000 - - 6 - Unaudited Segment Information The following presents the Company's net sales, operating income and total assets by operating segment, reconciling to the Company's totals. All data presented in thousands of dollars. Net Sales: Three Months Ended September 30, 2000 1999 Commercial $ 27,272 $ 29,802 Residential 15,601 15,769 Aluminum Extrusion 21,840 24,951 Total Segments 64,713 70,522 Eliminations (10,929) (11,781) Total $ 53,784 $ 58,741 Operating Income (Loss): Three Months Ended September 30, 2000 1999 Commercial $ 3,027 $ 3,658 Residential 1,213 1,067 Aluminum Extrusion (226) (388) Total Segments 4,014 4,337 Eliminations 461 973 Corporate (1,881) (2,015) Total $ 2,594 $ 3,295 Total Assets: Sept. 30, June 30, 2000 2000 Commercial $ 63,939 $ 66,937 Residential 33,495 32,510 Aluminum Extrusion 38,919 		43,779 Total Segments 136,353 143,226 Corporate 10,516 11,359 Total $146,869 $154,585 - - 7 - Unaudited INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Significant Changes in Results of Operations Net sales for the first quarter ended September 30, 2000 decreased by $4,957,000 or 8.4% from the comparable quarter of the prior year. This decrease includes $2,551,000 or 8.6% posted by the Commercial Products Group and $2,187,000 or 16.5% posted by the Aluminum Extrusion Group. While the comparisons show decreases from the first quarter of the prior year, they also reflect the continued efforts to recover from the significant operational problems incurred during the second and third quarters of the prior year. Cost of sales as a percentage of net sales was 73.8% for the quarter ended September 30, 2000 as opposed to 70.1% for the comparable prior year period. This increase is largely attributable to higher material cost in the Commercial Products and Aluminum Extrusion Groups, resulting from higher cost aluminum consumption, while limited in our ability to increase selling prices due to competitive pressures. Selling, general and administrative expenses decreased by $2,780,000 or 19.5% for the quarter compared to the same quarter last year. The decreased expenses are primarily attributable to lower employment costs directly related to the aforementioned decrease in sales coupled with the prior year containing nonrecurring costs associated with realigning operating group management teams. The swing from net interest income for the prior year quarter to net interest expense in the current year quarter relates to the depletion of funds available for investment due primarily to heavy capital expenditures in the prior year. These expenditures were financed in part by utilization of a line of credit, which was repaid during the current quarter. The effective tax rate for the quarter ended September 30, 2000 was 37.5% whereas the comparable period of the prior year was 40.3%. This decrease is primarily attributable to available tax credits offsetting a smaller taxable income. - - 8 - Unaudited Liquidity and Capital Resources Working capital at September 30, 2000 stood at $64,367,000, an increase of $781,000 from June 30, 2000. The ratio of current assets to current liabilities is currently 4.6 as compared to 3.5 as of the beginning of the year. The Company's projected net capital expenditures for fiscal 2001 and related financing remain unchanged from those described in the June 30, 2000 Annual Report. The Company's domestic line of credit remains unchanged from that described in the June 30, 2000 Annual Report to Shareholders. Forward-Looking Information This report contains forward-looking statements with respect to the financial condition, results of operations and business of the Company. Such items are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. - - 9 - INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. International Aluminum Corporation (Registrant) Date: November 13, 2000 MITCHELL K. FOGELMAN Mitchell K. Fogelman Senior Vice President - Finance (Principal Financial Officer) Date: November 13, 2000 MICHAEL J. NORRING Michael J. Norring Controller (Principal Accounting Officer) - - 10 -