INTERNATIONAL
ALUMINUM
CORPORATION
1994
ANNUAL
REPORT
COMPANY PROFILE
INTERNATIONAL ALUMINUM CORPORATION is an integrated manufacturer
and supplier
of a broad line of quality aluminum, wood, vinyl and glass
products. The
Company is headquartered in Monterey Park, California and has
approximately
1,900 employees. Operations are conducted through fourteen
domestic
subsidiaries and one foreign subsidiary.
COMMERCIAL PRODUCTS - Curtain walls, window walls, storefront
framing,
commercial windows, entrance doors and frames, interior doors and
frames and
interior glazing systems.
RESIDENTIAL PRODUCTS - Aluminum, wood, vinyl and composite
products including
sliding windows, single hung windows, double hung windows,
casement windows,
garden windows, bay and bow windows, special configuration
windows, louvre
windows, storm sash, patio doors, wardrobe mirror doors, tub
enclosures and
showers.
ALUMINUM EXTRUSIONS - Mill finish, anodized, painted and
fabricated extrusions.
GLASS PRODUCTS - Distinctive lines of glass furniture, modular
display
systems, tempering, etching and fabrication of flat glass.
TABLE OF 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
Consolidated Financial Statements
6
Notes to Consolidated Financial Statements
10
Quarterly Stock Information
14
Report of Independent Accountants
15
Corporate Information
16
List of Subsidiaries
17
FINANCIAL HIGHLIGHTS
Fiscal Years Ended June 30, 1994, 1993 and 1992
1994 1993 1992
Net sales
$174,773,000 $152,195,000 $158,323,000
Income from operations $
11,128,000 $ 4,148,000 $ 860,000
Net income $
8,795,000 $ 3,602,000 $ 876,000
Per Share Data:
Net income
$2.08 $ .85 $ .21
Dividends
$1.00 $1.00 $1.00
/TABLE
TO OUR SHAREHOLDERS
As fiscal 1994 unfolded we experienced progressive improvement in
most of our
markets. Construction activity of all types accelerated
throughout much of
the United States as the year progressed with the only
significant exception
being here in California. While we received some minimal local
benefit from
reconstruction activity related to the January earthquake, the
quake's
greatest effect was to add to California's already major economic
woes and
further dampen the State's already lagging emergence from the
recession.
Since historically roughly 45 percent of our revenues have been
derived from
construction related activities in California, the slow recovery
here has
somewhat dampened our overall rebound from the market stagnation
of the past
several years. Notwithstanding the above, we are generally
satisfied with
the progress made during the past year. On a revenue increase of
15 percent,
we were able to more than double net income from operations to
$1.74 per
share. While this is still far short of that recorded in 1989
and 1990, we
feel it represents acceptable achievement and supports the moves
which we
have made to adapt to vastly different market conditions.
The resurgence of our Commercial Products Group contributed
significantly to
our improved profitability. Not only did this Group generate
dramatically
improved earnings but the increased volume of aluminum extrusions
channeled
through it helped both of our extrusion plants to return to a
profitable
position. The conversion of our eastern United States Aluminum
facilities
into warehouse service centers has further proven to have been
the right
move. We are currently in the process of opening a satellite
storefront
warehouse facility in Houston which follows the one opened in
mid-year in
Denver. We are planning to establish additional outlets in the
East and
Southeast in the months to come.
Our aluminum extrusion and finishing plants in California and
Texas both
achieved remarkable turnarounds. They are extremely dependent on
heavy
sustained volume due to the large fixed costs with which they are
burdened.
Improved intercompany purchases combined with major increases in
outside
volume at both plants was the primary reason for this Group's
improved
results. Also as a result of the extrusion industry throughout
the United
States operating at close to full capacity and with extended lead
times, we
have found it possible to partially restore eroded margins.
The lack of recovery of our Residential Products Group has been a
disappointment. This Group is heavily dependent on the
California building
market which, while up slightly, still badly lags the rest of the
Country.
Conversely, Arizona is experiencing a true building boom and our
plant in
Phoenix is doing extremely well. As previously announced, we
will be
breaking ground there shortly on a new 100,000 square foot plant
to enable
us to better serve this expanding market.
Ragland Manufacturing, our interior door frame and wall system
subsidiary
headquartered in Houston, continued to do well. During the year
Ragland,
Mitsubishi Kasei and Lasco Systems of Dallas co-developed an
advanced "clean
room" product line which shows good promise for use in the
electronic
component and pharmaceutical industries.
Results from both International California Glass and
International Carolina
Glass showed marked improvement. These glass fabricating
companies are
redirecting their marketing efforts more in the direction of the
relatively
stable display industry and away from dependence on the somewhat
trendy heavy
glass furniture business. Our venture into the retail factory
outlet mall
business in South Carolina was less than a resounding success and
has been
dropped.
Eland-Brandt in Amsterdam had another poor year. Construction
activity in
Europe remains extremely soft and Eland-Brandt's ability to
downsize and
reduce its labor cost is constrained by government regulations.
Finally,
after eight months of negotiations, it has been given
authorization to lay
off approximately ten percent of its workforce. In March we sold
our metal
distribution company in Tijuana, Mexico to our resident manager.
We have an
ongoing supply agreement with the new management. As a result,
our sales
volume into that market should be essentially unaffected.
Financially the Company remains in good shape. Working capital
at yearend
stood at $63.4 million while total shareholders' equity increased
to $103.4
million. At June 30 our current ratio was 4.2 to 1 and our long
term debt
had declined to $1.1 million. Early in the year the mandatory
adoption of
Financial Accounting Standards No. 109 resulted in a one-time tax
benefit of
$1,430,000 or $.34 per share.
Our major task in the coming year will be to attempt to return
our California
residential operations to their former levels of income
contribution. To
this end, new product development and redirected marketing
efforts are
currently under way. While in the past year we made some
progress in the
direction of non-construction diversification, it will be our
intent to
continue this search in the year to come in order to reduce our
heavy
dependency on cyclical construction markets.
Cornelius C. Vanderstar John P.
Cunningham
Chairman President
September 2, 1994
SELECTED FINANCIAL DATA
Year Ended June 30 1994 1993
1992 1991 1990
Sales and Earnings -
Building products
Commercial $ 66,843,000 $ 60,340,000 $
62,179,000 $ 73,552,000 $ 93,133,000
Residential 52,081,000 49,308,000
52,696,000 55,749,000 70,769,000
Extrusions 38,616,000 28,585,000
28,963,000 30,397,000 32,420,000
157,540,000 138,233,000
143,838,000 159,698,000 196,322,000
Glass products 17,233,000 13,962,000
14,485,000 14,657,000 15,831,000
Total net sales $174,773,000 $152,195,000
$158,323,000 $174,355,000 $212,153,000
Income before
accounting change $ 7,365,000 $ 3,602,000 $
876,000 $ 6,243,000 $ 15,772,000
Accounting change 1,430,000
Net income $ 8,795,000 $ 3,602,000 $
876,000 $ 6,243,000 $ 15,772,000
Per common share:
Income before
accounting change $1.74 $ .85
$ .21 $1.46 $3.52
Accounting change .34
Net income $2.08 $ .85
$ .21 $1.46 $3.52
Dividends declared $1.00 $1.00
$1.00 $1.00 $1.00
Financial Data at Year End -
Working capital $ 63,452,000 $ 61,447,000 $
61,044,000 $ 61,655,000 $ 63,507,000
Total assets 129,030,000 123,938,000
122,286,000 129,377,000 134,701,000
Long-term debt 1,103,000 1,665,000
2,226,000 2,787,000 3,355,000
Shareholders' equity 103,435,000 98,947,000
99,427,000 102,188,000 105,039,000
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Significant Changes in Results of Operations
1994 vs. 1993
Fiscal year 1994 net sales increased by $22,578,000 or 14.8% from
the fiscal
year 1993 level. This increase is comprised of a $24,165,000
increase in
domestic sales which was offset by a $1,587,000 decrease in
foreign sales.
The domestic sales increase reflects improvements posted by each
of the
Company's domestic product groups. The most significant domestic
increases
were posted by the Aluminum Extrusion Group and the Commercial
Products Group
which reflect the upswing in activity in the manufacturing and
commercial
construction segments of the economy.
Gross profit was 29.2% of sales in 1994 as compared with 27.9% in
1993,
primarily reflecting the production cost efficiencies in the
Aluminum
Extrusion and Commercial Products lines resulting from
significantly increased
volume. This increase was offset by increases in production
costs at the two
California residential products companies necessitated by the
introduction of
a new line of more energy efficient products required to meet
stringent energy
standards mandated by the California Energy Commission.
Selling, general and administrative expenses were 22.8% of sales
in 1994 as
compared with 25.2% in 1993. Expenses in the current year have
risen by
$1,548,000 primarily due to additional distribution costs
associated with the
increased volumes of business.
The decrease in investment income relates to significant
decreases in the
market values of interest rate sensitive securities during the
year.
1993 vs. 1992
Net sales for fiscal 1993 decreased by $6,128,000 or 3.9% from
net sales of
fiscal 1992. This decrease consists of a $3,582,000 decrease in
domestic sales
and a $2,546,000 decrease in foreign sales. The overall sales
decrease
reflects the continued stagnant economies of the United States
and Western
Europe. The prolonged domestic recession has stifled the demand
for
residential and commercial construction and has created an
oversupply of
buildings across the United States.
Cost of sales decreased to 72.1% of sales in 1993 as compared
with 74.9% in
1992. This decrease is primarily related to two factors. The
Aluminum
Extrusion Group decreased costs of production through operating
efficiencies
attained from enhanced production procedures. The Commercial
Products Group
decreased their costs of sales through a restructuring of the
eastern plants
into warehouse service centers supplied by the Texas plant.
Selling, general and administrative expenses in 1993 were
$504,000 below
those of 1992. This decrease is primarily related with decreased
selling
costs due to reduced expenditures for advertising.
The increase in investment income directly relates to
significantly
increased rates of return on the Company's investable funds.
Liquidity and Capital Resources
Working capital at June 30, 1994 was $63,452,000, an increase of
$2,005,000
or 3.3% over the June 30, 1993 level and an increase of
$2,408,000 or 3.9%
over the June 30, 1992 level. The ratio of current assets to
current
liabilities was 4.2 at the end of 1994 compared to 4.6 at the end
of 1993 and
5.2 at the end of 1992. Thus, the Company continues to be in
excellent
position to meet its short-term requirements. Funds in excess of
current
operating requirements are invested in marketable securities and
short-term
interest-bearing instruments.
Capital expenditures for property, plant and equipment of
approximately
$4,559,000 in 1994, $3,479,000 in 1993 and $2,240,000 in 1992
were financed
through internal cash flow. The Company's projected capital
expenditures
for fiscal 1995 include $3,000,000 for scheduled expansion of
production
capacity in addition to the normal annual expenditures for
replacement items.
The Company anticipates financing these expenditures through
internal cash flow.
The Company had $10,000,000 in available credit at the end of
1994 under a
short-term borrowing arrangement witha bank.
CONSOLIDATED BALANCE SHEETS
June 30, 1994 and 1993
Assets
1994 1993
Current assets:
Cash
$ 5,973,000 $ 4,847,000
Short-term investments
9,727,000 14,407,000
Accounts receivable, less reserve of
$815,000 in 1994 and $673,000 in 1993
34,715,000 29,620,000
Unbilled receivables
1,055,000 1,441,000
Inventories
28,741,000 25,942,000
Prepaid expenses
1,580,000 1,529,000
Future income tax benefits
1,326,000 827,000
Total current assets
83,117,000 78,613,000
Property, plant and equipment, at cost:
Land
7,252,000 6,925,000
Buildings and improvements
27,915,000 27,766,000
Machinery and equipment
52,754,000 49,878,000
87,921,000 84,569,000
Less - Accumulated depreciation
48,133,000 44,528,000
39,788,000 40,041,000
Other assets:
Costs in excess of net assets of purchased businesses
4,972,000 5,105,000
Other
1,153,000 179,000
6,125,000 5,284,000
$129,030,000 $123,938,000
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
CONSOLIDATED BALANCE SHEETS
June 30, 1994 and 1993
Liabilities and Shareholders' Equity
1994 1993
Current liabilities:
Accounts payable
$ 8,449,000 $ 7,860,000
Accrued liabilities
8,877,000 8,720,000
Current portion of long-term debt
562,000 422,000
Income taxes payable
1,777,000 164,000
Total current liabilities
19,665,000 17,166,000
Long-term debt
1,103,000 1,665,000
Other liabilities:
Deferred income taxes
4,466,000 5,827,000
Other
361,000 333,000
4,827,000 6,160,000
Commitments (Note 7)
Shareholders' equity:
Capital Stock -
Preferred, $10.00 par value -
Authorized - 500,000 shares
Outstanding - none
Common, $1.00 par value -
Authorized - 10,000,000 shares
Outstanding - 4,230,780 shares in 1994
and 4,220,463 shares in 1993
4,704,000 4,694,000
Paid-in capital
3,359,000 3,230,000
Retained earnings, including cumulative
translation adjustment of $2,228,000
in 1994 and $2,446,000 in 1993
95,372,000 91,023,000
103,435,000 98,947,000
$129,030,000 $123,938,000
/TABLE
CONSOLIDATED STATEMENTS OF INCOME
For the years ended June 30, 1994, 1993 and 1992
1994 1993 1992
Net sales
$174,773,000 $152,195,000 $158,323,000
Cost of sales
123,725,000 109,675,000 118,587,000
Gross profit
51,048,000 42,520,000 39,736,000
Selling, general and administrative expenses
39,920,000 38,372,000 38,876,000
Income from operations
11,128,000 4,148,000 860,000
Investment income
479,000 1,428,000 771,000
Interest expense
(102,000) (134,000) (225,000)
Income before income taxes and cumulative effect of
accounting change
11,505,000 5,442,000 1,406,000
Provision for income taxes
4,140,000 1,840,000 530,000
Income before cumulative effect of accounting change
7,365,000 3,602,000 876,000
Cumulative effect of accounting change for income taxes
1,430,000
Net income $
8,795,000 $ 3,602,000 $ 876,000
Earnings per common share:
Income before cumulative effect of accounting change
$1.74 $.85 $.21
Cumulative effect of accounting change
.34
Net income
$2.08 $.85 $.21
/TABLE
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended June 30, 1994, 1993 and 1992
Common Stock
Number
Paid-in Retained
of Shares Amount
Capital Earnings Total
Balance, June 30, 1991 4,204,939 $4,678,000
$3,092,000 $94,418,000 $102,188,000
Exercise of stock options 13,484 14,000
115,000 129,000
Translation adjustment
448,000 448,000
Cash dividends
(4,214,000) (4,214,000)
Net income
876,000 876,000
Balance, June 30, 1992 4,218,423 4,692,000
3,207,000 91,528,000 99,427,000
Exercise of stock options 2,040 2,000
23,000 25,000
Translation adjustment
113,000 113,000
Cash dividends
(4,220,000) (4,220,000)
Net income
3,602,000 3,602,000
Balance, June 30, 1993 4,220,463 4,694,000
3,230,000 91,023,000 98,947,000
Exercise of stock options 10,317 10,000
129,000 139,000
Translation adjustment
(218,000) (218,000)
Cash dividends
(4,228,000) (4,228,000)
Net income
8,795,000 8,795,000
Balance, June 30, 1994 4,230,780 $4,704,000
$3,359,000 $95,372,000 $103,435,000
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended June 30, 1994, 1993 and 1992
1994 1993 1992
Cash flows from operating activities:
Net income $
8,795,000 $ 3,602,000 $ 876,000
Adjustments for noncash transactions:
Depreciation and amortization
4,696,000 4,607,000 4,790,000
Change in deferred income taxes
(699,000) (94,000) (110,000)
Change in accounting for income taxes
(1,430,000)
Changes in assets and liabilities:
Receivables
(4,883,000) 743,000 1,376,000
Inventories
(2,846,000) (1,552,000) 5,086,000
Prepaid expenses and other
(1,020,000) 40,000 586,000
Accounts payable
646,000 1,842,000 (3,435,000)
Accrued liabilities and other
221,000 1,265,000 (666,000)
Income taxes payable
1,871,000 (293,000) 441,000
Net cash provided by operating activities
5,351,000 10,160,000 8,944,000
Cash flows from investing activities:
Capital expenditures
(4,559,000) (3,479,000) (2,240,000)
Proceeds from sales of capital assets
170,000 317,000 412,000
Net cash used in investing activities
(4,389,000) (3,162,000) (1,828,000)
Cash flows from financing activities:
Repayment of long-term debt
(422,000) (700,000) (707,000)
Exercise of stock options
139,000 25,000 129,000
Dividends paid to shareholders
(4,228,000) (4,220,000) (4,214,000)
Net cash used in financing activities
(4,511,000) (4,895,000) (4,792,000)
Effect of exchange rate changes on cash
(5,000) (100,000) (50,000)
Net change in cash and short-term investments
(3,554,000) 2,003,000 2,274,000
Cash and short-term investments at beginning of year
19,254,000 17,251,000 14,977,000
Cash and short-term investments at end of year
$15,700,000 $19,254,000 $17,251,000
<FN>
See accompanying notes to consolidated financial statements.
/TABLE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Significant accounting policies and procedures -
(a) Principles of consolidation
The accompanying consolidated financial statements include the
accounts of
the Company and all its domestic and foreign subsidiaries. All
significant
intercompany transactions and accounts have been eliminated in
consolidation.
To expedite reporting, the Company follows the practice of
consolidating its
foreign subsidiary using a year ending one month prior to the
June 30th year
end of its domestic subsidiaries.
(b) Short-term Investments
Short-term investments include preferred stocks, certificates of
deposit and
money market funds.
During fiscal year 1993, the Company adopted Statement of
Financial
Accounting Standards No. 115 - Accounting For Certain Investments
in Debt and
Equity Securities. The preferred stocks are classified as
"Trading
Securities"; consequently, unrealized holding gains/losses are
being
currently recognized. Investment income includes unrealized
holding losses of
$581,000 in 1994 and unrealized holding gains of $487,000 in
1993.
(c) Long-term contracts
Certain sales of the Company's Netherlands subsidiary, Eland-
Brandt, B.V.,
are made under contracts covering extended periods of time.
These contracts
are accounted for by the percentage-of-completion method on the
basis of total
costs of shipments compared to total estimated costs. Costs and
estimated
earnings in excess of billings on uncompleted contracts are
classified as
"Unbilled receivables". It is anticipated that all such
receivables will be
collected within one year.
(d) Inventories
Inventories, stated at the lower of cost (first-in, first-out) or
market, are
summarized as follows:
1994
1993
Raw materials $21,415,000
$18,424,000
Work in process 2,332,000
3,374,000
Finished goods 4,994,000
4,144,000
$28,741,000
$25,942,000
(e) Depreciation and amortization policies
Depreciation and amortization are provided over the estimated
useful lives of
the assets or the remaining terms of the leases, whichever is
shorter, using
the straight-line method for financial reporting purpose
accelerated methods
for tax purposes.
The excess of the purchase price over the underlying book value
of the
companies acquired is classified as "Costs in excess of net
assets of purchased
businesses." The related amounts of $6,095,000 are generally
being amortized
using the straight-line method over periods of up to forty years.
Accumulated
amortization totalled $1,123,000 at June 30, 1994 and $990,000 at
June 30, 1993.
Note 2. Earnings per common share -
Earnings per common share have been computed based upon the
weighted average
number of shares outstanding; 4,226,733 shares in 1994, 4,219,401
shares in
1993 and 4,211,372 shares in 1992.
Note 3. Statement of Cash Flows -
All short-term investments qualify as cash equivalents.
Cash payments for interest were $81,000 in 1994, $168,000 in 1993
and
$246,000 in 1992. Cash payments for income taxes were $2,957,000
in 1994,
$2,214,000 in 1993 and $196,000 in 1992.
Note 4. Short-term debt and line of credit -
The Company has a loan agreement with a domestic bank providing
for a
$10,000,000 unsecured short-term line of credit at 55 basis
points below the
bank's prevailing prime interest rate (6.70 percent at June 30,
1994). There
was no amount outstanding under the agreement at June 30, 1994.
Note 5. Accrued Liabilities -
Components of accrued liabilities at June 30, 1994 and 1993 are:
1994
1993
Wages and compensated absences $4,666,000
$3,770,000
Taxes, other than income taxes 1,411,000
1,211,000
Insurance 752,000
1,928,000
Dividends 1,058,000
1,055,000
Other 990,000
756,000
$8,877,000
$8,720,000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6. Long-term debt -
Long-term debt consists primarily of an Industrial Development
Revenue Bond
that financed the development of two plant facilities in Rock
Hill, South
Carolina. The bond is secured by first mortgage liens on the two
properties.
Interest payments, at 73% of the floating prime rate, and
principal
installments of $138,000 are paid quarterly.
Future payments due on the long-term debt total $562,000 for
1995, $562,000
for 1996 and $541,000 for 1997.
Note 7. Commitments -
The Company is committed under lease agreements expiring at
various dates to
1998. Certain of the leases have renewal options for periods
ranging from two
to ten 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 for the three years ended June 30,
1994 was
$645,000 in 1994, $606,000 in 1993 and $555,000 in 1992. Real
property
rental commitments for the next three fiscal years are $574,000
in 1995,
$291,000 in 1996 and $108,000 in 1997.
Note 8. Stock options -
At June 30, 1994 there were 572,676 common shares reserved and
available for
issuance to certain executive and managerial employees under the
Company's
Stock Option Plans. All options outstanding under the plans are
immediately
exercisable and expire in fiscal year 1998.
At June 30, 1994 there were 72,676 incentive stock options
outstanding.
Payment upon exercise may be either cash or the delivery of
Company common
stock of equivalent value. Shares surrendered by optionees
(2,133 shares in
1994 and 900 in 1993) are immediately retired.
The transactions for shares under options for the two years ended
June 30, 1994 were:
Option price
Number of
per share
shares
Outstanding, June 30, 1992 $15.38
88,066
Exercised 15.38
( 2,940)
Outstanding, June 30, 1993 15.38
85,126
Exercised 15.38
(12,450)
Outstanding, June 30, 1994 $15.38
72,676
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9. Income taxes -
In July 1993, the Company adopted Statement of Financial
Accounting Standards
No. 109 (FAS 109), Accounting for Income Taxes. The adoption of
FAS 109
changed the Company's method of accounting for income taxes
deferral method to
an asset and liability approach which requires the recognition of
deferred
tax liabilities and assets for the expected future consequences
of temporary
differences between the carrying amounts for financial reporting
purposes and
the tax bases of assets and liabilities. As of July 1, 1993, the
Company
recorded a tax benefit of $1,430,000 or $.34 per share, which
represents the
net decrease to the deferred tax liability as of that date. This
amount has
been reflected in current year net income as the cumulative
effect of a change
in accounting principle.
The components of income before United States and foreign income
taxes are:
1994 1993 1992
Domestic
$12,210,000 $6,624,000 $1,084,000
Foreign
(705,000) (1,182,000) 322,000
$11,505,000 $5,442,000 $1,406,000
The provision for income taxes is comprised of the following:
1994 1993 1992
Current -
Federal
$ 4,142,000 $1,978,000 $ 428,000
State
770,000 333,000 79,000
Foreign
(73,000) (377,000) 133,000
4,839,000 1,934,000 640,000
Deferred -
Federal
(588,000) (70,000) (77,000)
State
(73,000) 20,000 (31,000)
Foreign
(38,000) (44,000) (2,000)
(699,000) (94,000) (110,000)
$ 4,140,000 $1,840,000 $ 530,000
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:
1994 1993 1992
Taxes on book income at statutory rate
$ 3,912,000 $1,850,000 $ 478,000
Increases (decreases) resulting from:
State income taxes, net of Federal income tax benefit
460,000 233,000 32,000
Dividend exclusion
(195,000) (134,000) (7,000)
Foreign tax credit carryforward
(157,000) (129,000)
Other
120,000 20,000 27,000
Provision for income taxes
$ 4,140,000 $1,840,000 $ 530,000
/TABLE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 which comprise the
deferred tax assets and liabilities at June 30, 1994 are as
follows:
Accounts receivable
$ 316,000
Inventory
309,000
Accrued liabilities
623,000
Other
78,000
Net deferred tax asset
$1,326,000
Property, plant and equipment
$4,389,000
Other
77,000
Net deferred tax liability
$4,466,000
No provision for U.S. taxes has been made for undistributed
earnings of
foreign subsidiaries since it is expected that the major portion
of such
earnings will continue to be reinvested for an indefinite period
of time.
Note 10. Segment and geographical information -
The Company is a vertically integrated manufacturer of building
products with
international operations in The Netherlands.
Sales, net income and identifiable assets for domestic and
foreign operations for the last three years are as
follows:
1994 1993 1992
Sales:
United States
$163,238,000 $139,073,000 $142,655,000
Foreign
11,535,000 13,122,000 15,668,000
$174,773,000 $152,195,000 $158,323,000
Net income:
United States $
9,390,000 $ 4,360,000 $ 684,000
Foreign
(595,000) (758,000) 192,000
$
8,795,000 $ 3,602,000 $ 876,000
Identifiable assets:
United States
$121,127,000 $114,799,000 $112,200,000
Foreign
7,903,000 9,139,000 10,086,000
$129,030,000 $123,938,000 $122,286,000
<FN>
The Company's equity investment in its consolidated foreign
subsidiary was $5,254,000 at June 30, 1994.
/TABLE
Note 11. Unaudited quarterly financial information -
Quarterly financial information for the fiscal years ended June
30, 1994 and 1993 is summarized as follows:
First Second
Third Fourth Fiscal
Quarter Quarter
Quarter Quarter Year
1994
Net sales $42,132,000 $44,539,000
$40,426,000 $47,676,000 $174,773,000
Cost of sales 30,853,000 32,281,000
27,857,000 32,734,000 123,725,000
Net income 2,629,000 1,526,000
1,528,000 3,112,000 8,795,000
Earnings per share .62 .36
.36 .74 2.08
1993
Net sales $40,706,000 $38,189,000
$33,642,000 $39,658,000 $152,195,000
Cost of sales 29,374,000 27,650,000
24,537,000 28,114,000 109,675,000
Net income (loss) 1,234,000 896,000
(126,000) 1,598,000 3,602,000
Earnings (loss) per share .29 .21
(.03) .38 .85
<FN>
During the first quarter of fiscal 1994, the Company adopted
Statement of
Financial Accounting Standards No. 109 - Accounting for Income
Taxes which
increased net income by $1,430,000 or $.34 per share.
During the third quarter of fiscal 1994, the Company sold its
International
Aluminum, S. de R.L. de C.V.subsidiary. This operation, which
was located in
Tijuana, Mexico, was sold for its approximate net book carrying
value.
QUARTERLY STOCK INFORMATION
1994
1993
High Low
Dividend High Low Dividend
First Quarter $24 1/2 $22 1/8 $
.25 $20 3/8 $18 3/8 $ .25
Second Quarter 24 3/8 21 5/8
.25 21 1/2 19 1/8 .25
Third Quarter 28 23 5/8
.25 24 20 5/8 .25
Fourth Quarter 26 3/4 23 7/8
.25 23 7/8 23 1/4 .25
Year $28 $21 5/8
$1.00 $24 $18 3/8 $1.00
/TABLE
REPORT OF INDEPENDENT ACCOUNTANTS
P
PRICE WATERHOUSE LLP
W
To the Board of Directors and Shareholders of
International Aluminum Corporation
In our opinion, the accompanying consolidated balance
sheets and the
related consolidated statements of income, shareholders'
equity and
cash flows present fairly, in all material respects, the
financial
position of International Aluminum Corporation and its
subsidiaries at
June 30, 1994 and 1993, and the results of their
operations and their
cash flows for each of the three years in the period ended
June 30, 1994,
in conformity with generally accepted accounting
principles. 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 generally accepted
auditing
standards which require that we plan and perform the audit
to obtain
reasonable assurance about whether the financial
statements are free
of material misstatement. An audit includes examining, on
a test basis,
evidence supporting the amounts and disclosures in the
financial
statements, assessing the accounting principles used and
significant
estimates made by management, and evaluating the overall
financial
statement presentation. We believe that our audits
provide a reasonable
basis for the opinion expressed above.
As discussed in Note 9 to the consolidated financial
statements, the
Company changed its method of accounting for income taxes
during the
year ended June 30, 1994.
PRICE WATERHOUSE
400 South Hope Street
Los Angeles, CA 90071-2889
August 17, 1994
CORPORATE INFORMATION
DIRECTORS OFFICERS
Cornelius C. Vanderstar John P. Cunningham
Chairman of the Board President
John P. Cunningham Hugh E. Curran
Vice President - Sales
Hugh E. Curran
David C. Treinen
David C. Treinen Vice President -
Finance; Secretary
Joel F. McIntyre Ronald L. Rudy
Partner in the Law Firm of Vice President -
Manufacturing
McIntyre & Lubeck
Mitchell K. Fogelman
Alexander van de Pol Asst. Vice President -
Finance;
Retired President and Controller
Chairman of the Board of
Commonwealth Metals-Pacific Michael S. Snodgrass
Asst. Vice President -
Personnel &
Donald J. Willfong Industrial Relations
Executive Vice President of
Sutro & Co. Roland A. Young
Treasurer; Assistant
Secretary
STOCK TRANSFER AGENT AND REGISTRAR
Continental Stock Transfer
2 Broadway
New York, N.Y. 10004
(212) 509-4000
ANNUAL SHAREHOLDERS
MEETING
STOCK EXCHANGE LISTINGS 2 p.m., Thursday,
October 27, 1994
New York Stock Exchange International
Extrusion Corporation
Pacific Stock Exchange 1000 Meridian Avenue
Trading Symbol - IAL Alhambra, California
91803
SUBSIDIARIES BY PRODUCT GROUP
COMMERCIAL - RESIDENTIAL -
United States Aluminum Corporation International
Window Corporation
Vernon, California South
Gate, California
United States Aluminum Corporation-Illinois International
Window-Northern California
Bedford Park, Illinois Hayward,
California
United States Aluminum Corporation-Texas International
Window-Arizona, Inc.
Waxahachie, Texas Phoenix,
Arizona
Denver, Colorado
Maestro
Products, Inc.
United States Aluminum Corporation-Carolina Riverside,
California
Rock Hill, South Carolina
Eland-Brandt,
B.V.
United States Aluminum Corporation-Northeast Amsterdam,
The Netherlands
Bridgeport, New Jersey
Ragland Manufacturing Company, Inc.
Houston, Texas
Dallas, Texas
Waxahachie, Texas
ALUMINUM EXTRUSIONS - GLASS -
International Extrusion Corporation International
California Glass Corporation
Alhambra, California South
Gate, California
International Extrusion Corporation-Texas International
Carolina Glass Corporation
Waxahachie, Texas Rock Hill,
South Carolina
767 Monterey Pass Road
Monterey Park, California 91754
(213) 264-1670