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 December 31, 1995 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 (213) 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 February 1, 1996 there were 4,257,880 shares of Common Stock outstanding. Page 1 of 11 Pages INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES INDEX Page Nos. PART I Financial Information Consolidated Balance Sheets - December 31, 1995 and June 30, 1995 3 Consolidated Statements of Income - three and six month periods ended December 31, 1995 and 1994 5 Consolidated Statements of Cash Flows - six months ended December 31, 1995 and 1994 6 Notes to Consolidated Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II Other Information Item 4. Submission of Matters to a Vote of Security Holders 10 Signatures 11 - 2 - PART I INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Unaudited Audited Assets Dec. 31, 1995 June 30, 1995 Current assets: Cash and cash equivalents $ 8,923,000 $ 3,550,000 Investments 2,213,000 Accounts receivable, net 34,430,000 34,877,000 Unbilled receivables 1,071,000 1,222,000 Inventories: Raw materials 28,966,000 31,002,000 Work-in-process 1,854,000 3,463,000 Finished goods 7,538,000 7,308,000 Prepaid expenses 2,201,000 2,060,000 Future income tax benefits 1,596,000 1,596,000 Total current assets 86,579,000 87,291,000 ____________ ____________ Property, plant and equipment, at cost 99,825,000 97,412,000 Accumulated depreciation (53,392,000) (52,567,000) 46,433,000 44,845,000 ____________ ____________ Other assets: Costs in excess of net assets of purchased businesses 4,772,000 4,839,000 Other 1,046,000 1,129,000 5,818,000 5,968,000 ____________ ____________ $138,830,000 $138,104,000 ____________ ____________ ____________ ____________ <FN> See accompanying notes to consolidated financial statements. - 3 - INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Unaudited Audited Liabilities and Shareholders' Equity Dec. 31, 1995 June 30, 1995 Current liabilities: Accounts payable $ 8,199,000 $ 7,820,000 Accrued liabilities 8,773,000 9,555,000 Current portion of long-term debt 422,000 423,000 Income taxes payable 586,000 1,098,000 Total current liabilities 17,980,000 18,896,000 ____________ ____________ Long-term debt 258,000 542,000 ____________ ____________ Other liabilities: Deferred income taxes 4,496,000 4,496,000 Other 390,000 399,000 4,886,000 4,895,000 ____________ ____________ Shareholders' equity 115,706,000 113,771,000 ____________ ____________ $138,830,000 $138,104,000 ____________ ____________ ____________ ____________ <FN> See accompanying notes to consolidated financial statements. - 4 - Unaudited INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Six Months Ended December 31, December 31, 1995 1994 1995 1994 Net sales $54,354,000 $52,992,000 $110,392,000 $104,755,000 Costs and expenses: Cost of sales 38,844,000 35,803,000 79,484,000 70,737,000 Selling, general and administrative expenses 12,411,000 11,496,000 24,155,000 22,464,000 Interest (income) expense, net (58,000) 203,000 (70,000) 105,000 Income before income taxes 3,157,000 5,490,000 6,823,000 11,449,000 Provision for income taxes 1,140,000 2,180,000 2,730,000 4,530,000 Net income $ 2,017,000 $ 3,310,000 $ 4,093,000 $ 6,919,000 ___________ ___________ ____________ ____________ ___________ ___________ ____________ ____________ Weighted average number of common shares outstanding 4,257,564 4,238,362 4,255,882 4,235,767 Earnings per common share $.47 $.78 $ .96 $1.63 Cash dividends per common share $.25 $.25 $.50 $.50 <FN> See accompanying notes to consolidated financial statements. - 5 - Unaudited INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended December 31, 1995 1994 Cash flows from operating activities: Net income $ 4,093,000 $ 6,919,000 Adjustments for noncash transactions: Depreciation and amortization 2,516,000 2,322,000 Changes in assets and liabilities: Receivables 505,000 (865,000) Inventories 3,387,000 (4,898,000) Prepaid expenses and other ( 66,000) (467,000) Accounts payable 426,000 (315,000) Accrued liabilities and other (762,000) (619,000) Income taxes payable (514,000) (1,227,000) Net cash provided by operating activities 9,585,000 850,000 Cash flows from investing activities: Capital expenditures (4,228,000) (2,582,000) Proceeds from sales of capital assets 137,000 2,403,000 Changes in investments 2,213,000 5,202,000 Net cash provided by (used in) investing activities (1,878,000) 5,023,000 Cash flows from financing activities: Repayment of long-term debt (285,000) (422,000) Exercise of stock options 79,000 61,000 Dividends paid to shareholders (2,129,000) (2,119,000) Net cash used in financing activities (2,335,000) (2,480,000) Effect of exchange rate changes on cash 1,000 8,000 Net change in cash and cash equivalents 5,373,000 3,401,000 Cash and cash equivalents at beginning of period 3,550,000 6,413,000 Cash and cash equivalents at end of period $ 8,923,000 $ 9,814,000 ___________ ___________ ___________ ___________ <FN> See accompanying notes to consolidated financial statements. - 6 - 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 its financial position as of December 31, 1995 and June 30, 1995, and the results of operations for the three and six month periods ended December 31, 1995 and 1994, and the cash flows for the six month periods ended December 31, 1995 and 1994. The results of operations for the three and six month periods ended December 31, 1995 and 1994 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. - 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 increased by $1,362,000 or 2.6% for the quarter ended December 31, 1995 and by $5,637,000 or 5.4% for the six months then ended when compared with the 1994 periods. These sales include significant increases posted by the Commercial Products Group, up $3,677,000 or 16.8% for the quarter and by $8,458,000 or 20.1% for the six months. These increases were partially offset by decreases posted by the Aluminum Extrusion Group, whose sales were down $2,341,000 or 18.3% for the quarter and $1,882,000 or 7.4% for the six months. Cost of sales as a percentage of net sales increased by 3.9% for the quarter ended December 31, 1995 and by 4.5% for the six months then ended when compared with the 1994 periods. These increases are primarily attributable to significantly decreased margins in the Aluminum Extrusion Group resulting from increased material costs coupled with declining selling prices. Additionally, substantially all of the Company's fabrication facilities incurred decreased margins associated with rising material costs. Selling, general and administrative expenses increased by $915,000 or 8.0% for the quarter and by $1,691,000 or 7.5% for the six month period. The increases primarily relate to additional selling costs associated with the expansion of the commercial products satellite warehouse program. The increase in net interest income for the six month period primarily reflects the significant decrease during the second quarter of the prior year of the market value of interest rate sensitive securities. The effective tax rate for the six months ended December 31, 1995 was 40.0% whereas the comparable period of fiscal year 1995 was 39.6%. - 8 - Unaudited Liquidity and Capital Resources: Working capital increased to $68,599,000 during the six months ended December 31, 1995, which represents an increase of $204,000 from June 30, 1995. The ratio of current assets to current liabilities is currently 4.8 as compared to 4.6 as of the beginning of the year. The Company's projected net capital expenditures for fiscal 1996 include $6,000,000 for scheduled expansion of production capacity in addition to the normal annual noncapitalized expenditures for replacement items. The Company anticipates financing these expenditures through internal cash flow and cash reserves. The Company's line of credit remains unchanged from that noted in the June 30, 1995 Annual Report to Shareholders. - 9 - PART II. OTHER INFORMATION Item 4(c). Submission of Matters to a Vote of Security Holders On October 26, 1995, the Company held its 1995 Annual Shareholders Meeting. Shareholders voted proxies representing 3,589,582 shares which was 84.4% of the 4,254,064 shares outstanding on the record date. The proposed slate of officers were elected with 3,568,846 shares and the selected independent accountants were ratified with 3,583,262 shares. - 10 - 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 February 12, 1996 DAVID C. TREINEN David C. Treinen Senior Vice President - Finance and Administration (Principal Financial Officer) Date February 12, 1996 MITCHELL K. FOGELMAN Mitchell K. Fogelman Vice President - Controller (Principal Accounting Officer) - 11 -