ITEM 1. BUSINESS
a.GENERAL DEVELOPMENT OF BUSINESS
International Aluminum Corporation is an integrated building products manufacturer of diversified lines of quality aluminum, vinyl and wood products. The Company was incorporated in California in 1963 as successor to an aluminum fabricating business begun in 1957 and maintains its executive offices at 767 Monterey Pass Road, Monterey Park, California 91754. The Company's telephone number is (323) 264-1670. Reference to the "Registrant", "International Aluminum Corporation" or the "Company" includes International Aluminum Corporation and its subsidiaries unless the context indicates otherwise.
b.INDUSTRY SEGMENTS, LINES OF BUSINESS AND CLASSES OF PRODUCTS
This information is included on pages 4 and 15 of the Registrant's 2001 Annual Report to Shareholders and is hereby incorporated by reference.
c.NARRATIVE DESCRIPTION OF BUSINESS
Processes and Products
Residential
Residential products are fabricated from aluminum, vinyl and wood into a broad line of horizontal sliding windows, vertical sliding windows, casement windows, garden windows, bay and bow windows, special configuration windows, louvre windows, patio doors, tub enclosures, shower doors, wardrobe mirror doors and related products. These products are used in new residential construction and in remodeling, home improvement and replacement.
Commercial
Commercial products are fabricated from aluminum into curtain walls, window walls, slope glazed systems, storefront framing, entrance doors and frames for exterior applications and officefronts, office partitions, doors and frames for interior applications. These products are utilized in varying combinations to produce systems used for office and commercial construction, remodeling and tenant improvement applications.
Aluminum Extrusion
In the extrusion process, heated aluminum billets are hydraulically forced through steel dies to produce a piece of metal of the desired cross-sectional shape and length. The extrusions are then cut and, when requested, anodized or painted in a variety of finishes in the Company's anodizing and painting departments.
Aluminum extrusions produced by the Company are used in fabricating substantially all of its other aluminum products. In addition, during fiscal 2001 approximately 43% of the extrusions produced were sold to users in its own or other industries, including manufacturers of fixtures, electronic equipment, automotive products, sailboats, skylights and truck bodies. The Company furnishes design services to assist its customers in developing or better utilizing custom extrusions.
Sales and Distribution
The Company markets its residential products primarily to mass merchandisers, builders, independent dealers and distributors, with whom the Company has no long-term contracts. Commercial building products are marketed primarily to glazing and tenant improvement contractors. Aluminum extrusions are marketed principally by direct sales to other manufacturers.
Each of the Company's subsidiaries has its own administrative and sales organizations. Sales are made primarily in North America.
No customer accounted for more than 5% of net sales in 2001, and no material part of the business is dependent upon a single customer or a few customers, the loss of any one or more of whom would have a materially adverse effect on the business of the Company. The Company does business on a current basis and has no significant backlog of unfilled firm orders.
Seasonality
Sales of products designed for residential and commercial applications are subject to cyclical swings in new construction and seasonal fluctuations due to reduced construction activity in some marketing areas during the winter months (second and third quarters).
Materials
The Company purchases its aluminum ingot requirements from primary aluminum producers or spot metal brokers. Although increased worldwide demand produces periods of tight supply of aluminum ingot and scrap, the Company has had satisfactory experience to date in obtaining sufficient raw materials to meet its requirements and does not anticipate material shortages that would significantly hamper its operations.
Flat glass is purchased from domestic glass manufacturers. The Company has had satisfactory experience to date in obtaining sufficient glass to meet its requirements.
The Company produces the aluminum extrusions used in the products it manufactures and sells. Vinyl, wood, hardware and small parts are purchased from outside sources.
Working Capital
To maintain an adequate supply of aluminum to meet customer delivery requirements and to assure itself of a continuous allotment of materials from its suppliers, the Company at times carries a significant inventory of aluminum ingot. Depending on price and availability, bulk quantities of ingot are purchased from either primary aluminum producers or from spot metal brokers.
The Company does not believe there are any abnormal working capital requirements associated with any of its product groups as merchandise is normally produced for specific customer orders or shipped from inventory and as a general practice extended payment terms are not granted to customers.
Employees
As of June 30, 2001, the Company had approximately 1,750 full-time employees.
Patents
The Company has no material patents, either issued or pending, and is not a party to any significant licensing agreements.
Competition and Risk
The business of International Aluminum is highly competitive. Competition in all product lines is on the basis of price, service and product quality. The manner and extent of such competition depends on the product being marketed and the relevant marketing area. In selling its residential products to mass merchandisers, dealers and distributors, the Company faces competition primarily from numerous fabricators. Several of the Company's major competitors in selling commercial products and aluminum extrusions are substantially larger, more diversified and have greater resources than the Company.
The Company anticipates that expansion of its product lines may result in its competing with certain of its present customers. While the Company cannot accurately predict the effect, if any, that such development will have on its business, the Company anticipates no material adverse effect.
Since a substantial portion of the Company's business is connected with residential and commercial building construction, any significant decrease in new or remodeling construction could adversely affect revenues. Experience has shown that high interest rates for construction financing and residential mortgage and home improvement loans may adversely affect revenues.
Environmental Controls
The Company's domestic aluminum extrusion, anodizing, painting and manufacturing facilities are subject to water and air pollution control standards mandated by federal, state and local law. While the Company anticipates no material capital expenditures to meet established environmental quality control standards, there can be no assurance that more stringent standards will not be established which might require such expenditures.
d.FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
The information concerning income before taxes of foreign and domestic operations for fiscal years 2001, 2000 and 1999 is set forth in Note 10 to the consolidated financial statements included on page 14 of the Company's 2001 Annual Report incorporated herein by reference. Other related information regarding foreign operations is not significant for disclosure.
ITEM 2.
ITEM 2. PROPERTIES
The following table sets forth information concerning the location, size and use of the Company's present facilities:
(A)Includes manufacturing, warehouse and office space; excludes construction in process, parking and yard storage space.
(L)Indicates leased premises. Of the 1,908,000 square feet exhibited above, 1,664,000 square feet are owned by the Company. The balance of 244,000 square feet is leased under agreements expiring at various dates. The Company believes that its facilities are adequate for anticipated levels of operations.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The Company has litigation pending, both offensive and defensive, arising from the conduct of its business, none of which are expected to have any material effect on the Company's financial position.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of security holders that are required to be reported under the instructions to this item.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The market and dividend information is included on pages 6 and 16 of the Company's 2001 Annual Report to Shareholders and is incorporated herein by reference.
There are no restrictions of future cash dividends.
There were approximately 400 shareholders of record of the Company's common stock at June 30, 2001.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data pertaining to the Company for the last five years is set forth on page 4 of the Company's 2001 Annual Report to Shareholders and is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This information is set forth on pages 2 through 6 of the Company's 2001 Annual Report to Shareholders and is incorporated herein by reference.
ITEM 7A.
ITEM 7A. DISCLOSURES ABOUT MARKET RISK
The Company has no market risk sensitive instruments that are required to be reported under the instructions to this item.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Part IV, Item 14.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements that are required to be reported under the instructions to this item.
PART III
The information required under Part III is contained in the Company's Proxy Statement for the Annual Meeting of Shareholders to be held October 25, 2001, which information is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Page
(a) 1.
Financial Statements
Consolidated Financial Statements (See Note):
Balance sheets-June 30, 2001 and 2000
Statements for the three years ended June 30, 2001-
Income
Shareholders' equity
Cash flows
Notes to consolidated financial statements
2.
Financial Statement Schedules
Report of Independent Accountants on Financial Statement Schedules
Schedule for the three years ended June 30, 2001-
II Valuation and qualifying accounts
3.
Exhibits
3. Articles of incorporation and by-laws. This information is set forth as Exhibits 2.2 and 2.3 to the September 9, 1977 Registration Statement on Form S-7, and was amended by Proxy Statements dated September 26, 1978 and September 21, 1988 furnished to shareholders in connection with the related Annual Meeting of Shareholders held on October 26, 1978 and October 27, 1988, respectively. These documents were filed by the Registrant with the Securities and Exchange Commission and are incorporated herein by reference.
4. Instruments defining the rights of security holders, including the indentures. This information is set forth on page 10 of the August 1, 1968 Registration Statement on Form S-1, as amended, filed by the Registrant with the Securities and Exchange Commission and is incorporated herein by reference.
13. Annual Report to Shareholders.
22. Subsidiaries of the registrant.
23. Consent of PricewaterhouseCoopers LLP (on page herein).
(b) No reports on Form 8-K were required to be filed during the last quarter of 2001.
NOTE: The consolidated financial statements referred to above are included in the 2001 Annual Report to Shareholders and are incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
INTERNATIONAL ALUMINUM CORPORATION
Date: September 21, 2001
By:
/s/ MITCHELL K. FOGELMAN Mitchell K. Fogelman
Senior Vice President-Finance and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ CORNELIUS C. VANDERSTAR Cornelius C. Vanderstar
Chairman of the Board and Chief Executive Officer
September 21, 2001
/s/ DAVID C. TREINEN David C. Treinen
Director; President; Secretary and Chief Operating Officer
September 21, 2001
/s/ MITCHELL K. FOGELMAN Mitchell K. Fogelman
Senior Vice President-Finance and Chief Financial Officer
September 21, 2001
/s/ MICHAEL J. NORRING Michael J. Norring
Controller and Chief Accounting Officer
September 21, 2001
/s/ DAVID M. ANTONINI David M. Antonini
Director
September 21, 2001
/s/ JOHN P. CUNNINGHAM John P. Cunningham
Director
September 21, 2001
/s/ ALEXANDER L. DEAN Alexander L. Dean
Director
September 21, 2001
/s/ JOEL F. MCINTYRE Joel F. McIntyre
Director
September 21, 2001
/s/ KENNETH D. PETERSON, JR. Kenneth D. Peterson, Jr.
Director
September 21, 2001
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
International Aluminum Corporation
Our audits of the consolidated financial statements referred to in our report dated August 21, 2001 appearing in the 2001 Annual Report to Shareholders of International Aluminum Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a)2 of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
August 21, 2001
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-57109) of International Aluminum Corporation of our report dated August 21, 2001 relating to the financial statements, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated August 21, 2001 relating to the financial statement schedule, which appears in this Form 10-K.
PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
September 21, 2001
INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
For The Three Years Ended June 30, 2001
FORM 10-K
PART I
PART II
PART III
PART IV
SIGNATURES
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE
CONSENT OF INDEPENDENT ACCOUNTANTS
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS