ITEM 1. BUSINESS
a. GENERAL
DEVELOPMENT OF BUSINESS
International
Aluminum Corporation is an integrated building products manufacturer of
diversified lines of quality aluminum and vinyl 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 2002 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 and vinyl 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, 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 curtainwalls, window walls, slope
glazed systems, storefront framing, entrance doors and frames and commercial
operable windows 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. During fiscal 2002 approximately 45% of extrusions
produced were sold to non-affiliated customers in either its own or other
widely diversified industries. 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 lumber yards, home
improvement centers, 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 2002, 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 requirements from primary aluminum producers,
under supply agreements at market prices, or spot metal brokers. Although increased worldwide demand produces
periods of tight supply of aluminum, 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, 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 may at times carry a significant inventory of aluminum. Depending on price and availability, bulk
quantities may be 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, 2002, the Company had approximately 1,500 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. 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.
Expansion
of its product lines may result in the Company competing with certain of its
present customers. While the Company
cannot accurately predict the effect, if any, that such development would 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, 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 2002, 2001 and 2000 is set forth in Note 9 to the consolidated
financial statements included on page 14 of the Company’s 2002 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 1,822,000 square feet exhibited above, 1,585,000
square feet are owned by the Company.
The balance of 237,000 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 arising from the conduct of its business, none
of which is 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 7 and 16 of the Company’s
2002 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, 2002.
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 2002 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 2002 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 31, 2002,
which information is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
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 20, 2002
By:
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
CORNELIUS C. VANDERSTAR
Chairman of the Board and
Chief Executive Officer
September 20, 2002
Cornelius C. Vanderstar
DAVID C. TREINEN
Director; President;
Secretary and Chief Operating Officer
September 20, 2002
David C. Treinen
RONALD L. RUDY
Director and Senior Vice
President-Operations
September 20, 2002
Ronald L. Rudy
MITCHELL K. FOGELMAN
Senior Vice
President-Finance and Chief Financial Officer
September 20, 2002
Mitchell K. Fogelman
MICHAEL J. NORRING
Controller and Chief Accounting
Officer
September 20, 2002
Michael J. Norring
DAVID M. ANTONINI
Director
September 20, 2002
David M. Antonini
JOHN P. CUNNINGHAM
Director
September 20, 2002
John P. Cunningham
ALEXANDER L. DEAN
Director
September 20, 2002
Alexander L. Dean
JOEL F. McINTYRE
Director
September 20, 2002
Joel F. McIntyre
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,
2002 appearing in the 2002 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, 2002
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,
2002 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, 2002 relating to the financial statement
schedule, which appears in this Form 10-K.
PricewaterhouseCoopers LLP
Los Angeles, California
September 20, 2002
INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For The Three Years Ended June 30, 2002