**SECURITIESAND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

 

**FORM10-K**

 

**ANNUALREPORT PURSUANT TO SECTION 13**

**OFTHE SECURITIES EXCHANGE ACT OF 1934**

 

**For thefiscal year ended June 30, 2002         Commission File Number 1-7256**

 

**INTERNATIONAL ALUMINUM CORPORATION**

(Exact name of Registrant as specified in its charter)

 

| **California**  |   | **95-2385235**         |
|-----------------|--------|------------------------|
| (Incorporation) |   | (I.R.S.  Employer No.) |

** **

** **

**767Monterey Pass Road**

**MontereyPark, California 91754**

**(323)264-1670**

(Principalexecutive office)

 

 

**Securities registered pursuant toSection 12(b) of the Act:**

 

| **Title of Each Class**         |   | **Names of Exchanges on Which Registered** |
|---------------------------------|--------|--------------------------------------------|
| Common Stock ($1.00 Par  Value) |   | New York Stock Exchange                    |

 

**Securities registered pursuant toSection 12(g) of the Act:**   None

 

Indicate by check mark whether the Registrant (1) has filed all reportsrequired to be filed by Section 13 of the Securities Exchange Act of 1934during the preceding 12 months and (2) has been subject to such filingrequirements for the past 90 days.    Yes  ý   No  o

 

Indicate by check mark if disclosure of delinquent filers pursuant toItem 405 of Regulation S-K is not contained herein, and will not be contained,to the best of Registrant’s knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.   ý

 

At September 10, 2002 there were 4,244,794 shares of Registrant’sCommon Stock outstanding.  The aggregatemarket value of shares held by non-affiliates was $42,346,589 based on the NewYork Stock Exchange composite closing price on that date.

 

 

**DOCUMENTSINCORPORATED BY REFERENCE**

 

Registrant’s Annual Report to Shareholders for fiscal year ended June30, 2002 is incorporated by reference into Parts I and II.

 

Registrant’s Proxy Statement dated September 20, 2002 for the AnnualMeeting of Shareholders to be held on October 31, 2002 is incorporated byreference, other than the Stock Performance Graph, the Compensation CommitteeReport, and the Audit Committee Report, into Part III.

 

 

 

 

 

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PART I

 

 

ITEM 1.  BUSINESS

 

a.       GENERALDEVELOPMENT OF BUSINESS

 

   InternationalAluminum Corporation is an integrated building products manufacturer ofdiversified lines of quality aluminum and vinyl products.  The Company was incorporated in Californiain 1963 as successor to an aluminum fabricating business begun in 1957 andmaintains its executive offices at 767 Monterey Pass Road, Monterey Park,California 91754.  The Company’stelephone number is (323) 264-1670. Reference to the “Registrant”, “International Aluminum Corporation” orthe “Company” includes International Aluminum Corporation and its subsidiariesunless the context indicates otherwise.

 

 

b.   INDUSTRYSEGMENTS, LINES OF BUSINESS AND CLASSES OF PRODUCTS

 

   Thisinformation is included on pages 4 and 15 of the Registrant’s 2002 AnnualReport to Shareholders and is hereby incorporated by reference.

 

 

c.       NARRATIVEDESCRIPTION OF BUSINESS

 

Processes and Products

 

   Residential

 

   Residentialproducts are fabricated from aluminum and vinyl into a broad line of horizontalsliding windows, vertical sliding windows, casement windows, garden windows,bay and bow windows, special configuration windows, louvre windows, patiodoors, wardrobe mirror doors and related products.  These products are used in new residential construction and inremodeling, home improvement and replacement.

 

   Commercial

 

   Commercialproducts are fabricated from aluminum into curtainwalls, window walls, slopeglazed systems, storefront framing, entrance doors and frames and commercialoperable windows for exterior applications and officefronts, office partitions,doors and frames for interior applications. These products are utilized in varying combinations to produce systemsused for office and commercial construction, remodeling and tenant improvementapplications.

 

 

1

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   AluminumExtrusion

 

   Inthe extrusion process, heated aluminum billets are hydraulically forced throughsteel dies to produce a piece of metal of the desired cross-sectional shape andlength.  The extrusions are then cutand, when requested, anodized or painted in a variety of finishes in theCompany’s anodizing and painting departments.

 

   Aluminumextrusions produced by the Company are used in fabricating substantially all ofits other aluminum products. During fiscal 2002 approximately 45% of extrusionsproduced were sold to non-affiliated customers in either its own or otherwidely diversified industries.  TheCompany furnishes design services to assist its customers in developing orbetter utilizing custom extrusions.

 

 

Sales and Distribution

 

   TheCompany markets its residential products primarily to lumber yards, homeimprovement centers, independent dealers and distributors, with whom theCompany has no long-term contracts. Commercial building products are marketed primarily to glazing andtenant improvement contractors. Aluminum extrusions are marketed principally by direct sales to othermanufacturers.

 

   Eachof the Company’s subsidiaries has its own administrative and salesorganizations.  Sales are made primarilyin North America.

 

   Nocustomer accounted for more than 5% of net sales in 2002, and no material partof the business is dependent upon a single customer or a few customers, theloss of any one or more of whom would have a materially adverse effect on thebusiness of the Company.  The Companydoes business on a current basis and has no significant backlog of unfilledfirm orders.

 

 

Seasonality

 

   Salesof products designed for residential and commercial applications are subject tocyclical swings in new construction and seasonal fluctuations due to reducedconstruction activity in some marketing areas during the winter months (secondand third quarters).

 

2

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Materials

 

   TheCompany purchases its aluminum requirements from primary aluminum producers,under supply agreements at market prices, or spot metal brokers.  Although increased worldwide demand producesperiods of tight supply of aluminum, the Company has had satisfactoryexperience to date in obtaining sufficient raw materials to meet itsrequirements and does not anticipate material shortages that wouldsignificantly hamper its operations.

 

   Flatglass is purchased from domestic glass manufacturers.  The Company has had satisfactory experience to date in obtainingsufficient glass to meet its requirements.

 

   TheCompany produces the aluminum extrusions used in the products it manufacturesand sells.  Vinyl, hardware and smallparts are purchased from outside sources.

 

 

Working Capital

 

   Tomaintain an adequate supply of aluminum to meet customer delivery requirementsand 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, bulkquantities may be purchased from either primary aluminum producers or from spotmetal brokers.

 

   TheCompany does not believe there are any abnormal working capital requirementsassociated with any of its product groups as merchandise is normally producedfor specific customer orders or shipped from inventory and as a generalpractice extended payment terms are not granted to customers.

 

 

Employees

 

   As ofJune 30, 2002, the Company had approximately 1,500 full-time employees.

 

 

Patents

 

   TheCompany has no material patents, either issued or pending, and is not a partyto any significant licensing agreements.

 

 

3

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Competition and Risk

 

   Thebusiness of International Aluminum is highly competitive. Competition in allproduct lines is on the basis of price, service and product quality.  The manner and extent of such competitiondepends on the product being marketed and the relevant marketing area.  The Company faces competition primarily fromnumerous fabricators.  Several of theCompany’s major competitors in selling commercial products and aluminumextrusions are substantially larger, more diversified and have greaterresources than the Company.

 

   Expansionof its product lines may result in the Company competing with certain of itspresent customers.  While the Companycannot accurately predict the effect, if any, that such development would haveon its business, the Company anticipates no material adverse effect.

 

   Sincea substantial portion of the Company’s business is connected with residentialand commercial building construction, any significant decrease in new orremodeling construction could adversely affect revenues.  Experience has shown that high interest ratesfor construction financing, residential mortgage and home improvement loans mayadversely affect revenues.

 

 

Environmental Controls

 

   TheCompany’s domestic aluminum extrusion, anodizing, painting and manufacturingfacilities are subject to water and air pollution control standards mandated byfederal, state and local law.  While theCompany anticipates no material capital expenditures to meet establishedenvironmental quality control standards, there can be no assurance that morestringent standards will not be established which might require suchexpenditures.

 

 

d.   FINANCIALINFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS

 

   Theinformation concerning income before taxes of foreign and domestic operationsfor fiscal years 2002, 2001 and 2000 is set forth in Note 9 to the consolidatedfinancial statements included on page 14 of the Company’s 2002 Annual Reportincorporated herein by reference.  Otherrelated information regarding foreign operations is not significant fordisclosure.

 

4

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ITEM 2.  PROPERTIES

 

   Thefollowing table sets forth information concerning the location, size and use ofthe Company’s present facilities:

 
|                    |   | **Square  Feet   (A)** |    |   |   |
|-------------------------|--------|----------------------------------|---------|--------|--------|
| **Location**            |   |                             | **Use** |   |
|                    |   |                             |    |   |   |   |   |
| Alhambra, CA            |   | 221,000                          |    |   |   | Aluminum extrusions, |   |
|                    |   |                             |    |   |   | foundry & finishing |   |
| Waxahachie, TX          |   | 272,000                          |    |   |   | Aluminum extrusions, |   |
|                    |   |                             |    |   |   | foundry & finishing |   |
| South Gate, CA          |   | 189,000                          |    |   |   | Residential products |   |
| Hayward, CA             |   | 103,000                          |    |   |   | Residential products |   |
| Phoenix, AZ             |   | 100,000                          |    |   |   | Residential products |   |
| Denver, CO              |   | 29,000                           | (L)     |   |   | Residential products |   |
| Vernon, CA              |   | 134,000                          |    |   |   | Commercial products |   |
| Bedford Park, IL        |   | 81,000                           |    |   |   | Commercial products |   |
| Boston, MA              |   | 21,000                           | (L)     |   |   | Commercial products |   |
| Detroit, MI             |   | 12,000                           | (L)     |   |   | Commercial products |   |
| Waxahachie, TX          |   | 159,000                          |    |   |   | Commercial products |   |
| Denver, CO              |   | 16,000                           | (L)     |   |   | Commercial products |   |
| St. Louis, MO           |   | 14,000                           | (L)     |   |   | Commercial products |   |
| Dallas, TX              |   | 36,000                           | (L)     |   |   | Commercial products |   |
| Houston, TX             |   | 19,000                           | (L)     |   |   | Commercial products |   |
| Rock Hill, SC           |   | 74,000                           |    |   |   | Commercial products |   |
| Atlanta, GA             |   | 37,000                           | (L)     |   |   | Commercial products |   |
| Baltimore, MD           |   | 20,000                           | (L)     |   |   | Commercial products |   |
| Langley, B.C., Canada   |   | 63,000                           |    |   |   | Commercial products |   |
| Guelph, Ontario, Canada |   | 72,000                           |    |   |   | Commercial products |   |
| Houston, TX             |   | 57,000                           |    |   |   | Commercial products |   |
| Waxahachie, TX          |   | 60,000                           |    |   |   | Commercial products |   |
| Dallas, TX              |   | 14,000                           | (L)     |   |   | Commercial products |   |
| Monterey Park, CA       |   | 19,000                           | (L)     |   |   | Executive offices |   |

 

 

(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, 1,585,000square feet are owned by the Company. The balance of 237,000 square feet is leased under agreements expiringat various dates.  The Company believesthat its facilities are adequate for anticipated levels of operations.

 

 

5

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ITEM 3.  LEGAL PROCEEDINGS

 

   TheCompany has litigation pending arising from the conduct of its business, noneof which is expected to have any material effect on the Company’s financialposition.

 

 

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS

 

   Nomatters have been submitted to a vote of security holders that are required tobe reported under the instructions to this item.

 

 

 

 

 

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PART II

 

ITEM 5.             MARKET FOR THE REGISTRANT’S COMMON STOCK ANDRELATED STOCKHOLDER MATTERS

 

   Themarket and dividend information is included on pages 7 and 16 of the Company’s2002 Annual Report to Shareholders and is incorporated herein by reference.

 

   Thereare no restrictions of future cash dividends.

 

   Therewere approximately 400 shareholders of record of the Company’s common stock atJune 30, 2002.

 

ITEM 6.             SELECTED FINANCIAL DATA

 

    Selected financial data pertaining to the Company for the last fiveyears is set forth on page 4 of the Company’s 2002 Annual Report toShareholders and is incorporated herein by reference.

 

ITEM 7.             MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIALCONDITION ANDRESULTS OF OPERATIONS

 

   Thisinformation is set forth on pages 2 through 6 of the Company’s 2002 AnnualReport to Shareholders and is incorporated herein by reference.

 

ITEM 7A.       DISCLOSURES ABOUT MARKET RISK

 

   TheCompany has no market risk sensitive instruments that are required to bereported under the instructions to this item.

 

ITEM 8.             FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

   SeePart IV, Item 14.

 

ITEM 9.             CHANGES IN ANDDISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING ANDFINANCIAL DISCLOSURE

 

   Therehave been no disagreements that are required to be reported under theinstructions to this item.

 

 

PART III

 

   Theinformation required under Part III is contained in the Company’s ProxyStatement for the Annual Meeting of Shareholders to be held October 31, 2002,which information is incorporated herein by reference.

 

 

7

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PART IV

 

ITEM 14.            EXHIBITS,FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (a)    | 1.  Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
|   | Consolidated Financial Statements (See Note):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
|   | Balance sheets - June 30, 2002  and 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|   | Statements for the three years ended June 30, 2002 -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |
|   | 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, 2002 - 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 F-1 herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (b)    | No reports on Form 8-K  were required to be filed during the last quarter of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| NOTE:  | The consolidated financial  statements referred to above are included in the 2002 Annual Report to  Shareholders and are incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        |  |  |  |

 

 

 

8

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SIGNATURES

 

 

   Pursuant to the requirements of Section 13 or 15(d) of theSecurities Exchange Act of 1934, the Registrant has duly caused this report tobe 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 of1934, this report has been signed below by the following persons on behalf ofthe 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        |   |                                                        |   |               |

 

 

 

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REPORT OF INDEPENDENTACCOUNTANTS ON

FINANCIALSTATEMENT SCHEDULE

 

 

 

To the Board of Directors of

International AluminumCorporation

 

 

Our audits of theconsolidated financial statements referred to in our report dated August 21,2002 appearing in the 2002 Annual Report to Shareholders of InternationalAluminum Corporation (which report and consolidated financial statements areincorporated by reference in this Annual Report on Form 10-K) also included anaudit of the Financial Statement Schedule listed in Item 14(a)2 of this Form10-K.  In our opinion, this FinancialStatement Schedule presents fairly, in all material respects, the informationset forth therein when read in conjunction with the related consolidatedfinancial statements.

 

 

PricewaterhouseCoopers LLP

 

Los Angeles, California

August 21, 2002

 

 

 

 

**Exhibit 23**

 

CONSENT OF INDEPENDENT ACCOUNTANTS

 

 

 

We hereby consent to theincorporation 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 Reportto Shareholders, which is incorporated in this Annual Report on Form 10-K.  We also consent to the incorporation byreference of our report dated August 21, 2002 relating to the financial statementschedule, which appears in this Form 10-K.

 

 

PricewaterhouseCoopers LLP

 

Los Angeles, California

September 20, 2002

 

 

 

F-1

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INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES

 

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

 

For The Three Years Ended June 30, 2002

 

 

 
|                           |   | **Balance at  Beginning  of Year** |    | **Amounts  Charged  to Income** |   | **Amounts  Written  Off** |   | **Balance at  End  of Year** |    |
|--------------------------------|--------|------------------------------------|---------|---------------------------------|--------|---------------------------|--------|------------------------------|---------|
|                           |   |                               |    |                            |   |
| **Description**                |   |                               |    |                            |   |
| Reserves for doubtful accounts |   |                               |    |                            |   |                      |   |                         |    |
|                           |   |                               |    |                            |   |                      |   |                         |    |
| 2002                           |   | $                                  | 775,000 |                            | $      | 865,000                   |   | $                            | 548,000 |   | $ | 1,092,000 |   |
|                           |   |                               |    |                            |   |                      |   |                         |    |
| 2001                           |   | 730,000                            |    | 497,000                         |   | 452,000                   |   | 775,000                      |    |
|                           |   |                               |    |                            |   |                      |   |                         |    |
| 2000                           |   | 735,000                            |    | 481,000                         |   | 486,000                   |   | 730,000                      |    |
|                                |        |                                    |         |                                 |        |                           |        |                              |         |  |  |  |  |

 

 

 

F-2

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