**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM 10-Q**

 

**QUARTERLYREPORT PURSUANT TO SECTION 13**

**OF THESECURITIES EXCHANGE ACT OF 1934**

 
| **For quarter ended March 31, 2003** |   | **Commission File Number 1-7256** | ** ** |
|--------------------------------------|--------|-----------------------------------|------------|

 

 

**INTERNATIONAL ALUMINUM CORPORATION**

(Exactname 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** |
| **(323) 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 SecuritiesExchange Act of 1934 during the preceding 12 months and (2) has been subject tosuch filing requirements for the past 90 days. Yes  ý     No   o

 

Indicate by check mark whetherthe registrant is an accelerated filer (as defined in Rule 12b.2 of theExchange Act). Yes ýNo o

 

At May 1, 2003 there were 4,244,794 shares ofCommon Stock outstanding.

 

 

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INTERNATIONALALUMINUM CORPORATION

ANDSUBSIDIARIES

 

INDEX

 
| PART I.  Financial Information |
|-------------------------------------|
|                                |   |
|                                | Consolidated Balance Sheets  -  March 31, 2003 and June 30, 2002 |
|                                |   |
|                                | Consolidated Statements  of Income -  three and nine month periods ended  March 31, 2003 and 2002 |
|                                |   |
|                                | Consolidated  Statements of Cash Flows -  nine months ended March 31, 2003 and 2002 |
|                                |   |
|                                | Notes to Consolidated  Financial Statements |
|                                |   |
|                                | Management’s  Discussion and Analysis of   Financial Condition and Results of Operations |
|                                |   |
| PART II. Other Information          |
|                                |   |
|                                | Signatures |
|                                |   |
|                                | Certifications |
|                                |   |
|                                | Exhibit99. | Certifications  Pursuant to 18 U.S.C. Section 1350  as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |

 

2

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PART I

 

INTERNATIONAL ALUMINUM CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATEDBALANCE SHEETS

 
|                                                  |   | **Unaudited**                |        | **Audited**                 |   |
|-------------------------------------------------------|--------|------------------------------|-------------|-----------------------------|--------|
|                                                  |   | **March 31, 2003** |        | **June 30, 2002** |   |
| Assets                                                |   |                         |        |                        |   |
| Current assets:                                       |   |                         |        |                        |   |
| Cash and cash equivalents                             |   | $                            | 7,306,000   |                        | $      | 3,495,000 |   |
| Accounts receivable, net                              |   | 34,418,000                   |        | 31,811,000                  |   |
| Inventories                                           |   | 32,354,000                   |        | 33,401,000                  |   |
| Prepaid expenses and deposits                         |   | 3,295,000                    |        | 3,665,000                   |   |
| Future income tax benefits                            |   | 1,675,000                    |        | 1,675,000                   |   |
|                                                  |   |                         |        |                        |   |
| Total current assets                                  |   | 79,048,000                   |        | 74,047,000                  |   |
|                                                  |   |                         |        |                        |   |
| Property, plant and equipment, at cost                |   | 120,122,000                  |        | 122,759,000                 |   |
| Accumulated depreciation                              |   | (67,388,000                  | )           | (65,466,000                 | )      |
|                                                  |   |                         |        |                        |   |
| Net property, plant and equipment                     |   | 52,734,000                   |        | 57,293,000                  |   |
|                                                  |   |                         |        |                        |   |
| Other assets:                                         |   |                         |        |                        |   |
| Costs in excess of net assets of purchased businesses |   | 1,041,000                    |        | 1,030,000                   |   |
| Other                                                 |   | 447,000                      |        | 354,000                     |   |
|                                                  |   |                         |        |                        |   |
| Total other assets                                    |   | 1,488,000                    |        | 1,384,000                   |   |
|                                                  |   |                         |        |                        |   |
|                                                  |   | $                            | 133,270,000 |                        | $      | 132,724,000 |   |

 

 
| Liabilities and Shareholders’ Equity |   |        |        |        |   |
|-------------------------------------------|--------|-------------|-------------|-------------|--------|
|                                      |   |        |        |        |   |
| Current liabilities:                      |   |        |        |        |   |
| Accounts payable                          |   | $           | 8,178,000   |        | $      | 6,575,000 |   |
| Accrued liabilities                       |   | 9,034,000   |        | 8,295,000   |   |
| Advances payable to banks                 |   | 595,000     |        | 1,034,000   |   |
| Income taxes payable                      |   | —      |        | 86,000      |   |
|                                      |   |        |        |        |   |
| Total current liabilities                 |   | 17,807,000  |        | 15,990,000  |   |
|                                      |   |        |        |        |   |
| Deferred income taxes                     |   | 5,929,000   |        | 5,929,000   |   |
|                                      |   |        |        |        |   |
| Total liabilities                         |   | 23,736,000  |        | 21,919,000  |   |
|                                      |   |        |        |        |   |
| Shareholders’ equity                 |   | 109,534,000 |        | 110,805,000 |   |
|                                      |   |        |        |        |   |
|                                      |   | $           | 133,270,000 |        | $      | 132,724,000 |   |

 

See accompanying notes to consolidatedfinancial statements.

 

3

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Unaudited

 

INTERNATIONAL ALUMINUM CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATEDSTATEMENTS OF INCOME

 

 
|                                                  |   | **Three  Months Ended   March 31,** |       | **Nine  Months Ended   March 31,** |   |
|-------------------------------------------------------|--------|-------------------------------------|------------|------------------------------------|--------|
|                                                  |   | **2003**                            |       | **2002**                           |   | **2003** |   | **2002** |   |
|                                                  |   |                                |       |                               |   |   |   |   |   |
| Net sales                                             |   | $                                   | 48,012,000 |                               | $      | 46,473,000 |   | $ | 143,969,000 |   | $ | 147,039,000 |   |
| Cost of sales                                         |   | 39,183,000                          |       | 38,264,000                         |   | 119,035,000 |   | 121,603,000 |   |
| Gross profit                                          |   | 8,829,000                           |       | 8,209,000                          |   | 24,934,000 |   | 25,436,000 |   |
| Selling, gen. and admin. expenses                     |   | 7,376,000                           |       | 7,570,000                          |   | 21,483,000 |   | 24,169,000 |   |
| Income from operations                                |   | 1,453,000                           |       | 639,000                            |   | 3,451,000 |   | 1,267,000 |   |
| Interest (income) expense, net                        |   | 6,000                               |       | 17,000                             |   | 9,000 |   | 4,000 |   |
| Income from continuing operations before income taxes |   | 1,447,000                           |       | 622,000                            |   | 3,442,000 |   | 1,263,000 |   |
| Provision for income taxes                            |   | 540,000                             |       | 230,000                            |   | 1,284,000 |   | 485,000 |   |
| Income from continuing operations                     |   | 907,000                             |       | 392,000                            |   | 2,158,000 |   | 778,000 |   |
| Income (loss) from discontinued operations            |   | —                              |       | —                             |   | 110,000 |   | (1,065,000 | ) |
|                                                  |   |                                |       |                               |   |   |   |   |   |
| Cumulative effect of accounting change                |   | —                              |       | —                             |   | — |   | (7,935,000 | ) |
| Net income (loss)                                     |   | $                                   | 907,000    |                               | $      | 392,000 |   | $ | 2,268,000 |   | $ | (8,222,000 | ) |
|                                                  |   |                                |       |                               |   |   |   |   |   |
| Basic and diluted EPS:                                |   |                                |       |                               |   |   |   |   |   |
| Continuing operations                                 |   | $                                   | .21        |                               | $      | .09 |   | $ | .50 |   | $ | .18 |   |
| Discontinued operations                               |   | —                              |       | —                             |   | .03 |   | (.25 | ) |
| Cumulative effect of accounting change                |   | —                              |       | —                             |   | — |   | (1.87 | ) |
| Total                                                 |   | $                                   | .21        |                               | $      | .09 |   | $ | .53 |   | $ | (1.94 | ) |
|                                                  |   |                                |       |                               |   |   |   |   |   |
| Shares used to compute EPS:                           |   |                                |       |                               |   |   |   |   |   |
| Basic and Diluted                                     |   | 4,244,794                           |       | 4,244,794                          |   | 4,244,794 |   | 4,244,794 |   |
|                                                  |   |                                |       |                               |   |   |   |   |   |
| Cash dividends per share                              |   | $                                   | .30        |                               | $      | .30 |   | $ | .90 |   | $ | .90 |   |

 

See accompanying notes to consolidatedfinancial statements.

 

4

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Unaudited

 

INTERNATIONAL ALUMINUM CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
|                                                |   | **Nine  Months Ended   March 31,** |      |
|-----------------------------------------------------|--------|-----------------------------------------|-----------|
|                                                |   | **2003**                                |      | **2002** |   |
|                                                |   |                                    |      |   |   |
| Cash flows from operating activities:               |   |                                    |      |   |   |
| Net income (loss)                                   |   | $                                       | 2,268,000 |   | $ | (8,222,000 | ) |
| Adjustments for noncash transactions:               |   |                                    |      |   |   |
| Depreciation and amortization                       |   | 5,266,000                               |      | 5,283,000 |   |
| Change in deferred income taxes                     |   | —                                  |      | 24,000 |   |
| Gain on sale of fixed assets                        |   | —                                  |      | (631,000 | ) |
| Gain on discontinued operations                     |   | (110,000                                | )         | — |   |
| Cumulative effect of accounting change              |   | —                                  |      | 7,935,000 |   |
| Changes in assets and liabilities:                  |   |                                    |      |   |   |
| Receivables                                         |   | (2,545,000                              | )         | 1,236,000 |   |
| Inventories                                         |   | 426,000                                 |      | (66,000 | ) |
| Prepaid expenses and deposits                       |   | 292,000                                 |      | 367,000 |   |
| Accounts payable                                    |   | 1,562,000                               |      | 2,372,000 |   |
| Accrued liabilities                                 |   | 739,000                                 |      | 263,000 |   |
| Income taxes payable                                |   | (89,000                                 | )         | (515,000 | ) |
|                                                |   |                                    |      |   |   |
| Net cash provided by operating activities           |   | 7,809,000                               |      | 8,046,000 |   |
|                                                |   |                                    |      |   |   |
| Cash flows from investing activities:               |   |                                    |      |   |   |
| Capital expenditures                                |   | (2,505,000                              | )         | (10,769,000 | )  |
| Proceeds from sales of capital assets               |   | 2,786,000                               |      | 1,772,000 |   |
|                                                |   |                                    |      |   |   |
| Net cash provided by (used in) investing activities |   | 281,000                                 |      | (8,997,000 | ) |
|                                                |   |                                    |      |   |   |
| Cash flows from financing activities:               |   |                                    |      |   |   |
| Dividends paid to shareholders                      |   | (3,820,000                              | )         | (3,820,000 | ) |
| Net borrowing under lines of credit                 |   | (472,000                                | )         | 783,000 |   |
|                                                |   |                                    |      |   |   |
| Net cash used in financing activities               |   | (4,292,000                              | )         | (3,037,000 | ) |
|                                                |   |                                    |      |   |   |
| Effect of exchange rate changes                     |   | 13,000                                  |      | (8,000 | ) |
|                                                |   |                                    |      |   |   |
| Net change in cash and cash equivalents             |   | 3,811,000                               |      | (3,996,000 | ) |
|                                                |   |                                    |      |   |   |
| Cash and cash equivalents at beginning of period    |   | 3,495,000                               |      | 5,915,000 |   |
|                                                |   |                                    |      |   |   |
| Cash and cash equivalents at end of period          |   | $                                       | 7,306,000 |   | $ | 1,919,000 |   |

 

See accompanying notes to consolidatedfinancial statements.

 

5

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Unaudited

 

INTERNATIONAL ALUMINUM CORPORATION

AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Basis of Presentation

 

In the opinion ofmanagement, the accompanying unaudited consolidated financial statementscontain all adjustments (which consist solely of normal recurring adjustmentsunless otherwise disclosed) necessary to present fairly, in all materialrespects, its financial position as of March 31, 2003 and June 30, 2002,and the results of operations for the three and nine month periods ended March31, 2003 and 2002 and the cash flows for the nine month periods ended March 31,2003 and 2002.  The results ofoperations for the three and nine month periods ended March 31, 2003 and 2002are not necessarily indicative of the results to be expected for the full year.

 

The financial statementsincluded herein have been prepared by the Company pursuant to the rules andregulations of the Securities and Exchange Commission.  Certain information and footnote disclosuresnormally included in financial statements prepared in accordance with generallyaccepted accounting principles have been condensed or omitted pursuant to suchrules and regulations, although the Company believes that the disclosures areadequate to make the information presented not misleading.  It is suggested that these financialstatements be read in conjunction with the financial statements and the notesthereto included in the Company’s latest annual report on Form 10-K.

 

Comprehensive Income

 

Comprehensive income,defined as net income and other comprehensive income, for the three months endedMarch 31, 2003 and 2002 was  $1,504,000and $376,000, respectively. Comprehensive income for the nine months ended March 31, 2003 and 2002was $2,549,000 and $(8,508,000), respectively. Other comprehensive incomeincludes foreign currency translation adjustments recorded directly inshareholders’ equity.

 
|                                      |   | **March 31,  2003** |        | **June 30,  2002** |   |
|-------------------------------------------|--------|---------------------|-------------|--------------------|--------|
| Balance Sheet Components                  |   |                |        |               |   |
| Inventories, lower of FIFO Cost or Market |   |                |        |               |   |
| Raw materials                             |   | $                   | 26,765,000  |               | $      | 28,576,000 |   |
| Work in process                           |   | 541,000             |        | 560,000            |   |
| Finished goods                            |   | 5,048,000           |        | 4,265,000          |   |
|                                      |   | $                   | 32,354,000  |               | $      | 33,401,000 |   |
|                                      |   |                |        |               |   |
| Shareholders’ Equity                 |   |                |        |               |   |
| Common stock                              |   | $                   | 4,765,000   |               | $      | 4,765,000 |   |
| Paid-in capital                           |   | 4,123,000           |        | 4,123,000          |   |
| Retained earnings                         |   | 100,389,000         |        | 101,941,000        |   |
| Accumulated other comprehensive income    |   | 257,000             |        | (24,000            | )      |
|                                      |   | $                   | 109,534,000 |               | $      | 110,805,000 |   |

 

6

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Unaudited

 

Segment Information

 

The following presents theCompany’s net sales, operating income and total assets by operating segment,reconciling to the Company’s totals. All data is presented in thousands of dollars.

 
|               |   | **Three  Months Ended  March 31,** |   | **Nine  Months Ended  March 31,** |   |
|--------------------|--------|------------------------------------|--------|-----------------------------------|--------|
|               |   | **2003**                           |   | **2002**                          |   | **2003** |   | **2002** |   |
| Net Sales:         |   |                               |   |                              |   |   |   |   |   |
| Commercial         |   | $                                  | 24,487 |                              | $      | 26,213 |   | $ | 74,359 |   | $ | 84,210 |   |
| Residential        |   | 13,734                             |   | 9,745                             |   | 40,188 |   | 34,922 |   |
| Aluminum Extrusion |   | 19,632                             |   | 21,029                            |   | 62,073 |   | 67,768 |   |
| Total Segments     |   | 57,853                             |   | 56,987                            |   | 176,620 |   | 186,900 |   |
| Eliminations       |   | (9,841                             | )      | (10,514                           | )      | (32,651 | ) | (39,861 | ) |
| Total              |   | $                                  | 48,012 |                              | $      | 46,473 |   | $ | 143,969 |   | $ | 147,039 |   |

 

 
|                     |   | **Three  Months Ended  March 31,** |   | **Nine  Months Ended  March 31,** |   |
|--------------------------|--------|------------------------------------|--------|-----------------------------------|--------|
|                     |   | **2003**                           |   | **2002**                          |   | **2003** |   | **2002** |   |
| Operating Income (Loss): |   |                               |   |                              |   |   |   |   |   |
| Commercial               |   | $                                  | 1,675  |                              | $      | 2,445 |   | $ | 5,311 |   | $ | 7,793 |   |
| Residential              |   | 1,779                              |   | (425                              | )      | 4,205 |   | (1,051 | ) |
| Aluminum Extrusion       |   | (317                               | )      | 278                               |   | 58 |   | (98 | ) |
| Total Segments           |   | 3,137                              |   | 2,298                             |   | 9,574 |   | 6,644 |   |
| Eliminations             |   | 284                                |   | (47                               | )      | (335 | ) | 87 |   |
| Corporate                |   | (1,968                             | )      | (1,612                            | )      | (5,788 | ) | (5,464 | )* |
| Total                    |   | $                                  | 1,453  |                              | $      | 639 |   | $ | 3,451 |   | $ | 1,267 |   |

 

 
|               |   | **March 31,  2003** |    | **June 30,  2002** |   |
|--------------------|--------|---------------------|---------|--------------------|--------|
| Total Assets:      |   |                |    |               |   |
| Commercial         |   | $                   | 62,354  |               | $      | 63,537 |   |
| Residential        |   | 24,061              |    | 28,776             |   |
| Aluminum Extrusion |   | 38,886              |    | 34,915             |   |
| Total Segments     |   | 125,301             |    | 127,228            |   |
| Corporate          |   | 7,969               |    | 5,496              |   |
| Total              |   | $                   | 133,270 |               | $      | 132,724 |   |

 

----

*Net of $631 gain on sale of former operatingfacility

 

7

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Unaudited

 

INTERNATIONALALUMINUM CORPORATION

AND SUBSIDIARIES

 

Stock-BasedCompensation

 

In January 2003, theFASB issued SFAS No. 148, “Accounting for Stock-BasedCompensation-Transition and Disclosure, an amendment of FASB StatementNo. 123.” SFAS No. 148 provides alternative methods of transition fora voluntary change to the fair value based method of accounting for stock-basedemployee compensation. It also requires disclosures in both annual and interimfinancial statements about the method of accounting for stock-based employeecompensation and the effect of the method used on reported results. SFASNo. 148 is effective for annual and interim periods beginning afterDecember 15, 2002. As the Company has elected not to change to the fairvalue based method of accounting for stock-based employee compensation, theadoption of SFAS No. 148 will not have an impact upon our financialcondition or results of operations.

 

The Companyapplies APB Opinion 25 and related interpretations in accounting for stockoptions granted to employees and, accordingly, does not recognize compensationcost for grants whose exercise price equals the market price of the stock on thedate of grant.  There would have been nochange to reported net income and earnings per share amounts had the Companyelected to recognize compensation cost based on the fair value of the optionsgranted at the grant date as prescribed by SFAS No. 123, “Accounting forStock-Based Compensation”, due to the lack of option grants during the lastfive years, the typical vesting period of the Company’s options.

 

 

DiscontinuedOperations

 

During the second quarter offiscal year 2002, the Company announced the closure of Maestro Products, itswood window and door subsidiary, which was a component of the ResidentialProducts segment.  In accordance withSFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”,the Company wrote-down the net assets of Maestro to their estimated netrealizable value and reported Maestro’s results as discontinuedoperations.  Due primarily to favorableresults experienced in selling Maestro’s facilities, the Company recognized anet gain in fiscal year 2003 which has also been classified as discontinuedoperations.  The Company does notanticipate any further activity with respect to Maestro in the future.

 

 

Change InAccounting

 

The Company adopted SFAS No.142, “Goodwill and Other Intangible Assets” effective July 1, 2001, whichrequired that existing goodwill be reviewed for impairment using a revisedmethodology.  The Company completed thetransitional impairment test and determined that a $7,935,000 non-cashtransition charge was required to reduce goodwill.  The transition charge is reflected as a cumulative effect of anaccounting change effective July 1, 2001 and the previously reported resultsfor the quarter ended September 30, 2001 were retroactively adjusted.

 

8

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

 

Significant Changes inResults of Operations

 

Net salesincreased by $1,539,000 or 3.3% for the quarter ended March 31, 2003 butdecreased by $3,070,000 or 2.1% for the nine months then ended when comparedwith the respective prior year periods. Sales of Residential Products increased by $4,030,000 or 41.7% for thequarter and $5,640,000 or 16.4% for the nine months compared to the sameperiods last year.  These increasesreflect continued recovery of revenues lost due to last year’s trade unionstrike at our South Gate, California facility as well as replacing sales volumeformerly directed to large home improvement centers.  During the prior year the Residential subsidiaries ceased servingas a stocking supplier for these stores which we previously supplied on aregional basis.  Last year sales tolarge home improvement centers amounted to 4.4% and 10.8% of Residentialsegment sales for the quarter and nine-month periods compared to only 1.7% and2.2% for the respective current year periods. In addition, a significant portion of the current quarter increase isattributable to major school remodeling projects.  Offsetting these increases are declines for the current quarterand year to date sales at our Colorado facility when compared to the prioryear.  Management continues to pursuenew strategies in order to increase revenues at this location.  Sales of the Aluminum Extrusion Groupincreased by $1,335,000 or 4.7% for the nine months but declined by $784,000 or7.3% for the quarter compared to the same periods last year.  Net tonnage shipped, particularly in thearea served by our Texas facility, increased by 11.3% for the nine months butdecreased by 1.6% for the quarter when compared to the respective prior yearperiods.  Additionally, this Groupcontinues to experience strong pressure on pricing.  Sales of the Commercial Products Group declined by $1,707,000 or6.6% for the quarter and $10,045,000 or 12.0% for the nine months compared tothe same periods last year, reflective of the continued soft commercialconstruction market coupled with increased competitive conditions.

 

 

Cost of salesas a percentage of net sales was 81.6% for the current quarter compared to82.3% for the same period last year and for the nine-month period was 82.7%,unchanged from last year.  These resultfrom several largely offsetting factors. The Residential Products Group achieved decreased material, labor andoverhead cost percentages for the current quarter and nine-month periodscompared to the prior year, reflecting continued recovery from prior year’sstrike related inefficiencies.  TheCommercial Products Group cost percentages increased due to the lower salesprices resulting from an increasingly competitive marketplace.  The heightened competition for the reducednumber of major projects during this year has especially impacted our UnitedStates Aluminum facility in Texas. The Aluminum Extrusion Group alsoexperienced comparatively higher cost percentages during the current quarter asmaterial, labor and overhead production costs were spread over lower sales,which resulted from decreased tonnage being sold at reduced unit sales prices.The year to date comparison shows the cost of sales percentages relatively thesame as production efficiencies gained from the higher tonnage mostly offsetthe lower per unit sales prices.

 

9

----

 

Selling,general and administrative expenses decreased by $194,000 or 2.6% from theprior year quarter and by $2,686,000 or 11.1% for the nine-month period.  Excluding a $631,000 gain on the sale of aformer operating facility which was recognized during the first quarter lastyear, this nine-month comparison would have shown a net decrease of $3,317,000or 13.4%.  The decrease in the currentquarter was mainly attributable to lower employment costs.  A portion of the year to date decrease wasdue to income relating to recoveries on retrospective workers’ compensationpolicies totaling $897,000 in fiscal 2003 compared to an expense of $490,000being recorded in the comparable period during fiscal year 2002.  The Company anticipates receiving refunds ofpreviously expensed premiums due to changes in actual and projected claimactivity.  The remainder of the year todate decrease also reflects reduced employment and advertising costs in thecurrent year as well as the prior year containing some additional costs forstrike related security and legal services.

 

The effectivetax rate for the nine months ended March 31, 2003 was 37.3% for continuingoperations whereas the comparable period of the prior year was 38.4%.  This decrease is primarily attributed to theprior year being higher as a result of losses incurred in states withoutrelated tax benefit.

 

 

Liquidity andCapital Resources

 

Working capital at March 31,2003 stood at $61,241,000, an increase of $3,184,000 from June 30,2002.  The ratio of current assets tocurrent liabilities is currently 4.4 as compared to 4.6 as of the beginning ofthe year.

 

The Company projects netcapital expenditures of $3,000,000 to $4,000,000 for fiscal 2003.  The Company anticipates financing theseexpenditures through internal cash flow and cash reserves.  The Company’s domestic line of creditremains unchanged from that described in the June 30, 2002 Annual Report toShareholders.

 

 

Recent AccountingPronouncements

 

In November2002, the FASB issued Financial Interpretation No. 45, “Guarantor’s Accountingand Disclosure Requirements for Guarantees, Including Indirect Guarantee ofIndebtedness of Others” (FIN 45).  FIN45 requires that upon issuance of a guarantee, a guarantor must recognize aliability for the fair value of the obligation assumed under a guarantee.  FIN 45 also requires additional disclosuresby a guarantor in its interim and annual financial statements about theobligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guaranteesissued or modified after December 31, 2002. The disclosure requirements are effective for financial statements ofinterim or annual periods ending after December 15, 2002.  The impact of such adoption did not have amaterial effect on the Company’s financial statements.

 

In January2003, the FASB issued Financial Interpretation No. 46, “Consolidation ofVariable Interest Entities” (FIN 46). FIN 46 is an interpretation of Accounting Research Bulletin 51,“Consolidated Financial Statements”, and addresses consolidation by businessenterprises of variable interest entities (VIE’s).  FIN 46 provides guidance on the identification of, and financialreporting for, entities over which control is achieved through

 

 

10

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means other than voting rights.  FIN 46 requires an enterprise to consolidatea variable interest entity if that enterprise has a variable interest that willabsorb a majority of the entity’s expected losses if they occur, receive amajority of the entity’s expected residual return if they occur, or both. TheCompany does not hold any interest in VIE’s and therefore the adoption of thisinterpretation will not impact the Company’s consolidated financial statements.

 

 

Forward-Looking Information

 

This report containsforward-looking statements with respect to the financial condition, results ofoperations and business of the Company. Such items are subject to certain risks and uncertainties that couldcause actual results to differ materially from those set forth in suchstatements.  Readers are cautioned notto place undue reliance on these forward-looking statements, which speak onlyas of the date the statement was made. The Company undertakes no obligation to publicly update or revise anyforward-looking statements, whether as a result of new information, futureevents or otherwise.

 

 

Controls and Procedures

 

Within 90 days prior to thefiling date of this report, a review was performed under the supervision andwith the participation of the Company’s management, including the ChiefExecutive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of theeffectiveness of the design and operation of the Company’s disclosure controlsand procedures.  Based on that review,the Company’s management, including the CEO and CFO, concluded that theCompany’s disclosure controls and procedures were effective.  There have been no significant changes inthe Company’s internal controls or in other factors that could significantlyaffect these controls subsequent to the completion of their review.

 

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INTERNATIONAL ALUMINUM CORPORATION

AND SUBSIDIARIES

 

SIGNATURES

 

Pursuant to the requirementsof the Securities Exchange Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.

 
|   |         | International  Aluminum Corporation   |
|--------|--------------|---------------------------------------|
|   |         | (Registrant)                          |
|   |         |                                  |
| Date:  | May 13, 2003 |                                  | MITCHELL  K. FOGELMAN |
|   |         | Mitchell  K. Fogelman                 |
|   |         | Senior  Vice President – Finance |
|   |         | (Principal  Financial Officer)        |
|   |         |                                  |
| Date:  | May 13, 2003 |                                  | MICHAEL  J. NORRING |
|   |         | Michael  J. Norring                   |
|   |         | Controller                            |
|   |         | (Principal  Accounting Officer)       |

 

 

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CERTIFICATION

 

I, Cornelius C. Vanderstar, certify that:

 

1.     I have reviewed thisquarterly report on Form 10-Q of International Aluminum Corporation;

 

2.     Based on my knowledge, thisquarterly report does not contain any untrue statement of a material fact oromit to state a material fact necessary to make the statements made, in lightof the circumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

 

3.     Based on my knowledge, thefinancial statements, and other financial information included in thisquarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.     The registrant’s othercertifying officers and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and15d-14) for the registrant and we have:

a.     designed such disclosurecontrols and procedures to ensure that material information relating to theregistrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which thisquarterly report is being prepared;

b.     evaluated the effectivenessof the registrant’s disclosure controls and procedures as of a date within 90days prior to the filing date of this quarterly report (the “Evaluation Date”);and

c.     presented in this quarterlyreport our conclusions about the effectiveness of the disclosure controls andprocedures based on our evaluation as of the Evaluation Date;

 

5.     The registrant’s othercertifying officers and I have disclosed, based on our most recent evaluation,to the registrant’s auditors and the audit committee of the registrant’s boardof directors (or persons performing the equivalent function):

a.     all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant’s ability to record, process, summarize andreport financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

b.     any fraud, whether or notmaterial, that involves management or other employees who have a significantrole in the registrant’s internal controls; and

 

6.     The registrant’s othercertifying officers and I have indicated in this quarterly report whether ornot there were significant changes in internal controls or in other factorsthat could significantly affect internal controls subsequent to the date of ourmost recent evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 

 
| Date:  May 12, 2003 | CORNELIUS  C. VANDERSTAR                            |   |
|--------------------------|-----------------------------------------------------|--------|
|                     | Cornelius  C. Vanderstar                            |   |
|                     | Chairman  of the Board and  Chief Executive Officer |   |

 

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CERTIFICATION

 

I, Mitchell K. Fogelman, certify that:

 

1.     I have reviewed thisquarterly report on Form 10-Q of International Aluminum Corporation;

 

2.     Based on my knowledge, thisquarterly report does not contain any untrue statement of a material fact oromit to state a material fact necessary to make the statements made, in lightof the circumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

 

3.     Based on my knowledge, thefinancial statements, and other financial information included in thisquarterly report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this quarterly report;

 

4.     The registrant’s othercertifying officers and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and15d-14) for the registrant and we have:

a.     designed such disclosurecontrols and procedures to ensure that material information relating to theregistrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which thisquarterly report is being prepared;

b.     evaluated the effectivenessof the registrant’s disclosure controls and procedures as of a date within 90days prior to the filing date of this quarterly report (the “Evaluation Date”);and

c.     presented in this quarterlyreport our conclusions about the effectiveness of the disclosure controls andprocedures based on our evaluation as of the Evaluation Date;

 

5.     The registrant’s othercertifying officers and I have disclosed, based on our most recent evaluation,to the registrant’s auditors and the audit committee of the registrant’s boardof directors (or persons performing the equivalent function):

a.     all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant’s ability to record, process, summarize andreport financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

b.     any fraud, whether or notmaterial, that involves management or other employees who have a significant rolein the registrant’s internal controls; and

 

6.     The registrant’s othercertifying officers and I have indicated in this quarterly report whether ornot there were significant changes in internal controls or in other factorsthat could significantly affect internal controls subsequent to the date of ourmost recent evaluation, including any corrective actions with regard tosignificant deficiencies and material weaknesses.

 
| Date:  May 12, 2003 | MITCHELL  K. FOGELMAN                                             |   |
|--------------------------|-------------------------------------------------------------------|--------|
|                     | Mitchell  K. Fogelman                                             |   |
|                     | Senior Vice President – Finance  and Chief Financial Officer |   |

 

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CERTIFICATIONSPURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002

 

In connection with the Quarterly Report ofInternational Aluminum Corporation (the “Company”) on Form 10-Q for the periodending March 31, 2003 as filed with the Securities and Exchange Commission (the“Report”), I, Cornelius C. Vanderstar, the Chairman of the Board and ChiefExecutive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.         The Report fully complies with therequirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and

 

2.         The information contained in the Reportfairly presents, in all material respects, the financial condition and resultsof operations of the Company.

 

 
| Date:  May 12, 2003 | CORNELIUS C.  VANDERSTAR                            |   |
|--------------------------|-----------------------------------------------------|--------|
|                     | Cornelius C. Vanderstar                             |   |
|                     | Chairman of the Board and   Chief Executive Officer |   |
|                     |                                                |

 

 

In connection with the Quarterly Report ofInternational Aluminum Corporation (the “Company”) on Form 10-Q for the periodending March 31, 2003 as filed with the Securities and Exchange Commission (the“Report”), I, Mitchell K. Fogelman, the Senior Vice President-Finance and ChiefFinancial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1.         The Report fully complies with therequirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and

 

2.         The information contained in the Reportfairly presents, in all material respects, the financial condition and resultsof operations of the Company.

 

 
| Date:  May 12, 2003 |  MITCHELL K. FOGELMAN                                            |   |
|--------------------------|-----------------------------------------------------------------------|--------|
|                     | Mitchell K. Fogelman                                                  |   |
|                     | Senior Vice President – Finance and Chief Financial Officer |   |
|                     |

 

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