**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

 

**FORM 10-Q**

 

 

**QUARTERLY REPORTPURSUANT TO SECTION 13**

**OF THE SECURITIESEXCHANGE ACT OF 1934**

 

 

| **For quarter ended December 31,  2002** |   | **Commission File Number 1-7256** |
|------------------------------------------|--------|-----------------------------------|

 

 

 

**INTERNATIONAL ALUMINUM CORPORATION**

(Exact nameof 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**

(Principalexecutive 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

 

At February 3, 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  — December 31, 2002 and June  30, 2002                                 |                                                                                                                    |   |
|                                                                                                     |                                                                                                                    |   |
| Consolidated  Statements of Income — three  and six month periods ended December  31, 2002 and 2001 |                                                                                                                    |   |
|                                                                                                     |                                                                                                                    |   |
| Consolidated  Statements of Cash Flows — six  months ended December 31, 2002 and 2001               |                                                                                                                    |   |
|                                                                                                     |                                                                                                                    |   |
| Notes to  Consolidated Financial Statements                                                              |                                                                                                                    |   |
|                                                                                                     |                                                                                                                    |   |
| Management’s  Discussion and Analysis of Financial  Condition and Results of Operations             |                                                                                                                    |   |
|                                                                                                     |                                                                                                                    |   |
| PART II.  Other Information                                                                         |                                                                                                                    |   |
|                                                                                                     |                                                                                                                    |   |
| Item  4(c).  Submission of Matters to a Vote  of Security Holders                                   |                                                                                                                    |   |
|                                                                                                     |                                                                                                                    |   |
| Signatures                                                                                               |                                                                                                                    |   |
|                                                                                                     |                                                                                                                    |   |
| Certifications                                                                                           |                                                                                                                    |   |
|                                                                                                     |                                                                                                                    |   |
| Exhibit                                                                                                  |                                                                                                                    |   |
| 99.                                                                                                      | Certifications Pursuant to 18 U.S.C. Section 1350as Adopted Pursuant to Section  906 of the Sarbanes-Oxley Act  of 2002 |   |   |
|                                                                                                          |                                                                                                                         |        |  |

 

 

2

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PART I

 

INTERNATIONALALUMINUM CORPORATION

ANDSUBSIDIARIES

 

CONSOLIDATEDBALANCE SHEETS

 
| ** **                                            | ** ** | **Unaudited  Dec. 31, 2002** | ** **  | **Audited  June 30, 2002** | ** ** |
|-------------------------------------------------------|------------|----------------------------------------|-------------|--------------------------------------|------------|
| Assets                                                |       |                                   |        |                                 |       |
|                                                  |       |                                   |        |                                 |       |
| Current assets:                                       |       |                                   |        |                                 |       |
| Cash and cash equivalents                             |       | $                                      | 9,513,000   |                                 | $          | 3,495,000 |   |
| Accounts receivable, net                              |       | 30,606,000                             |        | 31,811,000                           |       |
| Inventories                                           |       | 31,976,000                             |        | 33,401,000                           |       |
| Prepaid expenses and deposits                         |       | 3,931,000                              |        | 3,665,000                            |       |
| Future income tax benefits                            |       | 1,661,000                              |        | 1,675,000                            |       |
|                                                  |       |                                   |        |                                 |       |
| Total current assets                                  |       | 77,687,000                             |        | 74,047,000                           |       |
|                                                  |       |                                   |        |                                 |       |
| Property, plant and equipment, at cost                |       | 119,072,000                            |        | 122,759,000                          |       |
| Accumulated depreciation                              |       | (65,851,000                            | )           | (65,466,000                          | )          |
|                                                  |       |                                   |        |                                 |       |
| Net property, plant and equipment                     |       | 53,221,000                             |        | 57,293,000                           |       |
|                                                  |       |                                   |        |                                 |       |
| Other assets:                                         |       |                                   |        |                                 |       |
| Costs in excess of net assets of purchased businesses |       | 1,016,000                              |        | 1,030,000                            |       |
| Other                                                 |       | 423,000                                |        | 354,000                              |       |
|                                                  |       |                                   |        |                                 |       |
| Total other assets                                    |       | 1,439,000                              |        | 1,384,000                            |       |
|                                                  |       |                                   |        |                                 |       |
|                                                  |       | $                                      | 132,347,000 |                                 | $          | 132,724,000 |   |
|                                                  |       |                                   |        |                                 |       |
| Liabilities and Shareholders’ Equity             |       |                                   |        |                                 |       |
|                                                  |       |                                   |        |                                 |       |
| Current liabilities:                                  |       |                                   |        |                                 |       |
| Accounts payable                                      |       | $                                      | 7,778,000   |                                 | $          | 6,575,000 |   |
| Accrued liabilities                                   |       | 8,496,000                              |        | 8,295,000                            |       |
| Advances payable to banks                             |       | 840,000                                |        | 1,034,000                            |       |
| Income taxes payable                                  |       | —                                 |        | 86,000                               |       |
|                                                  |       |                                   |        |                                 |       |
| Total current liabilities                             |       | 17,114,000                             |        | 15,990,000                           |       |
|                                                  |       |                                   |        |                                 |       |
| Deferred income taxes                                 |       | 5,929,000                              |        | 5,929,000                            |       |
|                                                  |       |                                   |        |                                 |       |
| Total liabilities                                     |       | 23,043,000                             |        | 21,919,000                           |       |
|                                                  |       |                                   |        |                                 |       |
| Shareholders’ equity                             |       | 109,304,000                            |        | 110,805,000                          |       |
|                                                  |       |                                   |        |                                 |       |
|                                                  |       | $                                      | 132,347,000 |                                 | $          | 132,724,000 |   |

 

 

See accompanying notes to consolidated financialstatements.

 

 

3

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Unaudited

 

INTERNATIONALALUMINUM CORPORATION

ANDSUBSIDIARIES

 

CONSOLIDATEDSTATEMENTS OF INCOME

 
| ** **                                                   | ** ** | **Three  Months Ended  December 31,** | ** ** | **Six Months  Ended  December 31,** | ** ** |
|--------------------------------------------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
|                                                         |       | **2002**                              |       | **2001**                            |       | **2002** |   | **2001** |   |
| Net sales                                                    |       | $                                     | 46,229,000 |                                | $          | 47,302,000 |   | $ | 95,957,000 |   | $ | 100,566,000 |   |
| Cost of sales                                                |       | 39,486,000                            |       | 39,748,000                          |       | 79,852,000 |   | 83,339,000 |   |
| Gross profit                                                 |       | 6,743,000                             |       | 7,554,000                           |       | 16,105,000 |   | 17,227,000 |   |
| Selling, gen. and admin. expenses                            |       | 5,853,000                             |       | 8,649,000                           |       | 14,107,000 |   | 16,599,000 |   |
| Income (loss) from operations                                |       | 890,000                               |       | (1,095,000                          | )          | 1,998,000 |   | 628,000 |   |
| Interest (income) expense, net                               |       | 4,000                                 |       | 8,000                               |       | 3,000 |   | (13,000 | ) |
| Income (loss) from continuing operations before income taxes |       | 886,000                               |       | (1,103,000                          | )          | 1,995,000 |   | 641,000 |   |
| Provision for income taxes                                   |       | 334,000                               |       | (381,000                            | )          | 744,000 |   | 255,000 |   |
| Income (loss) from continuing operations                     |       | 552,000                               |       | (722,000                            | )          | 1,251,000 |   | 386,000 |   |
| Income (loss) from discontinued operations                   |       | 110,000                               |       | (889,000                            | )          | 110,000 |   | (1,065,000 | ) |
| Cumulative effect of accounting change                       |       | —                                |       | —                              |       | — |   | (7,935,000 | ) |
|                                                         |       |                                  |       |                                |       |   |   |   |   |
| Net income (loss)                                            |       | $                                     | 662,000    |                                | $          | (1,611,000  | ) | $ | 1,361,000 |   | $ | (8,614,000 | ) |
|                                                         |       |                                  |       |                                |       |   |   |   |   |
| Basic and diluted EPS:                                       |       |                                  |       |                                |       |   |   |   |   |
| Continuing operations                                        |       | $                                     | .13        |                                | $          | (.17 | ) | $ | .29 |   | $ | .09 |   |
| Discontinued operations                                      |       | .03                                   |       | (.21                                | )          | .03 |   | (.25 | ) |
| Cumulative effect of accounting change                       |       | —                                |       | —                              |       | — |   | (1.87 | ) |
| Total                                                        |       | $                                     | .16        |                                | $          | (.38 | ) | $ | .32 |   | $ | (2.03 | ) |
|                                                         |       |                                  |       |                                |       |   |   |   |   |
| 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 |   | $ | .60 |   | $ | .60 |   |

 

 

See accompanying notes to consolidated financialstatements.

 

 

4

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Unaudited

 

INTERNATIONALALUMINUM CORPORATION

ANDSUBSIDIARIES

 

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

 
| ** **                                          | ** ** | **Six Months  Ended  December 31,** | ** ** |
|-----------------------------------------------------|------------|------------------------------------------|------------|
|                                                |       | **2002**                                 |       | **2001** |   |
| Cash flows from operating activities:               |       |                                     |       |   |   |
| Net income (loss)                                   |       | $                                        | 1,361,000  |   | $ | (8,614,000 | ) |
| Adjustments for noncash transactions:               |       |                                     |       |   |   |
| Depreciation and amortization                       |       | 3,527,000                                |       | 3,575,000 |   |
| 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                                         |       | 1,134,000                                |       | 327,000 |   |
| Inventories                                         |       | 666,000                                  |       | 404,000 |   |
| Prepaid expenses and deposits                       |       | (339,000                                 | )          | (423,000 | ) |
| Accounts payable                                    |       | 1,251,000                                |       | (686,000 | ) |
| Accrued liabilities                                 |       | 201,000                                  |       | 828,000 |   |
| Income taxes payable                                |       | (83,000                                  | )          | (516,000 | ) |
|                                                |       |                                     |       |   |   |
| Net cash provided by operating activities           |       | 7,608,000                                |       | 2,223,000 |   |
|                                                |       |                                     |       |   |   |
| Cash flows from investing activities:               |       |                                     |       |   |   |
| Capital expenditures                                |       | (1,582,000                               | )          | (6,674,000 | ) |
| Proceeds from sales of capital assets               |       | 2,710,000                                |       | 1,726,000 |   |
|                                                |       |                                     |       |   |   |
| Net cash provided by (used in) investing activities |       | 1,128,000                                |       | (4,948,000 | ) |
|                                                |       |                                     |       |   |   |
| Cash flows from financing activities:               |       |                                     |       |   |   |
| Dividends paid to shareholders                      |       | (2,547,000                               | )          | (2,547,000 | ) |
| Net borrowing under lines of credit                 |       | (156,000                                 | )          | 697,000 |   |
|                                                |       |                                     |       |   |   |
| Net cash used in financing activities               |       | (2,703,000                               | )          | (1,850,000 | ) |
|                                                |       |                                     |       |   |   |
| Effect of exchange rate changes                     |       | (15,000                                  | )          | (7,000 | ) |
|                                                |       |                                     |       |   |   |
| Net change in cash and cash equivalents             |       | 6,018,000                                |       | (4,582,000 | ) |
|                                                |       |                                     |       |   |   |
| Cash and cash equivalents at beginning of period    |       | 3,495,000                                |       | 5,915,000 |   |
|                                                |       |                                     |       |   |   |
| Cash and cash equivalents at end of period          |       | $                                        | 9,513,000  |   | $ | 1,333,000 |   |

 

 

See accompanying notes to consolidated financialstatements.

 

 

5

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Unaudited

 

INTERNATIONALALUMINUM CORPORATION

ANDSUBSIDIARIES

 

NOTESTO CONSOLIDATED FINANCIAL STATEMENTS

 

Basis of Presentation

 

                Inthe opinion of management, the accompanying unaudited consolidated financialstatements contain all adjustments (which consist solely of normal recurringadjustments unless otherwise disclosed) necessary to present fairly, in allmaterial respects, its financial position as of December 31, 2002 andJune 30, 2002, and the results of operations for the three and six monthperiods ended December 31, 2002 and 2001 and the cash flows for the six monthperiods ended December 31, 2002 and 2001. The results of operations for the three and six month periods endedDecember 31, 2002 and 2001 are not necessarily indicative of the results to beexpected for the full year.

 

                Thefinancial statements included herein have been prepared by the Company pursuantto the rules and regulations 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

 

                Comprehensiveincome, defined as net income and other comprehensive income, for the secondquarters ended December 31, 2002 and 2001 was $669,000 and $(1,674,000), respectively.  Comprehensive income for the six months ended December 31, 2002and 2001 was $1,045,000 and $(8,883,000), respectively. Other comprehensiveincome includes foreign currency translation adjustments recorded directly inshareholders’ equity.

 
| **Balance  Sheet Components**             |   | **Dec. 31,  2002** |        | **June 30,  2002** |   |
|-------------------------------------------|--------|--------------------|-------------|--------------------|--------|
| Inventories, lower of FIFO Cost or Market |   |               |        |               |   |
| Raw materials                             |   | $                  | 27,663,000  |               | $      | 28,576,000 |   |
| Work in process                           |   | 334,000            |        | 560,000            |   |
| Finished goods                            |   | 3,979,000          |        | 4,265,000          |   |
|                                      |   | $                  | 31,976,000  |               | $      | 33,401,000 |   |
|                                      |   |               |        |               |   |
| Shareholders’ Equity                 |   |               |        |               |   |
| Common stock                              |   | $                  | 4,765,000   |               | $      | 4,765,000 |   |
| Paid-in capital                           |   | 4,123,000          |        | 4,123,000          |   |
| Retained earnings                         |   | 100,755,000        |        | 101,941,000        |   |
| Accumulated other comprehensive income    |   | (339,000           | )           | (24,000            | )      |
|                                      |   | $                  | 109,304,000 |               | $      | 110,805,000 |   |

 

 

6

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Unaudited

Segment Information

 

                Thefollowing presents the Company’s net sales, operating income and total assetsby operating segment, reconciling to the Company’s totals.  All data presented in thousands of dollars.

 

 
| Net Sales:               | ** ** | **Three  Months Ended  December 31,** | ** ** | **Six Months  Ended  December 31,** | ** ** |
|--------------------------|------------|---------------------------------------|------------|-------------------------------------|------------|
|                     |       | **2002**                              |       | **2001**                            |       | **2002** |   | **2001** |   |
| Commercial               |       | $                                     | 24,301     |                                | $          | 28,361 |   | $ | 49,872 |   | $ | 57,997 |   |
| Residential              |       | 12,909                                |       | 11,569                              |       | 26,454 |   | 25,177 |   |
| Aluminum Extrusion       |       | 21,327                                |       | 21,034                              |       | 42,441 |   | 46,739 |   |
| Total Segments           |       | 58,537                                |       | 60,964                              |       | 118,767 |   | 129,913 |   |
| Eliminations             |       | (12,308                               | )          | (13,662                             | )          | (22,810 | ) | (29,347 | ) |
| Total                    |       | $                                     | 46,229     |                                | $          | 47,302 |   | $ | 95,957 |   | $ | 100,566 |   |
|                     |       |                                  |       |                                |       |   |   |   |   |
| Operating Income (Loss): |       | **Three Months Ended  December 31,**  | ** ** | **Six Months Ended  December 31,**  |       |
|                     |       | **2002**                              |       | **2001**                            |       | **2002** |   | **2001** |   |
| Commercial               |       | $                                     | 1,203      |                                | $          | 2,856 |   | $ | 3,636 |   | $ | 5,347 |   |
| Residential              |       | 1,602                                 |       | (755                                | )          | 2,426 |   | (626 | ) |
| Aluminum Extrusion       |       | 496                                   |       | (719                                | )          | 375 |   | (376 | ) |
| Total Segments           |       | 3,301                                 |       | 1,382                               |       | 6,437 |   | 4,345 |   |
| Eliminations             |       | (559                                  | )          | (22                                 | )          | (619 | ) | 134 |   |
| Corporate                |       | (1,852                                | )          | (2,455                              | )          | (3,820 | ) | (3,851 | )* |
| Total                    |       | $                                     | 890        |                                | $          | (1,095 | ) | $ | 1,998 |   | $ | 628 |   |
|                     |       |                                  |       |                                |       |   |   |   |   |
| Total Assets:            |       | **Dec. 31,  2002**                    | ** ** | **June 30,  2002**                  |       |   |   |   |   |
| Commercial               |       | $                                     | 61,943     |                                | $          | 63,537 |   |   |   |   |   |
| Residential              |       | 24,657                                |       | 28,776                              |       |   |   |   |   |
| Aluminum Extrusion       |       | 33,615                                |       | 34,915                              |       |   |   |   |   |
| Total Segments           |       | 120,215                               |       | 127,228                             |       |   |   |   |   |
| Corporate                |       | 12,132                                |       | 5,496                               |       |   |   |   |   |
| Total                    |       | $                                     | 132,347    |                                | $          | 132,724 |   |   |   |   |   |

 

----

*Net of $631 gain on sale of former operatingfacility

 

 

7

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Unaudited

## Discontinued Operations

 

                Duringthe second quarter of fiscal year 2002, the Company announced the closure ofMaestro Products, its wood window and door subsidiary, which was a component ofthe Residential Products segment.  Inaccordance with SFAS No. 144, “Accounting for the Impairment or Disposal ofLong-Lived Assets”, the Company wrote-down the net assets of Maestro to theirestimated net realizable 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 In Accounting

 

                TheCompany adopted SFAS No. 142, “Goodwill and Other Intangible Assets” effectiveJuly 1, 2001, which required that existing goodwill be reviewed for impairmentusing a revised methodology.  TheCompany completed the transitional impairment test and determined that a$7,935,000 non-cash transition charge was required to reduce goodwill.  The transition charge is reflected as acumulative effect of an accounting change effective July 1, 2001 and thepreviously reported results for the quarter ended September 30, 2001 wereretroactively adjusted.

 

 

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

ANDRESULTS OF OPERATIONS

 

Significant Changes in Results of Operations

 

                Net sales decreased by$1,073,000 or 2.3% for the quarter ended December 31, 2002 and by $4,609,000 or4.6% for the six months then ended when compared with the respective prior yearperiods.  Sales of the CommercialProducts Group declined by $4,163,000 or 14.7% for the quarter and $8,338,000or 14.4% for the six months compared to the same periods last year, reflectiveof the continued soft commercial construction market coupled with increasedcompetitive conditions.  Partiallyoffsetting these decreases are increases by the Aluminum Extrusion Group of$1,555,000 or 20.2% for the quarter and $2,120,000 or 11.8% for the six monthscompared to the same periods last year. Although net tonnage shipped,particularly in the area served by our Texas facility, increased by 27.3% forthe quarter and 19.1% year to date when compared to the same periods last year,there is continued pressure on pricing. Sales of Residential Products increased by $1,535,000 or 13.5% for thequarter and $1,609,000 or 6.5% for the six months compared to the same periods lastyear.  These increases reflect continuedsuccess in replacing sales lost due to last year’s trade union strike at ourSouth Gate, California facility as well as volume formerly contributed by largehome improvement centers.  During the prior year the Residentialsubsidiaries discontinued being the stocking supplier for these stores which wehad supplied on a regional basis.  Last year sales to largehome improvement centers amounted to 15.6% and 13.3% of sales for the quarterand six month periods compared to only 2.3% and 2.5% for the respective currentyear periods.  While encouraged by theoverall performance of the Residential Products Group during the first half offiscal year 2003, the Company’s Colorado facility was unable to generatesufficient sales to operate profitably. Management continues to pursue new strategies in order to increaserevenues at this location.

 

 

8

----

Unaudited

 

                Cost of sales as a percentage ofnet sales was 85.4% for the quarter ended December 31, 2002 as opposed to 84.0%for the same period last year and for the six-month period was 83.2% comparedto 82.9% for the same period last year. These increases are mainly due to increased labor and overhead costpercentages in the Commercial Products Group resulting from normal productioncosts being spread over significantly diminished sales coupled with increasedcosts associated with the start up of two new horizontal paint lines.  In addition, margins were impacted by a morecompetitive price structure as well as higher than expected material costs forsome major products incurred at our U. S. Aluminum-Texas facility during thecurrent quarter.  Although showing signsof improvement in the current quarter, the Aluminum Extrusion Group incurredhigher labor cost percentages for the current year to date period when comparedwith the same period last year as the result of decreased unit salesprices.  Partially offsetting theseincreases were decreased material, labor and overhead costs in the ResidentialProducts Group for the current quarter and the six-month period compared to theprior year. This is reflective of their continued recovery from prior year’sstrike related inefficiencies.

 

                Selling, general and administrative expenses decreased by $2,796,000 or32.3% from the prior year quarter and by $2,492,000 or 15.0% for the six-monthperiod.  Excluding a $631,000 gain onthe sale of a former operating facility which was recognized during the firstquarter last year, this six-month comparison would have shown a net decrease of$3,299,000 or 19.1%.  A large portion ofthe decrease in selling, general and administrative expenses was due to theCompany recording income relating to recoveries on retrospective workers’compensation policies totaling $1,134,000 and $716,000 for the three and sixmonth periods ended December 31, 2002, respectively, compared to an expense of$78,000 and $421,000 being recorded in the comparable periods during fiscalyear 2002.  The Company anticipatesreceiving refunds of previously expensed premiums due to changes in actual andprojected claim activity.  The decreasealso reflects reduced employment and advertising costs in the current year aswell as the prior year containing some additional costs for strike relatedsecurity and legal services.

 

                The effective tax rate for the six monthsended December 31, 2002 was 37.3% whereas the comparable period of the prioryear was 39.9%, primarily due to the impact of state income taxes.

 

 

#### Liquidityand Capital Resources

 

                Workingcapital at December 31, 2002 stood at $60,573,000, an increase of $2,516,000from June 30, 2002.  The ratio ofcurrent assets to current liabilities is currently 4.5 as compared to 4.6 as ofthe beginning of the year.

 

                TheCompany’s projected net capital expenditures for fiscal 2003 and relatedfinancing remain unchanged from those described in the June 30, 2002 AnnualReport.  The Company’s domestic line ofcredit remains unchanged from that described in the June 30, 2002 Annual Reportto Shareholders.

 

 

9

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Recent Accounting Pronouncements

 

                InJanuary 2003, the FASB issued SFAS No. 148, “Accounting forStock-Based Compensation-Transition and Disclosure, an amendment of FASBStatement No. 123.” SFAS No. 148 provides alternative methods oftransition for a voluntary change to the fair value based method of accountingfor stock-based employee compensation. It also requires disclosures in bothannual and interim financial statements about the method of accounting forstock-based employee compensation and the effect of the method used on reportedresults. SFAS No. 148 is effective for annual and interim periodsbeginning after December 15, 2002. As the Company has elected not tochange to the fair value based method of accounting for stock-based employeecompensation, the adoption of SFAS No. 148 will not have an impact uponour financial condition or results of operations.

 

Forward-Looking Information

 

                Thisreport contains forward-looking statements with respect to the financialcondition, results of operations and business of the Company.  Such items are subject to certain risks anduncertainties that could cause actual results to differ materially from thoseset forth in such statements.  Readersare cautioned not to place undue reliance on these forward-looking statements,which speak only as of the date the statement was made.  The Company undertakes no obligation topublicly update or revise any forward-looking statements, whether as a resultof new information, future events or otherwise.

 

Controls and Procedures

 

                Within90 days prior to the filing date of this report, a review was performed underthe supervision and with the participation of the Company’s management,including the Chief Executive Officer (“CEO”) and the Chief Financial Officer(“CFO”), of the effectiveness of the design and operation of the Company’sdisclosure controls and procedures. Based on that review, the Company’s management, including the CEO andCFO, concluded that the Company’s disclosure controls and procedures wereeffective.  There have been nosignificant changes in the Company’s internal controls or in other factors thatcould significantly affect these controls subsequent to the completion of theirreview.

 

 

INTERNATIONALALUMINUM CORPORATION

ANDSUBSIDIARIES

 

 

PARTII.  OTHER INFORMATION

 

Item 4(c).  Submission of Matters to a Vote of SecurityHolders

 

                OnOctober 31, 2002, the Company held its 2002 Annual Shareholders Meeting.  Shareholders voted proxies representing4,013,953 shares, which was 94.6% of the 4,244,794 shares outstanding on therecord date.  The proposed slate ofdirectors was elected with 3,953,586 shares and the selected independentaccountants were ratified with 3,981,152 shares.

 

 

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SIGNATURES

 

 

                Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
|   |               |   | International  Aluminum Corporation   |
|--------|--------------------|--------|---------------------------------------|
|   |               |   | (Registrant)                          |
|   |               |   |                                  |
| Date:  | February  13, 2003 |   | MITCHELL  K. FOGELMAN                 |
|   |               |   | Mitchell  K. Fogelman                 |
|   |               |   | Senior  Vice President — Finance |
|   |               |   | (Principal  Financial Officer)        |
|   |               |   |                                  |
| Date:  | February  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 this quarterly report on Form10-Q of International Aluminum Corporation;

 

2.               Based on my knowledge, this quarterly reportdoes not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

 

3.               Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

 

4.               The registrant’s other certifying officersand I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

a.               designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

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

c.               presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifying officersand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent function):

a.               all significant deficiencies in the design oroperation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

b.              any fraud, whether or not material, that involvesmanagement or other employees who have a significant role in the registrant’sinternal controls; and

 

6.               The registrant’s other certifying officersand I have indicated in this quarterly report whether or not there weresignificant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 

 
| Date: February 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 this quarterly report on Form10-Q of International Aluminum Corporation;

 

2.               Based on my knowledge, this quarterly reportdoes not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstancesunder which such statements were made, not misleading with respect to theperiod covered by this quarterly report;

 

3.               Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

 

4.               The registrant’s other certifying officersand I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

a.               designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

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

c.               presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifying officersand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent function):

a.               all significant deficiencies in the design oroperation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

b.              any fraud, whether or not material, thatinvolves management or other employees who have a significant role in theregistrant’s internal controls; and

 

6.               The registrant’s other certifying officers andI have indicated in this quarterly report whether or not there were significantchanges in internal controls or in other factors that could significantlyaffect internal controls subsequent to the date of our most recent evaluation,including any corrective actions with regard to significant deficiencies andmaterial weaknesses.

 

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

 

 

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