# **SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

 

----

 

 

**FORM 10-Q**

 

 

 

| **QUARTERLY REPORT PURSUANT TO  SECTION 13****OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|-----------------------------------------------------------------------------------------|

 

 

 

**Forquarter ended December 31, 2001**

**CommissionFile 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 reportsrequired to be filed by Section 13 of the Securities Exchange Act of 1934during the preceding 12 months and (2) has been subject to such filingrequirements for the past 90 days.  Yes  ý   No  o

 

At February 1, 2002 there were 4,244,794 shares of Common Stockoutstanding.

 

 

 

 

INTERNATIONAL ALUMINUMCORPORATION

AND SUBSIDIARIES

 

INDEX

 

 

| PART  I.  | Financial  Information                                                                                   |
|----------------|----------------------------------------------------------------------------------------------------------|
|           |                                                                                                     |
|           | Consolidated Balance Sheets  -   December 31, 2001 and June 30, 2001                                |
|           |                                                                                                     |
|           | Consolidated  Statements of Income -  three and six month periods ended  December 31, 2001 and 2000 |
|           |                                                                                                     |
|           | Consolidated  Statements of Cash Flows -  six months ended December 31, 2001  and 2000              |
|           |                                                                                                     |
|           | 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                                                                                               |
|                |                                                                                                          |  |

 

2

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PART I

 

INTERNATIONALALUMINUM CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATED BALANCESHEETS

 

 
|                                                         |   | Unaudited               |        | Audited                 |   |
|--------------------------------------------------------------|--------|-------------------------|-------------|-------------------------|--------|
|                                                         |   | Dec. 31, 2001 |        | June 30, 2001 |   |
| Assets                                                       |   |                    |        |                    |   |
|                                                         |   |                    |        |                    |   |
| Current assets:                                              |   |                    |        |                    |   |
| Cash and cash  equivalents                                   |   | $                       | 1,333,000   |                    | $      | 5,915,000 |   |
| Accounts  receivable, net                                    |   | 37,293,000              |        | 37,711,000              |   |
| Inventories                                                  |   | 37,229,000              |        | 37,731,000              |   |
| Prepaid expenses  and deposits                               |   | 2,903,000               |        | 2,597,000               |   |
| Future income  tax benefits                                  |   | 1,382,000               |        | 1,406,000               |   |
|                                                         |   |                    |        |                    |   |
| Total current  assets                                        |   | 80,140,000              |        | 85,360,000              |   |
|                                                         |   |                    |        |                    |   |
| Property, plant  and equipment, at cost                      |   | 117,965,000             |        | 114,693,000             |   |
| Accumulated  depreciation                                    |   | (62,579,000             | )           | (61,145,000             | )      |
|                                                         |   |                    |        |                    |   |
| Net property,  plant and equipment                           |   | 55,386,000              |        | 53,548,000              |   |
|                                                         |   |                    |        |                    |   |
| Other assets:                                                |   |                    |        |                    |   |
| Costs in excess  of net assets of  purchased businesses |   | 8,949,000               |        | 8,966,000               |   |
| Other                                                        |   | 305,000                 |        | 196,000                 |   |
|                                                         |   |                    |        |                    |   |
| Total other  assets                                          |   | 9,254,000               |        | 9,162,000               |   |
|                                                         |   |                    |        |                    |   |
|                                                         |   | $                       | 144,780,000 |                    | $      | 148,070,000 |   |
|                                                         |   |                    |        |                    |   |
|                                                         |   |                    |        |                    |   |
|                                                         |   |                    |        |                    |   |
|                                                         |   |                    |        |                    |   |
| Liabilities and  Shareholders’ Equity                   |   |                    |        |                    |   |
|                                                         |   |                    |        |                    |   |
| Current  liabilities:                                        |   |                    |        |                    |   |
| Accounts payable                                             |   | $                       | 8,439,000   |                    | $      | 9,235,000 |   |
| Accrued  liabilities                                         |   | 10,175,000              |        | 9,347,000               |   |
| Advances payable  to banks                                   |   | 854,000                 |        | 165,000                 |   |
| Income taxes  payable                                        |   | —                  |        | 516,000                 |   |
|                                                         |   |                    |        |                    |   |
| Total current  liabilities                                   |   | 19,468,000              |        | 19,263,000              |   |
|                                                         |   |                    |        |                    |   |
| Deferred income  taxes                                       |   | 5,052,000               |        | 5,052,000               |   |
|                                                         |   |                    |        |                    |   |
| Total  liabilities                                           |   | 24,520,000              |        | 24,315,000              |   |
|                                                         |   |                    |        |                    |   |
| Shareholders’  equity                                   |   | 120,260,000             |        | 123,755,000             |   |
|                                                         |   |                    |        |                    |   |
|                                                         |   | $                       | 144,780,000 |                    | $      | 148,070,000 |   |
|                                                         |   |                    |        |                    |   |
|                                                         |   |                    |        |                    |   |

 

See accompanying notes to consolidated financial statements.

 

3

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Unaudited

 

 

INTERNATIONALALUMINUM CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTSOF INCOME

 

 
|                                                                |   | Three Months Ended |             | Six Months Ended |   |
|---------------------------------------------------------------------|--------|--------------------|------------------|------------------|--------|
|                                                                |   | December 31,       |             | December 31,     |   |
|                                                                |   | 2001               |             | 2000             |   | 2001 |   | 2000 |   |
|                                                                |   |               |             |             |   |   |   |   |   |
| Net sales                                                           |   | $                  | 47,302,000       |             | $      | 52,673,000 |   | $ | 100,566,000 |   | $ | 106,805,000 |   |
| Cost of sales                                                       |   | 39,748,000         |             | 42,164,000       |   | 83,339,000 |   | 86,027,000 |   |
| Gross profit                                                        |   | 7,554,000          |             | 10,509,000       |   | 17,227,000 |   | 20,778,000 |   |
| Selling, gen.  and admin. expenses                                  |   | 8,649,000          |             | 7,769,000        |   | 16,599,000 |   | 15,302,000 |   |
| Income (loss)  from operations                                      |   | (1,095,000         | )                | 2,740,000        |   | 628,000 |   | 5,476,000 |   |
| Interest  (income) expense, net                                     |   | 8,000              |             | (15,000          | )      | (13,000 | ) | 126,000 |   |
| Income (loss)  from continuing  operations before income taxes |   | (1,103,000         | )                | 2,755,000        |   | 641,000 |   | 5,350,000 |   |
| Provision for  income taxes                                         |   | (381,000           | )                | 1,034,000        |   | 255,000 |   | 2,003,000 |   |
| Income (loss)  from continuing  operations                     |   | (722,000           | )                | 1,721,000        |   | 386,000 |   | 3,347,000 |   |
| Income (loss)  from discontinued  operations                   |   | (889,000           | )                | 12,000           |   | (1,065,000 | ) | (81,000 | ) |
|                                                                |   |               |             |             |   |   |   |   |   |
| Net income  (loss)                                                  |   | $                  | (1,611,000  | )                | $      | 1,733,000 |   | $ | (679,000  | ) | $ | 3,266,000 |   |
|                                                                |   |               |             |             |   |   |   |   |   |
|                                                                |   |               |             |             |   |   |   |   |   |
|                                                                |   |               |             |             |   |   |   |   |   |
|                                                                |   |               |             |             |   |   |   |   |   |
| Basic and  diluted EPS:                                             |   |               |             |             |   |   |   |   |   |
| Continuing  operations                                              |   | $                  | (.17             | )                | $      | .41 |   | $ | .09 |   | $ | .79 |   |
| Discontinued  operations                                            |   | (.21               | )                | —           |   | (.25 | ) | (.02 | ) |
| Total                                                               |   | $                  | (.38             | )                | $      | .41 |   | $ | (.16 | ) | $ | .77 |   |
|                                                                |   |               |             |             |   |   |   |   |   |
|                                                                |   |               |             |             |   |   |   |   |   |
| 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 financial statements.

 

4

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Unaudited

 

 

INTERNATIONALALUMINUM CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

 

 
|                                                |   | Six Months Ended  |           |
|-----------------------------------------------------|--------|-------------------|----------------|
|                                                |   | December 31, |           |
|                                                |   | 2001              |           | 2000 |   |
|                                                |   |              |           |   |   |
| Cash flows from  operating activities:              |   |              |           |   |   |
| Net income  (loss)                                  |   | $                 | (679,000  | ) | $ | 3,266,000 |   |
| Adjustments for  noncash transactions:              |   |              |           |   |   |
| Depreciation and  amortization                      |   | 3,555,000         |           | 3,739,000 |   |
| Change in  deferred income taxes                    |   | 24,000            |           | — |   |
| Gain on sale of  fixed assets                       |   | (631,000          | )              | (390,000 | ) |
| Changes in  assets and liabilities:                 |   |              |           |   |   |
| Receivables                                         |   | 418,000           |           | 4,095,000 |   |
| Inventories                                         |   | 502,000           |           | 4,334,000 |   |
| Prepaid expenses  and deposits                      |   | (415,000          | )              | (337,000 | ) |
| Accounts payable                                    |   | (796,000          | )              | 2,096,000 |   |
| Accrued liabilities                                 |   | 828,000           |           | (645,000 | ) |
| Income taxes  payable                               |   | (516,000          | )              | (249,000 | ) |
|                                                |   |              |           |   |   |
| Net cash  provided by operating activities          |   | 2,290,000         |           | 15,909,000 |   |
|                                                |   |              |           |   |   |
| Cash flows from  investing activities:              |   |              |           |   |   |
| Capital  expenditures                               |   | (6,740,000        | )              | (2,561,000 | ) |
| Proceeds from  sales of capital assets              |   | 1,726,000         |           | 3,153,000 |   |
|                                                |   |              |           |   |   |
| Net cash  provided by (used in)investing activities |   | (5,014,000        | )              | 592,000 |   |
|                                                |   |              |           |   |   |
| Cash flows from  financing activities:              |   |              |           |   |   |
| Dividends paid  to shareholders                     |   | (2,547,000        | )              | (2,547,000 | ) |
| Net borrowing  under lines of credit                |   | 689,000           |           | (9,470,000 | ) |
|                                                |   |              |           |   |   |
| Net cash used in  financing activities              |   | (1,858,000   | )              | (12,017,000 | ) |
|                                                |   |              |           |   |   |
| Net change in  cash and cash equivalents            |   | (4,582,000        | )              | 4,484,000 |   |
|                                                |   |              |           |   |   |
| Cash and cash  equivalents at beginningof period    |   | 5,915,000         |           | 1,678,000 |   |
|                                                |   |              |           |   |   |
| Cash and cash  equivalents at end of period         |   | $                 | 1,333,000      |   | $ | 6,162,000 |   |

 

 

See accompanying notes to consolidated financial statements.

 

5

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Unaudited

 

 

INTERNATIONALALUMINUM CORPORATION

AND SUBSIDIARIES

 

NOTES TOCONSOLIDATED FINANCIAL STATEMENTS

 

 

 

Basis of Presentation

 

   In the opinion of management,the accompanying unaudited consolidated financial statements contain alladjustments (which consist solely of normal recurring adjustments unlessotherwise disclosed) necessary to present fairly, in all material respects, itsfinancial position as of December 31, 2001 and June 30, 2001, and theresults of operations for the three and six month periods ended December 31,2001 and 2000 and the cash flows for the six month periods ended December 31,2001 and 2000.  The results ofoperations for the three and six month periods ended December 31, 2001 and 2000are 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 asnet income and other comprehensive income, for the second quarters endedDecember 31, 2001 and 2000 was $(1,674,000) and $1,746,000, respectively.  Comprehensive income for the six months ended December 31, 2001and 2000 was $(948,000) and $3,205,000, respectively. Other comprehensiveincome includes foreign currency translation adjustments recorded directly inshareholders’ equity.

 
| Balance Sheet  Components                  |   | Dec. 31, 2001 |        | June 30, 2001 |   |
|--------------------------------------------|--------|---------------|-------------|---------------|--------|
|                                       |   |          |        |          |   |
| Inventories,  lower of FIFO Cost or Market |   |          |        |          |   |
| Raw materials                              |   | $             | 31,896,000  |          | $      | 32,153,000 |   |
| Work in process                            |   | 1,245,000     |        | 1,332,000     |   |
| Finished goods                             |   | 4,088,000     |        | 4,246,000     |   |
|                                       |   | $             | 37,229,000  |          | $      | 37,731,000 |   |
|                                       |   |          |        |          |   |
| Shareholders’  Equity                 |   |          |        |          |   |
| Common stock                               |   | $             | 4,765,000   |          | $      | 4,765,000 |   |
| Paid-in capital                            |   | 4,123,000     |        | 4,123,000     |   |
| Retained  earnings                         |   | 111,792,000   |        | 115,018,000   |   |
| Accumulated  other comprehensive income    |   | (420,000      | )           | (151,000      | )      |
|                                       |   | $             | 120,260,000 |          | $      | 123,755,000 |   |

 

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 presented in thousands of dollars.

 

 
| Net Sales:                |   | Three Months Ended |     | Six Months Ended |   |
|---------------------------|--------|--------------------|----------|------------------|--------|
|                      |   | December 31,       |     | December 31,     |   |
|                      |   | 2001               |     | 2000             |   | 2001 |   | 2000 |   |
|                      |   |               |     |             |   |   |   |   |   |
| Commercial                |   | $                  | 28,361   |             | $      | 30,119 |   | $ | 57,997 |   | $ | 58,255 |   |
| Residential               |   | 11,569             |     | 13,957           |   | 25,177 |   | 28,814 |   |
| Aluminum  Extrusion       |   | 21,034             |     | 24,825           |   | 46,739 |   | 46,893 |   |
| Total Segments            |   | 60,964             |     | 68,901           |   | 129,913 |   | 133,962 |   |
| Eliminations              |   | (13,662            | )        | (16,228          | )      | (29,347 | ) | (27,157 | ) |
| Total                     |   | $                  | 47,302   |             | $      | 52,673 |   | $ | 100,566 |   | $ | 106,805 |   |
|                      |   |               |     |             |   |   |   |   |   |
|                      |   |               |     |             |   |   |   |   |   |
|                      |   |               |     |             |   |   |   |   |   |
| Operating Income  (Loss): |   | Three Months Ended |     | Six Months Ended |   |
|                      |   | December 31,       |     | December 31,     |   |
|                      |   | 2001               |     | 2000             |   | 2001 |   | 2000 |   |
|                      |   |               |     |             |   |   |   |   |   |
| Commercial                |   | $                  | 2,856    |             | $      | 3,372 |   | $ | 5,347 |   | $ | 6,398 |   |
| Residential               |   | (755               | )        | 1,357            |   | (626 | ) | 2,712 |   |
| Aluminum  Extrusion       |   | (719               | )        | 75               |   | (376 | ) | (152 | ) |
| Total Segments            |   | 1,382              |     | 4,804            |   | 4,345 |   | 8,958 |   |
| Eliminations              |   | (22                | )        | (520             | )      | 134 |   | (58 | ) |
| Corporate                 |   | (2,455             | )        | (1,544           | )      | (3,851 | ) | (3,424 | ) |
| Total                     |   | $                  | (1,095   | )                | $      | 2,740 |   | $ | 628 |   | $ | 5,476 |   |
|                      |   |               |     |             |   |   |   |   |   |
|                      |   |               |     |             |   |   |   |   |   |
|                      |   |               |     |             |   |   |   |   |   |
| Total Assets:             |   | Dec. 31,           | June 30, |             |   |   |
|                      |   | 2001               | 2001     |             |   |   |
|                      |   |               |     |             |   |   |   |   |   |
| Commercial                |   | $                  | 68,095   |             | $      | 66,994 |   |   |   |   |   |
| Residential               |   | 30,635             |     | 32,405           |   |   |   |   |   |
| Aluminum  Extrusion       |   | 37,258             |     | 38,032           |   |   |   |   |   |
| Total Segments            |   | 135,988            |     | 137,431          |   |   |   |   |   |
| Corporate                 |   | 8,792              |     | 10,639           |   |   |   |   |   |
| Total                     |   | $                  | 144,780  |             | $      | 148,070 |   |   |   |   |   |
|                           |        |                    |          |                  |        |  |  |  |  |  |  |  |  |  |

 

   The Net Sales and OperatingIncome of the Residential Products segment excludes the operations of MaestroProducts, the Company’s wood window and door subsidiary, as it is accounted foras a discontinued operation. Significantly impacting the Residential segment was a costly laborstrike initiated in mid-September at a major facility, which necessitated thehiring and retraining of replacement personnel and the shifting of orders toother facilities.

 

   At quarter end, the Residentialsubsidiaries received notification that a large home improvement chain, whichwe supplied on a regional basis, was shifting their stock window and doorbusiness to an alternative supplier. This will diminish future sales but is not expected to significantlyimpact future operating income.

 

7

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Unaudited

 

 

INTERNATIONALALUMINUM CORPORATION

AND SUBSIDIARIES

##  

##  

## Current and PendingAccounting Changes

 

   The Company adopted SFAS No.142, “Goodwill and Other Intangible Assets” effective July 1, 2001, and as aresult is not required to expense goodwill in the amount of $278,000 for thesix months ended December 30, 2001. Excluding goodwill amortization for the same period last year would haveincreased reported net income to $3,544,000 and Basic and Diluted earnings pershare to $.83.  SFAS No. 142 alsorequires that existing goodwill be reviewed for impairment using revisedmethodology during the year of adoption. The Company has completed the initial phase of its transitional goodwillimpairment test which identified a potential impairment of goodwill related toa reporting unit within the Commercial Products Group.  Under the standard, the Company has untilthe end of its fiscal year to determine the implied fair value of goodwillrelated to this reporting unit and record a loss if the fair value is less thanthe goodwill’s carrying value.  Thiscalculation is currently in process. Although management cannot reasonably estimate the potential loss atthis time, the impairment charge is expected to be significant.

 

   In October 2001, the FinancialAccounting Standards Board issued SFAS No. 144, “Accounting for Impairment orDisposal of Long-Lived Assets”. This pronouncement provides specific guidancefor long-lived assets to be disposed of by sale, abandoned, exchanged for asimilar productive asset or distributed to owners in a spin-off.  The Company has adopted SFAS No. 144, andclassified the disposal of Maestro Products as a discontinued operation.  There were no other impairment chargesrelated to the adoption of this standard which impacted our consolidatedresults of operations or financial position.

 

#### DiscontinuedOperations

 

   In December 2001, the Companyannounced the disposal of Maestro Products, its wood window and door subsidiarywhich was a component of the Residential Products segment.  The Company is currently discussing the saleof the subsidiary with certain potential buyers.  Results of Maestro Products have been reclassified asdiscontinued operations and are shown net of taxes for all periods presented onthe statement of income.  Included inMaestro Products results for the three and six month periods ended December 31,2001 are $1,175,000 of charges related to the writedown of various assets,primarily inventory.  Results ofoperations for the periods presented are as follows:

 

 
|                                              |   | Three Months Ended |       | Six Months Ended |   |
|---------------------------------------------------|--------|--------------------|------------|------------------|--------|
|                                              |   | December 31        |       | December 31      |   |
|                                              |   | 2001               |       | 2000             |   | 2001 |   | 2000 |   |
|                                              |   |               |       |             |   |   |   |   |   |
| Net Sales                                         |   | $                  | 515,000    |             | $      | 921,000 |   | $ | 1,398,000 |   | $ | 1,686,000 |   |
|                                              |   |               |       |             |   |   |   |   |   |
| Pre tax income  (loss)                            |   | $                  | (1,478,000 | )                | $      | 18,000 |   | $ | (1,770,000 | ) | $ | (124,000 | ) |
| Provision for  income taxes                       |   | (589,000           | )          | 6,000            |   | (705,000 | ) | (43,000 | ) |
| Income (loss)  from  discontinued operations |   | $                  | (889,000   | )                | $      | 12,000 |   | $ | (1,065,000 | ) | $ | (81,000 | ) |

 

8

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OFOPERATIONS

 

 

Significant Changes in Results of Operations

 

   Net sales decreased by$5,371,000 or 10.1% for the quarter ended December 31, 2001 and by $6,239,000or 5.8% for the six months then ended when compared with the respective fiscal2001 periods.  The recession anduncertain economic climate has been felt to varying degrees by each of oursegments.  Sales for the ResidentialProducts Group have declined $2,486,000 or 18.0% for the quarter and $3,801,000or 13.3% for the six months compared to the same periods last year.  Compounding the slowdown in the economy,this group has continued to struggle due to the effects of the September 2001trade union strike at our South Gate, California facility.  As mentioned in the Form 10-Q for theSeptember 2001 quarter, this strike has hampered our ability to maintain normaldelivery schedules to our customers in the territory serviced by thisfacility.  The Aluminum Extrusion Groupsales decreased by $1,202,000 or 13.5% for the quarter and $2,242,000 or 11.1%for the six months compared to the same periods last year stemming fromcontinued softening in demand, particularly in the area served by our Texasfacility.  The Commercial Products Groupsales decreased by $1,683,000 or 5.6% for the quarter and $196,000 or 0.3% forthe six months compared to the same periods last year, primarily due todecreased sales by our RACO Interior Products subsidiary, coupled withdecreased sales during the quarter of our United States Aluminum exteriorproducts into the Southeastern U.S. marketing area.

 

   Cost of sales as a percentageof net sales was 84.0% for the quarter ended December 31, 2001 as opposed to80.0% for the same period last year and for the six months was 82.9% comparedto 80.5% for the same period last year. The Residential Products Group incurred higher costs due to productioninefficiencies resulting from the hiring and training of replacement personnelnecessitated by the aforementioned strike. Operations at the South Gate, California plant are returning to normalas the newly trained work force becomes more productive.  In addition, high overhead costs, includingsignificantly increased utility costs, were incurred at our Californiaextrusion facility.

 

   Selling, general andadministrative expenses increased by $880,000 or 11.3% over the prior yearquarter and by $1,297,000 or 8.5% for the six month period.  The increased expenses are primarily due toa significant swing from recovery to additional expense for retrospectiveworkers’ compensation adjustments for prior year claims.  An added factor was strike related highsecurity and legal costs related to the aforementioned strike.  Partially offsetting these costs is a gain realizedin the first quarter on the sale of our former Glass Group facility in SouthCarolina.

 

   The swing from net interestexpense for the prior year to net interest income in the current year relatesto the increase in funds available for investment.  The prior year net expense reflects utilization of a domesticline of credit used in part to finance heavy capital expenditures during thepreceding year.  The current quarter netinterest expense compared to the same period last year reflects heavier utilizationof foreign lines of credit by our Canadian facilities.

 

   The effective tax rate for thesix months ended December 31, 2001 was 39.9% whereas the comparable period ofthe prior year was 37.5%.

 

9

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Liquidity and Capital Resources

 

   Working capital at December 31,2001 stood at $60,672,000, a decrease of $5,425,000 from June 30,2001.  The ratio of current assets tocurrent liabilities is currently 4.1 as compared to 4.4 as of the beginning ofthe year.

 

   The Company’s projected netcapital expenditures for fiscal 2002 and related financing remain unchangedfrom those described in the June 30, 2001 Annual Report.  The Company’s domestic line of creditremains unchanged from that described in the June 30, 2001 Annual Report toShareholders.

 

 

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.

 

 

 

INTERNATIONALALUMINUM CORPORATION

AND SUBSIDIARIES

 

 

PART II. OTHER INFORMATION

 

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

 

   On October 25, 2001, theCompany held its 2001 Annual Shareholders Meeting.  Shareholders voted proxies representing 3,800,800 shares, whichwas 89.5% of the 4,244,794 shares outstanding on the record date.  The proposed slate of directors was electedwith 3,178,464 shares and the selected independent accountants were ratifiedwith 3,786,692 shares.  The proposal toapprove the adoption of the Company’s 2001 Stock Option Plan was ratified with2,840,474 shares.  A nonbindingshareholder proposal was not ratified with 2,761,323 shares cast againstadoption.

 

   Subsequent to the AnnualShareholders Meeting, Mitchell K. Fogelman resigned as a director of theCompany.  He is continuing to hold hisposition as Senior Vice President-Finance. Ronald L. Rudy, the Company’s Senior Vice President-Operations, waselected a director, filling the vacancy resulting from Mr. Fogelman’sresignation.

 

10

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SIGNATURES

 

 

   Pursuant to the requirements ofthe Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned thereunto duly authorized.

 
|   |              | International Aluminum  Corporation   |
|--------|-------------------|---------------------------------------|
|   |              | (Registrant)                          |
|   |              |                                  |
|   |              |                                  |
|   |              |                                  |
|   |              |                                  |
| Date:  | February 12, 2002 |                                  | MITCHELL K. FOGELMAN |
|   |              | Mitchell K. Fogelman                  |
|   |              | Senior Vice President —  Finance |
|   |              | (Principal Financial  Officer)        |
|   |              |                                  |
|   |              |                                  |
|   |              |                                  |
|   |              |                                  |
| Date:  | February 12, 2002 |                                  | MICHAEL J. NORRING |
|   |              | Michael J. Norring                    |
|   |              | Controller                            |
|   |              | (Principal Accounting Officer)        |