SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For quarter ended March 31, 2004

Commission File Number 1-7256

INTERNATIONAL ALUMINUM CORPORATION

(Exact name 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 Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

At May 3, 2004 there were 4,244,794 shares of Common Stock outstanding.

INTERNATIONAL ALUMINUM CORPORATION

AND SUBSIDIARIES

INDEX

PART I. Financial Information

	Item 1.	Financial Statements.

		Consolidated Balance Sheets - March 31, 2004 and June 30, 2003

		Consolidated Statements of Income - three and nine month periods ended March 31, 2004 and 2003

		Consolidated Statements of Cash Flows - nine months ended March 31, 2004 and 2003

		Notes to Consolidated Financial Statements

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

	Item 4.	Controls and Procedures.

PART II. Other Information

	Item 6.	Exhibits and Reports on Form 8-K.

Signatures

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

International Aluminum Corporation

and Subsidiaries

Consolidated Balance Sheets

	Mar. 31, 2004			June 30, 2003
	(Unaudited)
Assets

Current assets:
Cash and cash equivalents	$	15,245,000		$	12,570,000
Accounts receivable, net	34,129,000			34,336,000
Inventories	31,975,000			28,551,000
Prepaid expenses and deposits	2,483,000			2,583,000
Future income tax benefits	2,239,000			2,239,000

Total current assets	86,071,000			80,279,000

Property, plant and equipment, at cost	121,700,000			120,829,000
Accumulated depreciation	(71,814,000		)	(68,999,000		)

Net property, plant and equipment	49,886,000			51,830,000

Other assets:
Costs in excess of net assets of purchased businesses	616,000			605,000
Other	718,000			529,000

Total other assets	1,334,000			1,134,000

	$	137,291,000		$	133,243,000

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable	$	9,189,000		$	7,407,000
Accrued liabilities	11,205,000			9,054,000
Advances payable to banks	480,000			590,000
Income taxes payable	—			299,000

Total current liabilities	20,874,000			17,350,000

Deferred income taxes	6,357,000			6,357,000

Total liabilities	27,231,000			23,707,000

Shareholders’ equity	110,060,000			109,536,000

	$	137,291,000		$	133,243,000

See accompanying notes to consolidated financial statements.

Unaudited

International Aluminum Corporation

and Subsidiaries

Consolidated Statements of Income

	Three Months Ended March 31,						Nine Months Ended March 31,
	2004			2003			2004			2003

Net sales	$	50,064,000		$	47,648,000		$	153,718,000		$	142,576,000
Cost of sales	40,591,000			38,545,000			122,673,000			116,761,000
Gross profit	9,473,000			9,103,000			31,045,000			25,815,000
Selling, gen. and admin. expenses	8,067,000			7,296,000			24,490,000			21,212,000
Income from operations	1,406,000			1,807,000			6,555,000			4,603,000
Interest (income) expense, net	(9,000		)	6,000			(24,000		)	9,000
Income from continuing operations before income taxes	1,415,000			1,801,000			6,579,000			4,594,000
Provision for income taxes	560,000			672,000			2,624,000			1,714,000
Income from continuing operations	855,000			1,129,000			3,955,000			2,880,000
Income (loss) from discontinued operations	—			(222,000		)	129,000			(612,000		)

Net income	$	855,000		$	907,000		$	4,084,000		$	2,268,000

Basic and diluted EPS:
Continuing operations	$	.20		$	.27		$	.93		$	.68
Discontinued operations	—			(.06		)	.03			(.15		)
Total	$	.20		$	.21		$	.96		$	.53

Shares used to compute EPS:
Basic	4,244,794			4,244,794			4,244,794			4,244,794
Diluted	4,251,235			4,244,794			4,246,941			4,244,794

Cash dividends per share	$	.30		$	.30		$	.90		$	.90

See accompanying notes to consolidated financial statements.

International Aluminum Corporation

and Subsidiaries

Consolidated Statements of Cash Flows

	Nine Months Ended March 31,
	2004			2003

Cash flows from operating activities:
Net income	$	4,084,000		$	2,268,000
Adjustments for noncash transactions:
Depreciation and amortization	4,930,000			5,266,000
Gain on discontinued operations	—			(110,000		)
Changes in assets and liabilities:
Receivables	270,000			(2,545,000		)
Inventories	(3,372,000		)	426,000
Prepaid expenses and deposits	(86,000		)	292,000
Accounts payable	1,731,000			1,562,000
Accrued liabilities	2,182,000			739,000
Income taxes payable	(280,000		)	(89,000		)

Net cash provided by operating activities	9,459,000			7,809,000

Cash flows from investing activities:
Capital expenditures	(3,031,000		)	(2,505,000		)
Proceeds from sales of capital assets	180,000			2,786,000

Net cash provided by (used in) investing activities	(2,851,000		)	281,000

Cash flows from financing activities:
Dividends paid to shareholders	(3,820,000		)	(3,820,000		)
Net borrowing under lines of credit	(126,000		)	(472,000		)

Net cash used in financing activities	(3,946,000		)	(4,292,000		)

Effect of exchange rate changes	13,000			13,000

Net change in cash and cash equivalents	2,675,000			3,811,000

Cash and cash equivalents at beginning of period	12,570,000			3,495,000

Cash and cash equivalents at end of period	$	15,245,000		$	7,306,000

See accompanying notes to consolidated financial statements.

International Aluminum Corporation

and Subsidiaries

Notes To Consolidated Financial Statements

Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which consist solely of normal recurring adjustments unless otherwise disclosed) necessary to present fairly, in all material respects, its financial position as of March 31, 2004 and June 30, 2003, and the results of operations for the three and nine month periods ended March 31, 2004 and 2003 and the cash flows for the nine month periods ended March 31, 2004 and 2003. The results of operations for the three and nine month periods ended March 31, 2004 and 2003 are not necessarily indicative of the results to be expected for the full year.

The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles, in the United States of America, have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto 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 third quarters ended March 31, 2004 and 2003 was $744,000 and $1,504,000, respectively. Comprehensive income for the nine months ended March 31, 2004 and 2003 was $4,344,000 and $2,549,000, respectively. Other comprehensive income includes foreign currency translation adjustments recorded directly in shareholders’ equity.

Balance Sheet Components	Mar. 31, 2004		June 30, 2003

Inventories, lower of FIFO Cost or Market
Raw materials	$	26,664,000	$	23,374,000
Work in process	817,000		430,000
Finished goods	4,494,000		4,747,000
	$	31,975,000	$	28,551,000

Shareholders’ Equity
Common stock	$	4,765,000	$	4,765,000
Paid-in capital	4,123,000		4,123,000
Retained earnings	99,840,000		99,576,000
Accumulated other comprehensive income	1,332,000		1,072,000
	$	110,060,000	$	109,536,000

Segment Information

The following presents the Company’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 March 31,						Nine Months Ended March 31,
	2004			2003			2004			2003

Commercial	$	23,817		$	24,487		$	71,984		$	74,359
Residential	15,403			13,370			47,561			38,795
Aluminum Extrusion	22,259			19,632			70,524			62,073
Total Segments	61,479			57,489			190,069			175,227
Eliminations	(11,415		)	(9,841		)	(36,351		)	(32,651		)
Total	$	50,064		$	47,648		$	153,718		$	142,576

Operating Income (Loss):	Three Months Ended March 31,						Nine Months Ended March 31,
	2004			2003			2004			2003

Commercial	$	1,231		$	1,675		$	4,775		$	5,311
Residential	2,336			2,133			7,998			5,357
Aluminum Extrusion	(290		)	(317		)	471			58
Total Segments	3,277			3,491			13,244			10,726
Eliminations	308			284			(46		)	(335		)
Corporate	(2,179		)	(1,968		)	(6,643		)	(5,788		)
Total	$	1,406		$	1,807		$	6,555		$	4,603

Total Assets:	Mar. 31, 2004		June 30, 2003

Commercial	$	59,704	$	59,397
Residential	25,704		25,135
Aluminum Extrusion	35,669		36,016
Total Segments	121,077		120,548
Corporate	16,214		12,695
Total	$	137,291	$	133,243

Discontinued Operations

During the fourth quarter of fiscal year 2003, the Company announced the closure of International Window-Colorado, a vinyl window and door subsidiary, which was a component of the Residential Products segment. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company wrote-down the net assets of International Window-Colorado to their estimated net realizable value and reported International Window-Colorado’s results as discontinued operations. Due primarily to favorable results experienced in selling a portion of International Window-Colorado’s equipment and inventory and collection of accounts receivable balances, the Company recognized a net gain in fiscal year 2004 which has also been classified as discontinued operations. The Company does not anticipate any further activity with respect to International Window-Colorado in the future.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

Net sales increased by $2,416,000 or 5.1% for the quarter ended March 31, 2004 and by $11,142,000 or 7.8% for the nine months then ended when compared with the respective prior year periods. Sales of the Residential Products Group increased by $1,950,000 or 14.6% for the quarter and $8,607,000 or 22.3% for the nine months compared to the same periods last year. Low interest rates and increased consumer confidence continue to stimulate new home construction, resales of existing homes and home improvement spending. In addition, sales at our South Gate, California facility continue to improve due to increased customer confidence in product quality and customer service that had suffered during the prolonged strike in fiscal 2002. New product development and new marketing and advertising programs have also contributed to the increase. Sales of the Aluminum Extrusion Group increased by $1,223,000 or 12.3% for the quarter and $5,119,000 or 17.0% for the nine months compared to the same periods last year. Net tonnage shipped increased by 8.3% for the quarter and 13.6% year to date when compared to the same periods last year. The Extrusion Group continues to benefit from expanded geographic market penetration, particularly the area served by our Texas facility. Still subject to a highly competitive market, the Group increased sales prices this quarter commensurate with the increased cost of aluminum. Partially offsetting these increases are decreases by the Commercial Products Group, wherein sales for the current quarter decreased by $757,000 or 3.1% and $2,584,000 or 3.5% for the nine months compared to the same periods last year. Although some geographic market areas experienced gains during the current quarter, the year to date decrease is reflective of the continuing soft commercial construction market coupled with increased competitive conditions. Increases from sales of newly developed product lines have somewhat offset the overall declines for this Group.

Cost of sales as a percentage of net sales was 81.1% for the quarter ended March 31, 2004 as opposed to 80.9% for the same period last year and for the nine-month period was 79.8% compared to 81.9% for the same period last year. Although cost of sales percentages for all Groups was relatively flat for the current three-month period compared to last year, all Groups achieved reductions, to varying degrees, in their cost percentages during the current nine-month period compared to last year. The Residential Products Group experienced decreased material, labor and overhead cost percentages compared to the prior year reflecting production efficiencies attained from additional automation and the substantially higher sales volume. The Commercial Products Group achieved somewhat lower cost percentages as compared to last year mainly due to the prior year having unusually high material costs for some major projects at the U.S. Aluminum-Texas facility. Labor and overhead cost percentages were relatively unchanged, as cost containment efforts have offset the effect of spreading these costs over diminished sales in a highly competitive marketplace. While absorbing higher material costs compared to last year, the Aluminum Extrusion Group incurred decreased labor and overhead cost percentages due to production efficiencies resulting from the higher tonnage output.

Selling, general and administrative expenses as a percentage of net sales were 16.1% for the quarter ended March 31, 2004 as opposed to 15.3% for the same period last year and were 15.9% for the nine-month period compared to 14.9% for the same period last year. A portion of the increase during the year reflects increased employment, sales representation and promotional costs. During fiscal 2003, income relating to retrospective workers’ compensation policies totaled $183,000 and $900,000 for the three and nine-month periods, respectively, compared to income of $124,000 and additional expense of $10,000 for the comparable periods of the current year.

The effective tax rate for the nine months ended March 31, 2004 was 39.9% whereas the comparable period of the prior year was 37.3%. The lower prior year rate reflects benefits available for foreign losses.

Liquidity and Capital Resources

Working capital at March 31, 2004 stood at $65,197,000, an increase of $2,268,000 from June 30, 2003. The ratio of current assets to current liabilities is currently 4.1 as compared to 4.6 as of the beginning of the year.

The Company’s projected net capital expenditures for fiscal 2004 and related financing remain unchanged from those described in the June 30, 2003 Annual Report. The Company’s domestic line of credit remains unchanged from that described in the June 30, 2003 Annual Report to Shareholders.

Recent Accounting Pronouncements

The Company will not be affected by any recent pronouncements.

Forward-Looking Information

This report contains forward-looking statements with respect to the financial condition, results of operations and business of the Company. Such items are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in such statements. Readers are 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 to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Fluctuating foreign exchange rates may impact the Company’s earnings. The Company’s foreign exchange exposure is related to activities associated with its Canadian subsidiaries. The Company does not attempt to manage these risks by entering into forward exchange contracts.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”). Based on this evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective in causing material company information to be recorded, processed, summarized and reported to our management on a timely basis to insure that the quality and timeliness of the Company’s public disclosures complies with its Securities and Exchange Commission disclosure obligations.

There have been no significant changes in our internal controls or in other factors that could significantly affect internal control subsequent to the evaluation.

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits:

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K:

Date of Report		Item Reported

February 12, 2004		Press release issued announcing the Company’s second quarter fiscal year 2004 earnings results.

February 18, 2004		Press release issued announcing the retention of The Seidler Companies Inc., Investment Bankers, as its financial advisors to assist in efforts to maximize shareholder value.

SIGNATURES

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

		International Aluminum Corporation
		(Registrant)


Date:	May 12, 2004	MITCHELL K. FOGELMAN
		Mitchell K. Fogelman
		Senior Vice President – Finance
		(Principal Financial Officer)


Date:	May 12, 2004	MICHAEL J. NORRING
		Michael J. Norring
		Controller
		(Principal Accounting Officer)

Date: May 12, 2004	CORNELIUS C. VANDERSTAR
	Cornelius C. Vanderstar
	Chairman of the Board and
	Chief Executive Officer

Date: May 12, 2004	CORNELIUS C. VANDERSTAR
	Cornelius C. Vanderstar
	Chairman of the Board and
	Chief Executive Officer