Aldila Reports 1999 Fourth Quarter and Full Year Results.Business Editors POWAY Pow·ay A community of southern California north of San Diego. It is near a large naval air base. Population: 49,100. , Calif.--(BUSINESS WIRE)--Feb. 16, 2000 Aldila, Inc. (NASDAQ/NMS:ALDA ALDA Association of Late-Deafened Adults ALDA Australian Learning Disability Association ALDA Adult Learning Development Association ALDA Asociación Larense de Astronomía (Barquisimeto, Venezuela) ALDA Alabama Dietetic Association ) today reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $11.6 million and a net loss of $432,000 ($0.03 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) for the fourth quarter ended December December: see month. 31, 1999, excluding a charge of $900,000 (after tax $540,000 or $0.03), primarily related to the remaining payments on the lease of its Rancho ran·cho n. pl. ran·chos Southwestern U.S. 1. A hut or group of huts for housing ranch workers. 2. A ranch. Bernardo Bernardo enraged that member of a rival street-gang is making advances to his sister. [Am. Musical: West Side Story] See : Anger , CA manufacturing operation which was consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: into its Poway, CA facility in 1997. After the charge, the fourth quarter net loss was $972,000 or ($0.06) per share. In the fourth quarter of 1998, Aldila reported net sales of $8.6 million and a net loss of $661,000 or ($0.04) per share, including plant consolidation charges. For the year ended December 31, 1999, net sales were $45.1 million, compared to net sales of $62.5 million in 1998. The company reported a net loss of $2.1 million for 1999 ($0.14 per diluted share), compared to net income of $2.8 million or $0.18 per diluted share in 1998. Aldila said that a Lease Termination Agreement has been negotiated with the landlord of the Rancho Bernardo manufacturing facility subsequent to closing the 1999 financial results. Performance of the terms of the agreement is expected in the first quarter of 2000, at which time the company anticipates the recovery of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $400,000 against previously taken plant consolidation charges. The company attributed its disappointing 1999 financial results to the golf industry's well-publicized over-inventory situation, declining shaft shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. selling prices and higher fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). per unit on lower production volume. &uot;We are encouraged by our 1999 fourth quarter incoming Incoming is a 3-D shooter developed by Rage Software and published by Interplay. The PC version was released in late 1998, and the Dreamcast version, a launch title for the console, was released in 1998 in Japan and in 1999 in the rest of the world. order rate which was 40% stronger than in the fourth quarter of 1998. This rate is currently continuing in the first quarter, which leads us to believe that the inventory concerns hanging over the industry in 1999 have been corrected,&uot;said Peter R. Mathewson Math·ew·son , Christopher Known as "Christy." 1880-1925. American baseball player who won 373 games as a right-handed pitcher for the New York Giants (1900-1916). , Chairman and Chief Executive Officer, Aldila, Inc. &uot;We see renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. enthusiasm from our customers with their new product introductions and we are receiving orders supporting that optimism Optimism See also Hope. Bontemps, Roger personification of cheery contentment. [Fr. Lit.: “Roger Bontemps” in Walsh Modern, 66] Candide beset by inconceivable misfortunes, hero indifferently shrugs them off. [Fr. . The recovery in our business is broad based, impacting all three segments of the market for Aldila golf shafts The shaft of a golf club is the long, cylindrical piece - generally made of steel or graphite - which connects the golfer’s hands to the club head. While hundreds of different designs exist, the primary purpose of the golf shaft remains the same - to provide the player with a , Premium, Distribution and Value. We are currently ramping up our plants to meet this demand.&uot; &uot;Management changes and cost reductions implemented in 1999 throughout our operations have resulted in lower costs and improved operational effectiveness. We are continuing to move Premium OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and shaft lines from the U.S. plant to our plants in Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. and expect to make significant progress in this effort in 2000,&uot; Mr. Mathewson continued. &uot;Aldila's China facility is delivering large numbers of shafts for club assembly in China for the U.S. market. This shift to club assembly in China has been dramatic in its speed and the quantity of units involved. We believe it represents a fundamental change in how the Value club business will operate. Aldila is well positioned for this change,&uot; Mr. Mathewson said. &uot;The sale of half of our carbon fiber operation to SGL Carbon SGL Carbon (FWB: SGCG) is one of the world's leading manufacturers of products from carbon. The company portfolio ranges from carbon and graphite materials to carbon fibers and composites. Fibers and Composites, Inc. for $7.0 million, combined with a gross working capital reduction of $3.0 million during the year, enabled Aldila to reduce its debt by $4.0 million and to increase cash and short term investments by $6.6 million in 1999 to $8.6 million at year end,&uot; Mr. Mathewson continued. &uot;Our new partnership with SGL SGL See Speculative Grade Liquidity Rating (SGL). in Carbon Fiber Technology LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , will increase the operating rate Operating rate The percentage of total production capacity of a company, industry, or country that is being used. operating rate The portion of capacity at which a business operates. to accommodate both requirements, thus lowering the cost of the fiber produced,&uot; said Mr. Mathewson. Aldila, Inc. is the golf industry's leading manufacturer of graphite graphite (grăf`īt), an allotropic form of carbon, known also as plumbago and black lead. It is dark gray or black, crystalline (often in the form of slippery scales), greasy, and soft, with a metallic luster. golf shafts used in clubs assembled as·sem·ble v. as·sem·bled, as·sem·bling, as·sem·bles v.tr. 1. To bring or call together into a group or whole: assembled the jury. 2. and marketed throughout the world by major golf club companies, component distributors and custom clubmakers. Aldila also manufactures composite prepreg for its golf shaft business and through a 50% joint venture with SGL Carbon Fibers and Composites, Inc. manufactures carbon fiber. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. based on our expectations as of the date of this press release. These statements necessarily reflect assumptions that we make in evaluating our expectations as to the future. They are also necessarily subject to risks and uncertainties. Our actual future performance and results could differ from that contained in or suggested by these forward-looking statements as a result of a variety of factors. Our filings with the Securities and Exchange Commission present a detailed discussion of the principal risks and uncertainties related to our future operations, in particular under &uot;Business Risks&uot; in Part I, Item 1 of our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 1998, &uot;Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operation&uot; in Part I, Item 7 of the Form 10-K, and &uot;Management's Discussion and Analysis of Financial Condition and Results of Operation&uot; in Item 2 of our Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September September: see month. 30, 1999. The forward-looking statements in this press release are particularly subject to the risks that
- our principal customers will not continue to increase their orders over last
year;
- our principal customers will be unwilling to satisfy a significant portion of
their demand with shafts manufactured in Mexico or China instead of with shafts
manufactured in the United States;
- we will not achieve success marketing shafts to club assemblers based in
China;
- our international operations will be adversely affected by political
instability, currency fluctuation, export/import regulation and other risks
typical of multi-national operations, particularly those operating in less
developed countries; and
- our joint venture with SGL Carbon Fibers and Composites, Inc. will be
unsuccessful.
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, December 31,
1999 1998
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $4,077 $1,972
Marketable securities 4,513 -
Accounts receivable 4,807 3,421
Inventories 12,326 17,326
Deferred tax assets 4,010 5,126
Prepaid expenses and
other current assets 741 1,006
Total current assets 30,474 28,851
PROPERTY, PLANT AND EQUIPMENT 11,298 27,453
INVESTMENT IN JOINT VENTURE 7,181 -
TRADEMARKS AND PATENTS 13,833 14,268
GOODWILL 44,770 46,198
DEFERRED FINANCING FEES 256 68
OTHER ASSETS 191 196
TOTAL ASSETS 108,003 117,034
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $3,258 $3,658
Accrued expenses 3,693 3,897
Income taxes payable 167 1,565
Long-term debt, current portion 8,000 4,000
Total current liabilities 15,118 13,120
LONG-TERM LIABILITIES:
Long-term debt 8,000 16,000
Deferred tax liabilities 6,338 7,143
Deferred rent liabilities 398 517
Total liabilities 29,854 36,780
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par
value; authorized 5,000,000 shares;
no shares issued
Common stock, $.01 par value;
authorized 30,000,000 shares;
issued and outstanding 15,462,204
shares 155 155
Additional paid-in capital 42,627 42,627
Retained earnings 35,367 37,472
Total stockholders' equity 78,149 80,254
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $108,003 $117,034
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
1999 1998 1999 1998
(Unaudited) (Unaudited)
NET SALES $11,611 $8,608 $45,091 $62,487
COST OF SALES 9,992 6,737 37,241 44,689
Gross profit 1,619 1,871 7,850 17,798
SELLING, GENERAL
AND ADMINISTRATIVE 1,885 1,439 7,179 9,005
AMORTIZATION OF GOODWILL 357 356 1,428 1,427
PLANT CONSOLIDATION 900 1,200 900 1,200
Operating income (loss) (1,523) (1,124) (1,657) 6,166
OTHER EXPENSE (INCOME):
Interest expense 291 324 1,315 1,285
Other, net (395) (36) (379) (218)
Equity in earnings
of joint venture (12) - (12) -
INCOME (LOSS ) BEFORE
INCOME TAXES (1,407) (1,412) (2,581) 5,099
PROVISION (BENEFIT)
FOR INCOME TAXES (435) (751) (476) 2,300
NET INCOME (LOSS) ($972) ($661) ($2,105) $2,799
NET INCOME (LOSS)
PER COMMON SHARE ($0.06) ($0.04) ($0.14) $0.18
NET INCOME (LOSS)
PER COMMON SHARE,
ASSUMING DILUTION ($0.06) ($0.04) ($0.14) $0.18
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 15,462 15,462 15,462 15,452
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES 15,462 15,462 15,462 15,519
ALDILA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Twelve months ended
December 31,
1999 1998
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($2,105) $2,799
Depreciation and amortization 6,015 5,996
Gain on joint venture transaction (334) -
Loss on disposal of fixed assets 13 313
Changes in working capital items, net 1,876 (4,468)
Net cash provided by
operating activities 5,465 4,640
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (1,037) (5,886)
Proceeds from sales in joint
venture transaction 6,972 -
Investment in marketable securities (4,513) -
Investment in joint venture (500) -
Other (12) -
Net cash provided by (used for)
investing activities 910 (5,886)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit - -
Principal payments on long-term debt (4,000) -
Proceeds from issuance of common stock - 156
Other, net (270) 16
Net cash provided by (used for)
financing activities (4,270) 172
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 2,105 (1,074)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,972 3,046
CASH AND CASH EQUIVALENTS, END OF PERIOD $4,077 $1,972
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