Aldila Reports 1999 Second Quarter Results; Secures Three-Year $12.0 Million Financing Facility.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)--July 28, 1999-- 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 $12.6 million for the second quarter ended June June: see month. 30, 1999, compared to net sales of $21.2 million in the second quarter of 1998. The company reported a net loss of $72,000 for the second quarter of 1999, compared to net income of $1.6 million in the 1998 second quarter (less than $0.01 loss 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 1999 versus earnings of $0.10 per diluted share in 1998.) Net sales for the six months ended June 30, 1999 were $23.2 million, compared to $40.3 million in the first six months of 1998. The company's net loss for the six months ended June 30, 1999 was $0.4 million versus net income of $2.7 million in the six months of 1998 ($0.02 loss per diluted share for 1999 versus earnings of $0.17 per diluted share in 1998.) "While market conditions and the competitive environment continue to impact our 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. sales, we are beginning to see signs of weaker competitors possibly dropping out of the market," 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). , President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. of Aldila Golf Corp. "Midway Midway, island group (2 sq mi/5.2 sq km), central Pacific, c.1,150 mi (1,850 km) NW of Honolulu, comprising Sand and Eastern islands with the surrounding atoll. Discovered by Americans in 1859, Midway was annexed in 1867. A cable station was opened in 1903. through 1999, however, we continue to be cautious in our outlook for the remainder of the year, as we enter the traditionally slower part of the season." "Aldila Golf however, is particularily well-positioned for a turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. in the golf market. Operations in Tijuana, Mexico, where premium shafts are manufactured for many of the country's leading club companies, allow Aldila Golf to deliver 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 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 at unmatched prices and service levels," Mr. Mathewson continued. "In China, our new 80,000 square foot facility is running smoothly. Several major customers have visited the plant and are impressed im·press 1 tr.v. im·pressed, im·press·ing, im·press·es 1. To affect strongly, often favorably: with the excellent quality and low cost of shafts produced." "In the value segment we see a significant trend toward not only component sourcing, but club assembly as well in China. The close proximity of our plant location to this activity provides us with increasing opportunities to ship our Chinese manufactured shafts directly to nearby club assemblers This is a list of assemblers. Hundreds of assemblers have been written; some notable examples are:
Separately, Aldila announced that it has entered into a revolving $12.0 million financing facility for a three year term with Foothill Capital Corporation, a Wells Fargo Wells Fargo armored carriers of bullion. [Am. Hist.: Brewer Dictionary, 1147] See : Protectiveness Wells Fargo company that handled express service to western states; often robbed. [Am. Hist. company. Borrowings against the revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. are based on Aldila's eligible accounts receivables accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and inventories and will bear interest at the bank's reference rate or the Eurodollar Eurodollar U.S. dollar that has been deposited outside the U.S., especially in Europe. Foreign banks holding Eurodollars are obligated to pay in U.S. dollars when the deposits are withdrawn. rate plus 2.5% at Aldila's election. "We are very pleased to have secured this revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. line which will provide the working capital required to meet Aldila's needs," said Gary T. Barbera, Chairman and Chief Executive Officer of Aldila, Inc. Commenting on Aldila's composite materials composite material or composite, any material made from at least two discrete substances, such as concrete. Many materials are produced as composites, such as the fiberglass-reinforced plastics used for automobile bodies and boat hulls, but the business, Mr. Barbera said outside customer sales of carbon fiber and composite prepregs increased 300% in the second quarter of 1999 over the second quarter of 1998, with the majority of the increase from carbon fiber sales. On a consolidated basis, materials sales represent 13% of total sales in the first six months of 1999, compared to 2.5% in the same period of 1998. "Our carbon fiber operation in Evanston, Wyoming Evanston is a city in Uinta County, Wyoming, United States. The population was 11,507 at the 2000 census. It is the county seat of Uinta CountyGR6. Geography Evanston is located at (41.263302, -110. is now in its second year of operation and continues making excellent progress," said Mr. Barbera. "The large bundle carbon fiber currently being produced in Evanston exhibits no loss in stiffness when compared to today's small bundle standard modulus See modulo. fibers and is beginning to give our core golf shaft business the added competitive edge we envisioned." "The recent announcement of an agreement in principle to form a joint venture between Aldila and 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. Group offers exciting opportunities for the continued development of our composite materials business," Mr. Barbera continued. "According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the agreement, SGL SGL See Speculative Grade Liquidity Rating (SGL). will acquire a 50% interest in Aldila's carbon fiber manufacturing operation in Evanston, Wyoming. In addition to supporting SGL's existing carbon fiber requirements and Aldila's core golf shaft business and prepreg operation in Poway, California Poway is a city in San Diego County, California, United States. As of the latest 2000 census the city had a population of 48,044 (see Demographics section below). The ZIP code is 92064. , the joint venture will develop, manufacture and market a variety of carbon fiber products for the recreational, industrial and aerospace markets." The transaction is expected to close in the third quarter of 1999. SGL Carbon AG is the world's largest producer of carbon and graphite products, with 1998 revenues exceeding $1.2 billion. The company has operations in 13 countries and offices in more than 90 countries Aldila, Inc. is the world's leading manufacturer of graphite 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 leading golf club companies, distributors and custom clubmakers. Through vertical integration the company manufactures carbon fiber and composite prepreg for its golf shaft business and for outside sales to commercial customers 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 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, including: - risks associated with our proposed joint venture with SGL, including (a) the possibility that we are unable to reach agreement with SGL on the final terms of the joint venture or the joint venture is not formed for any other reason, including the failure to obtain any required third party or governmental consents or a material adverse change in our carbon fiber operation, (b) the possibility that the carbon fiber facility will not produce sufficiently high volumes of high quality carbon fiber at low cost to meet our demands as well as those of SGL, (c) risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc difficulties in operating and managing the carbon fiber facility through the joint venture, including the risk of irreconcilable differences The existence of significant differences between a married couple that are so great and beyond resolution as to make the marriage unworkable, and for which the law permits a Divorce. between SGL and Aldila as to the management of the joint venture, and (d) the risk that SGL will be unable to meet its financial obligations to the joint venture; - changes in demand by customers for graphite golf shafts, graphite prepreg and carbon fiber (due to factors such as changes in consumer demand for products including the company's products, changes in availability or prices for golf shafts, graphite prepreg or carbon fiber, changes in inventory purchasing practices by the company's customers); - the availability of raw materials (principally carbon fiber and acrylic fiber acrylic fiber n. Any of numerous synthetic fibers polymerized from acrylonitrile. acrylic fiber Any of numerous synthetic fibers polymerized from acrylonitrile. Noun 1. ) for our manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. , including the carbon fiber facility, at anticipated prices; - risks resulting from the increasing portion of our manufacturing operations that is conducted in Mexico and China (including the risk of political instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability. detrusor instability , export/import regulation, currency exchange rate risk, and cultural differences); - the ability to develop new customer relationships with non-golf users of graphite prepreg and carbon fiber and changes in demand for carbon fiber and carbon fiber-based products; - the nature and effectiveness of the competition for our products; and - the availability of our new line of credit to the extent necessary to meet Aldila's working capital needs, including in connection with principal payments under the company's outstanding senior notes, commencing in September 1999 Our filings with the Securities and Exchange Commission present a more detailed discussion of some of these and other risks related to the forward looking statements in this press release, in particular under "Business Risks" 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 (the "Form 10-K"), "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" in Part I, Item 7 of the Form 10-K, and "Management's Discussion and Analysis of Financial Condition and Results of Operation" in Item 2 of our Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarters ended March 31, and June 30, 1999.
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, December 31,
1999 1998
-------- -----------
-------------------- --------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $485 $1,972
Accounts receivable 7,087 3,421
Inventories 15,056 17,326
Deferred tax assets 4,891 5,126
Prepaid expenses and other
current assets 1,080 1,006
--------- ---------
Total current assets 28,599 28,851
PROPERTY, PLANT AND EQUIPMENT 26,202 27,649
TRADEMARKS AND PATENTS 14,050 14,268
GOODWILL 45,484 46,198
DEFERRED FINANCING FEES 49 68
--------- ---------
TOTAL ASSETS $114,384 $117,034
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $2,519 $3,658
Accrued expenses 3,321 3,897
Income taxes payable 1,173 1,565
Long-term debt, current portion 8,000 4,000
--------- ---------
Total current liabilities 15,013 13,120
LONG-TERM LIABILITIES:
Long-term debt 12,000 16,000
Deferred tax liabilities 7,039 7,143
Deferred rent liabilities 457 517
--------- ---------
34,509 36,780
--------- ---------
Total liabilities
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 37,093 37,472
--------- ---------
Total stockholders' equity 79,875 80,254
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $114,384 $117,034
========= =========
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
----------------------------------------
1999 1998 1999 1998
-------- -------------------- -------
NET SALES $ 12,612 $ 21,153 $ 23,175 $ 40,270
COST OF SALES 9,956 15,177 18,230 28,454
-------- -------- -------- --------
Gross profit 2,656 5,976 4,945 11,816
-------- -------- -------- --------
SELLING, GENERAL
AND ADMINISTRATIVE 1,831 2,419 3,696 5,487
AMORTIZATION OF GOODWILL 357 357 714 714
-------- -------- -------- --------
Operating income 468 3,200 535 5,615
-------- -------- -------- --------
OTHER:
Interest expense 344 323 678 639
Other expense (income), net 6 (54) 13 (101)
-------- -------- -------- --------
INCOME (LOSS ) BEFORE
INCOME TAXES 118 2,931 (156) 5,077
PROVISION FOR INCOME TAXES 190 1,367 223 2,372
-------- -------- -------- --------
NET INCOME (LOSS) ($ 72) $ 1,564 ($ 379) $ 2,705
======== ======== ======== ========
NET INCOME (LOSS)
PER COMMON SHARE $ 0.00 $ 0.10 ($ 0.02) $ 0.18
======== ======== ======== ========
NET INCOME (LOSS) PER
COMMON SHARE,
ASSUMING DILUTION $ 0.00 $ 0.10 ($ 0.02) $ 0.17
======== ======== ======== ========
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 15,462 15,451 15,462 15,441
======== ======== ======== ========
WEIGHTED AVERAGE
NUMBER OF COMMON
AND COMMON EQUIVALENT
SHARES 15,462 15,893 15,462 15,700
======== ======== ======== ========
ALDILA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six months ended
June 30,
-------------------
1999 1998
--------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($ 379) $ 2,705
Depreciation and amortization 3,133 2,896
Loss on disposal of fixed assets 9 23
Changes in working capital items, net (3,506) (933)
------- -------
Net cash provided by
(used for) operating
activities (743) 4,691
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and
equipment, net (744) (2,317)
------- -------
Net cash used for
investing activities (744) (2,317)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit 1,700 --
Payments under line of credit (1,700) --
Proceeds from issuance
of common stock -- 156
Other, net -- 16
------- -------
Net cash provided by
financing activities -- 172
------- -------
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS (1,487) 2,546
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,972 3,046
------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 485 $ 5,592
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