Aldila Reports 1999 Third Quarter Results; Signs Joint Venture Agreement with SGL CARBON.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)--Nov. 1, 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 $10.3 million and a net loss of $754,000 ($0.05 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 the third quarter ended September September: see month. 30, 1999. In the third quarter of 1998, the company had net sales of $13.6 million and net income of $755,000 or $0.05 per diluted share. For nine months ended September 30, 1999, net sales were $33.5 million and the net loss was $1.1 million ($0.07 loss per diluted share), compared to net sales of $53.9 million and net income of $3.5 million or $0.22 per diluted share in the same period of 1998. "Aldila has received strong golf 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. orders for new product introductions from two key customers with substantially improved market share at one of these accounts," said Peter R. Mathewson, 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. "In addition, the company's China facility is beginning to benefit from opportunities in Asia through shaft sales for 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. in China. Initial orders have been received from local assemblers This is a list of assemblers. Hundreds of assemblers have been written; some notable examples are:
Aldila's outside customer sales of carbon fiber and composite prepregs represent 15% of total sales in the first nine months of 1999, compared to 2.5% in the same period of 1998. The contribution to operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. from these sales has been minimal for the 1999 nine month period. Cash flow generated from operations for the nine months ended September 30, 1999 totaled $3.6 million. "These operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. combined with the available 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. facility established in July 1999, has enabled the company to meet its operating needs and begin scheduled principal repayments on the long term debt obligation, which was reduced to $16.0 million at September 30, 1999," said Gary T. Barbera, Chairman and Chief Executive Officer, Aldila, Inc. "Management expects the combination of positive cash flows from operations, the available line of credit, and proceeds from the sale of a 50% interest in the carbon fiber operation will support the operating needs of Aldila." In a separate announcement today, Aldila said it has formed a joint venture called Carbon Fiber Technology LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control with SGL SGL See Speculative Grade Liquidity Rating (SGL). Technik GmbH, a 100%-owned subsidiary of 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. AG ("SGL") (NYSE NYSE See: New York Stock Exchange :SGG SGG Synthetic Greenhouse Gas SGG Superconducting Gravity Gradiometer SGG Sialosyl Galactosyl Globoside SGG Snow Gum Group (Australian project management consultant) ). In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the previously announced Letter of Intent, SGL has purchased a 50% interest in Aldila's carbon fiber manufacturing 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. for approximately $7 million in cash. The joint venture will be managed by Steve Russell
Aldila will continue to manufacture 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. prepreg material 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. for its golf shaft business. Commenting on the joint venture arrangement, Mr. Barbera said, "We are excited to have completed this joint venture transaction with SGL and look forward to working with them going forward. The combined carbon fiber requirements of SGL and Aldila allows production of carbon fiber at increased volume levels, which will result in lower carbon fiber production costs and benefit our golf shaft business." Aldila, Inc. is the world's leading manufacturer of graphite 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 used in clubs assembled 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. 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 joint venture with SGL, including (a) 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, (b) 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 (c) the risk that SGL will be unable to meet its financial obligations as 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 line of credit facility to the extent necessary to meet Aldila's working capital needs, including in connection with principal payments under the company's outstanding senior notes, next due in March 2000. 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 quarter ended June 30, 1999. -0-
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30, December 31,
1999 1998
--------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 739 $ 1,972
Accounts receivable 3,832 3,421
Inventories 13,797 17,326
Deferred tax assets 4,671 5,126
Prepaid expenses and
other current assets 921 1,006
-------- --------
Total current assets 23,960 28,851
PROPERTY, PLANT AND EQUIPMENT 25,264 27,649
TRADEMARKS AND PATENTS 13,942 14,268
GOODWILL 45,127 46,198
DEFERRED FINANCING FEES 288 68
-------- --------
TOTAL ASSETS $108,581 $117,034
======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,421 $ 3,658
Accrued expenses 2,718 3,897
Income taxes payable 624 1,565
Line of credit 283 --
Long-term debt, current portion 8,000 4,000
-------- --------
Total current liabilities 14,046 13,120
LONG-TERM LIABILITIES:
Long-term debt 8,000 16,000
Deferred tax liabilities 6,987 7,143
Deferred rent liabilities 427 517
-------- --------
Total liabilities 29,460 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 36,339 37,472
-------- --------
Total stockholders' equity 79,121 80,254
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $108,581 $117,034
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ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
-------- -------- -------- --------
NET SALES $ 10,305 $ 13,609 $ 33,480 $ 53,879
COST OF SALES 9,019 9,498 27,249 37,952
-------- -------- -------- --------
Gross profit 1,286 4,111 6,231 15,927
-------- -------- -------- --------
SELLING,
GENERAL AND
ADMINISTRATIVE 1,598 2,079 5,294 7,566
AMORTIZATION
OF GOODWILL 357 357 1,071 1,071
-------- -------- -------- --------
Operating
income (loss) (669) 1,675 (134) 7,290
-------- -------- -------- --------
OTHER:
Interest expense 344 322 1,022 961
Other expense
(income), net 3 (81) 16 (182)
-------- -------- -------- --------
INCOME (LOSS)
BEFORE INCOME
TAXES (1,016) 1,434 (1,172) 6,511
PROVISION
(BENEFIT) FOR
INCOME TAXES (264) 679 (41) 3,051
-------- -------- -------- --------
NET INCOME
(LOSS) ($ 752) $ 755 ($ 1,131) $ 3,460
======== ======== ======== ========
NET INCOME
(LOSS) PER
COMMON SHARE ($ 0.05) $ 0.05 ($ 0.07) $ 0.22
======== ======== ======== ========
NET INCOME
(LOSS) PER
COMMON SHARE,
ASSUMING DILUTION ($ 0.05) $ 0.05 ($ 0.07) $ 0.22
======== ======== ======== ========
WEIGHTED
AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING 15,462 15,462 15,462 15,448
======== ======== ======== ========
WEIGHTED
AVERAGE NUMBER OF
COMMON AND COMMON
EQUIVALENT SHARES 15,462 15,557 15,462 15,654
======== ======== ======== ========
ALDILA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine months ended
September 30,
1999 1998
------- -------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) ($1,133) $ 3,460
Depreciation and amortization 4,699 4,315
Loss on disposal of fixed assets 11 253
Changes in working
capital items, net 55 (132)
------- -------
Net cash provided by
operating activities 3,632 7,896
------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and
equipment, net (878) (4,108)
------- -------
Net cash used for
investing activities (878) (4,108)
------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings under line
of credit 283 --
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 (3,987) 172
------- -------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (1,233) 3,960
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,972 3,046
------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 739 $ 7,006
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