Aldila Reports 2000 Third Quarter Results 27% Higher Golf Shaft Sales.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. , CA--(BUSINESS WIRE)--Oct. 18, 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 $10.8 million for the third quarter ended September September: see month. 30, 2000, a $0.5 million increase over net sales of $10.3 million in the comparable quarter of 1999. 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. sales in the third quarter increased 27%, or $2.2 million, more than offsetting the absence of $1.5 million of carbon fiber sales in the third quarter of 1999, prior to completion of a joint venture arrangement with 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. in November November: see month. , 1999. As a result of the increase in golf shaft sales, net income improved to $37,000, rounding to $0.01 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, compared to a loss of $754,000, or ($0.05) per share, in the 1999 quarter. For nine months ended September 30, 2000, net sales were $44.6 million, an increase of 33% compared to $33.5 million in the first nine months of 1999. Net income increased to $2.3 million, or $0.15 per diluted share, in the first nine months of 2000, compared to a loss of $1.1 million, or ($0.07) per share, in the same period of 1999. "We are pleased with Aldila's profitability in the third quarter, which is historically a weak quarter in the golf industry," 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 CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Aldila, Inc. "Aldila is well-positioned to benefit significantly from several promising new product programs, although in the short term it is not clear how rapidly these sales will develop," Mr. Mathewson continued. "Operationally, Aldila has made major strides in transitioning most Premium shaft lines to our operations 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 continues making progress with several key customers to move selected product lines to our China operations. Production on these shaft lines is expected to begin in the first quarter of 2001," said Mr. Mathewson. "On the competitive front, two competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. have discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in the U.S. It is becoming increasingly difficult to compete from U.S.-based production facilities," Mr. Mathewson said. "Aldila's multiple manufacturing plants located in the U.S., Mexico and China give Aldila a unique competitive advantage." "Currently underway is an active program introducing Aldila's new HM 2000 Tour wood shaft to 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 custom fit club companies and the distribution market. A second high performance shaft line is being well received on the PGA Tour The PGA Tour is an organization that operates the USA's main professional golf tours. It is headquartered in Ponte Vedra Beach, Florida, USA. Its name is officially rendered in all caps as “PGA TOUR". by tour players and will soon be announced to the general public," Mr. Mathewson said. "Carbon Fiber Technology LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control in Evanston Evanston, residential city (1990 pop. 73,233), Cook co., NE Ill., on Lake Michigan; settled 1826, inc. 1892. A largely residential suburb north of Chicago, Evanston has businesses and manufactures goods such as books and published documents, paper, paint, chemicals, , WY, continues to run smoothly and both Aldila and its partner, SGL Carbon Fibers and Composites, Inc., are benefiting from the joint venture. The common goal is to continue increasing fiber production at the plant to further reduce the cost per pound produced," Mr. Mathewson said. Aldila's cash and short term investment position, after a $4 million principal payment on its debt and meeting its third quarter operating needs, totaled $8.5 million at September 30, 2000, versus $8.0 of outstanding debt. Aldila, Inc. is the golf industry's leading manufacture 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 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 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 manufactures composite composite, alternate common name for Asteraceae or Compositae, the aster family. composite - aggregate prepreg material for its golf shaft business and external sales, and through its ownership interest in Carbon Fiber Technology LLC, externally manufactures carbon fiber for internal use. 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 "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 December: see month. 31, 1999, "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 Operations" in Part I, Item 7 of the Form 10-K, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of our Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September 30, 2000. The forward-looking statements in this press release are particularly subject to the risks that -- we will not maintain or increase our market share at our principal customers; -- demand for clubs manufactured by our principal customers will decline, thereby affecting their demand for our shafts; -- our principal customers will be unwilling to satisfy a greater portion of their demand with clubs manufactured in China or Mexico instead of the United States; -- new product offerings will not achieve success with consumers or OEM customers; -- we will not achieve success marketing shafts to club assemblers based in China; -- our international operations will be adversely affected by political instability, currency fluctuations, export/import regulations and other risks typical of multi-national operations, particularly those in less developed countries, and -- Carbon Fiber Technology LLC will be unsuccessful as a result, for example, of internal operational problems, raw material supply problems, changes in demand for carbon fiber based products, or difficulties in operating a joint venture. For more information about Aldila, Inc., visit the company's website at: www.aldila.com
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30, December 31,
2000 1999
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 5,428 $ 4,077
Marketable securities 3,052 4,513
Accounts receivable 4,763 4,807
Inventories 9,964 12,326
Deferred tax assets 4,010 4,010
Prepaid expenses and other
current assets 632 741
-------- --------
Total current assets 27,849 30,474
PROPERTY, PLANT AND EQUIPMENT 9,592 11,298
INVESTMENT IN JOINT VENTURE 7,386 7,181
TRADEMARKS AND PATENTS 13,507 13,833
GOODWILL 43,699 44,770
DEFERRED FINANCING FEES 159 256
LICENSE/ROYALTY 266 --
OTHER ASSETS 149 191
-------- --------
TOTAL ASSETS 102,607 108,003
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,179 $ 3,258
Accrued expenses 3,066 3,693
Income taxes payable 1,687 167
Long-term debt, current
portion 8,000 8,000
-------- --------
Total current liabilities 15,932 15,118
LONG-TERM LIABILITIES:
Long-term debt -- 8,000
Deferred tax liabilities 6,202 6,338
Deferred rent liabilities 51 398
-------- --------
Total liabilities 22,185 29,854
-------- --------
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 37,640 35,367
-------- --------
Total stockholders' equity 80,422 78,149
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $102,607 $108,003
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ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
NET SALES $ 10,820 $ 10,305 $ 44,615 $ 33,480
COST OF SALES 8,177 9,019 33,281 27,249
-------- -------- -------- --------
Gross profit 2,643 1,286 11,334 6,231
-------- -------- -------- --------
SELLING, GENERAL AND
ADMINISTRATIVE 2,013 1,598 6,153 5,294
AMORTIZATION OF GOODWILL 357 357 1,071 1,071
PLANT CONSOLIDATION -- -- (566) --
-------- -------- -------- --------
Operating income
(loss) 273 (669) 4,676 (134)
-------- -------- -------- --------
OTHER EXPENSE (INCOME):
Interest expense 227 346 744 1,024
Other, net (184) 3 (431) 16
Equity in earnings of
joint venture (69) -- (139) --
-------- -------- -------- --------
INCOME (LOSS) BEFORE
INCOME TAXES 299 (1,018) 4,502 (1,174)
PROVISION (BENEFIT)
FOR INCOME TAXES 262 (264) 2,229 (41)
-------- -------- -------- --------
NET INCOME (LOSS) $ 37 ($ 754) $ 2,273 ($ 1,133)
======== ======== ======== ========
NET INCOME (LOSS) PER
COMMON SHARE $ 0.01 ($ 0.05) $ 0.15 ($ 0.07)
======== ======== ======== ========
NET INCOME (LOSS)
PER COMMON SHARE,
ASSUMING DILUTION $ 0.01 ($ 0.05) $ 0.15 ($ 0.07)
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 15,462 15,462 15,462 15,462
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES 15,717 15,462 15,600 15,462
======== ======== ======== ========
ALDILA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)
Nine months ended
September 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,273 ($1,133)
Depreciation and amortization 3,077 4,699
Loss on disposal of fixed assets 54 11
Changes in working capital items, net 3,411 51
------- -------
Net cash provided by
operating activities 8,815 3,628
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (445) (874)
Investment in marketable securities 1,461 --
Investment in joint venture (205) --
Other (275) --
------- -------
Net cash provided by (used for) investing
activities 536 (874)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit -- 283
Principal payments on long-term debt (8,000) (4,000)
Other, net -- (270)
Net cash used for financing activities (8,000) (3,987)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,351 (1,233)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 4,077 1,972
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,428 $ 739
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