Aldila Reports 2001 Second Quarter and Six Months Results.

Business Editors

POWAY, Calif.--(BUSINESS WIRE)--July 18, 2001

Aldila Inc. (NASDAQ:ALDA) Wednesday reported net sales of $9.8 million for the second quarter ended June 30, 2001, compared to net sales of $17.1 million in the second quarter of 2000.

The company reported a net loss of $464,000 ($0.03 loss per share) for the second quarter of 2001, of which approximately 50% related to a $569,000 pretax plant consolidation charge in Mexico. In the comparable 2000 period the company reported net income of $1.7 million and $0.10 per diluted share.

For six months ended June 30, 2001, net sales were $24.4 million, compared to $33.8 million in the first six months of 2000. Net income for six months ended June 30, 2001, was $524,000 ($0.03 per diluted share) versus net income of $2.2 million ($0.14 per diluted share) for the comparable period in 2000. Excluding plant consolidation charges and recoveries in the periods, the company's net income for six months ended June 30, 2001 was $883,000 ($0.06 per diluted share), versus net income of $1.9 million ($0.12 per diluted share), in the first six months of 2000.

"Although quarterly sales are down substantially compared to last year's very strong second quarter, they were about at the level indicated in our first quarter earnings release," said Peter R. Mathewson, Chairman and CEO, Aldila, Inc. "The golf market has been impacted by a steady stream of negative factors since the first of the year including bad weather across key sections of the country and a persistent uncertain outlook for the U.S. economy. Our incoming order rate in the second quarter reflected these negative factors and was 35% below last year's second quarter order rate, which suggests a continuation of weak sales in the third and possibly fourth quarters. As we progress into the last six months of the year, however, there are some encouraging aspects to Aldila's future.

"During the quarter, we reacted quickly to the immediate opportunities to move production of qualified premium shaft lines to our China facility and have closed down two of the three facilities in Mexico reducing overhead costs," Mathewson continued. "In the next golf season we believe our China facility will set a record for number of graphite shafts produced at a single facility, confirming our statements that it is the world's largest capacity graphite shaft facility. The recent implementation of Aldila's Enterprise Resource Planning (ERP) System throughout the China operation provides us with immediate and complete on-line access to all production activities including order status, inventory, shop floor control and shipments.

"The successful outcome of several major customer bids for their 2002 product lines confirms Aldila's leading competitive position in the marketplace. There has also been a growing acceptance for our new high performance HM 40 Tour Gold, Aldila's flagship premium shaft offering which was introduced late in 2000.

"Following our first full quarter of graphite hockey stick production for Mission Hockey, sales are on track. New product development work is currently underway with Mission to expand their product line offerings.

"We are continuing to explore our options toward the divestiture of our 50% ownership of CFT, and in the search for an acquisition with more immediate growth potential than the advanced materials arena," concluded Mathewson.

Aldila's cash and short term investment position remains strong at $5.1 million as of June 30, 2001. With the last debt payment of $4.0 million at the end of the 2001 third quarter, the company completes the retirement of $20 million in debt, which it began retiring at the end of September 1999.

Aldila Inc. is the golf industry's leading manufacturer of graphite golf shafts used in clubs assembled and marketed throughout the world by major golf club companies, component distributors and custom clubmakers. Aldila manufactures composite prepreg material for its golf shaft business and external sales. Through an ownership interest in Carbon Fiber Technology LLC, the company externally manufactures carbon fiber for internal use.

Aldila will host a conference call at 8:00 A.M., PDT, on Thursday, July 19, 2001 with Pete Mathewson, chairman and CEO, and Bob Cierzan, vice president, finance, to review Aldila's 2001 second quarter and six months financial results. A live Webcast of the conference call can be accessed on the Aldila Web site at http://www.aldila.com at least 15 minutes prior to the call to register and receive instructions for access to the Webcast.

For telephone access to the conference call, dial 888/370-6127 and request connection to the Aldila conference call. Call leader is Pete Mathewson. The call will be rebroadcast at 800/642-1687, conference ID No. 1379818, from 4:00 P.M. (PDT), Thursday, July 19, until 7 p.m., Friday, July 20 (PDT).

This press release contains forward-looking statements 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 our Annual Report on Form 10-K for the year ended Dec. 31, 2000, under "Business Risks" in Part I, Item 1, and "Management's Discussion and Analysis 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 for the Quarter ended June 30, 2001. 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 instead of the United States or
Mexico;

-- new product offerings, including those outside the golf industry, 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;

-- 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, and

-- attractive strategic alternatives will not be available to us on desirable
terms.

For additional information about Aldila, Inc., please go to the company's Web site at www.aldila.com.

                     ALDILA, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF INCOME -- UNAUDITED
                 (In thousands, except per share data)

                      Three months ended        Six months ended
                           June 30,                  June 30,
                     2001           2000       2001           2000

NET SALES           $9,812        $17,082    $24,394        $33,795
COST OF SALES        7,441         11,377     17,871         25,104

 Gross profit        2,371          5,705      6,523          8,691

SELLING, GENERAL AND
 ADMINISTRATIVE      1,699          2,262      3,800          4,140
AMORTIZATION OF
 GOODWILL              354            357        711            714
PLANT CONSOLIDATION    569             --        569           (566)
  Operating income
  (loss)              (251)         3,086      1,443          4,403

OTHER EXPENSE (INCOME):
 Interest expense       94            229        250            517
 Other, net            161           (110)        57           (247)
 Equity in earnings of
  joint venture        (41)           (32)      (111)           (70)

INCOME (LOSS) BEFORE
 INCOME TAXES         (465)         2,999      1,247          4,203
PROVISION (BENEFIT) FOR
 INCOME TAXES           (1)         1,343        723          1,967

NET INCOME (LOSS)    ($464)        $1,656       $524         $2,236

NET INCOME (LOSS) PER
 COMMON SHARE       ($0.03)         $0.10      $0.03          $0.14

NET INCOME (LOSS) PER
 COMMON SHARE, ASSUMING
  DILUTION          ($0.03)         $0.10      $0.03          $0.14

WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING 15,262         15,462     15,310         15,462

WEIGHTED AVERAGE NUMBER OF COMMON
 AND COMMON EQUIVALENT
  SHARES            15,262         15,556     15,393         15,566

                     ALDILA, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
                   (In thousands, except share data)

                                       June 30,           December 31,
                                        2001                  2000
ASSETS                               (Unaudited)

CURRENT ASSETS:

 Cash and cash equivalents             $5,113                $5,603
 Marketable securities                     --                 3,104
 Accounts receivable                    3,823                 6,693
 Inventories                           11,900                11,001
 Deferred tax assets                    3,302                 3,302
 Prepaid expenses and other current
  assets                                  560                   607
   Total current assets                24,698                30,310

PROPERTY, PLANT AND EQUIPMENT           8,125                 9,277

INVESTMENT IN JOINT VENTURE             7,561                 7,464

TRADEMARKS AND PATENTS                 13,180                13,398

GOODWILL                               42,631                43,342

OTHER ASSETS                              465                   536

TOTAL ASSETS                          $96,660              $104,327

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

 Accounts payable                      $2,006                $4,405
 Accrued expenses                       2,271                 3,653
 Income taxes payable                     914                   865
 Long-term debt, current portion        4,000                 8,000
  Total current liabilities             9,191                16,923

LONG-TERM LIABILITIES:

 Deferred tax liabilities               5,894                 5,981
 Deferred rent                             66                    57
  Total liabilities                    15,151                22,961

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 15,262,204
   shares in 2001 and 15,462,204
    shares in 2000                        153                   155

Additional paid-in capital             42,248                42,627
Retained earnings                      39,108                38,584
 Total stockholders' equity            81,509                81,366

TOTAL LIABILITIES AND STOCKHOLDERS'
 EQUITY                               $96,660              $104,327

                     ALDILA, INC. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -- UNAUDITED
                            (In thousands)

                                           Six months ended
                                               June 30,
                                    2001                      2000

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income                          $524                     $2,236
Depreciation and amortization      2,092                      2,077
Loss on disposal of fixed assets     176                         19
Changes in working capital items,
 net                              (1,622)                     3,357
 Net cash provided by operating
  activities                       1,170                      7,689

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment,
 net                                (286)                      (262)
Proceeds from sales of marketable
 securities                        3,104                      4,513
Purchase of marketable securities     --                     (7,437)
Investment in joint venture          (97)                      (135)
 Net cash provided by (used for)
  investing activities             2,721                     (3,321)

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments on long-term
 debt                             (4,000)                    (4,000)
Repurchases of common stock         (381)                        --
 Net cash used for financing
  activities                      (4,381)                    (4,000)

NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                   (490)                       368

CASH AND CASH EQUIVALENTS, BEGINNING
 OF PERIOD                         5,603                      4,077

CASH AND CASH EQUIVALENTS, END OF
 PERIOD                           $5,113                     $4,445