Aldila Reports 2002 Fourth Quarter and Fiscal Year Results.

Business/Sports Editors

POWAY, Calif.--(BUSINESS WIRE)--Feb. 12, 2003

Aldila Inc. (Nasdaq:ALDA) reported slightly higher net sales of $9,087,000 for the fourth quarter ended December 31, 2002, compared to $8,322,000 in the same quarter of 2001, and a net loss of $1,777,000 ($0.36 per share). Included in the fourth quarter 2002 results was a charge of $300,000 (pre tax) for combining the corporate staff within the golf shaft and prepreg facility in Poway. Also included in the 2002 fourth quarter results was a valuation allowance of $1,911,000 related to the company's deferred tax assets and an adjustment of $677,000 to previously accrued tax reserves. Excluding these items, Aldila's 2002 fourth quarter net loss was $875,000 ($0.18 per share). In the fourth quarter of 2001, the net loss was $51,428,000 ($10.15 per share), of which $49,400,000 (net of taxes) related to impairment of goodwill and other intangible assets. Excluding the charge, Aldila's 2001 fourth quarter net loss was $2,075,000 ($0.41 per share).

For the year ended December 31, 2002, net sales were $37,462,000, compared to net sales of $39,561,000 in 2001. The company reported a net loss of $2,844,000 ($0.57 per share) in 2002. Excluding the consolidation charge and the adjustments related to taxes that affected the fourth quarter and fiscal year results, the company's net loss in 2002 was $1,610,000 ($0.33 per share). In 2001, the company had a net loss of $51,419,000 ($10.10 per share), including impairment charges of $49,400,000 and plant consolidation charges of $356,000 (net of taxes). Excluding impairment and plant consolidation charges, the company's net loss in 2001 was $1,710,000 ($0.34 per share).

Aldila's cash and short term investment position remains strong at $3,286,000 as of December 31, 2002, versus $266,000 at December 31, 2001, with no outstanding borrowings.

All financial results are reflective of a one-for-three reverse stock split effective at the close of business June 3, 2002.

"Golf shaft units shipped were up 9% in the fourth quarter versus the same quarter a year ago and the average selling price declined 3%," said Peter R. Mathewson, Chairman of the Board and CEO. "For the year, units shipped increased 11%, with a 15% decline in average selling price.

"We are continuing to invest in our brand, led by our innovative Aldila ONE wood shaft and Tour Gold line of woods and irons," continued Mathewson. "Nick Price and Rich Beem will continue to be incorporated into our advertising campaign including commercials on the Golf Channel. Our tour presence will continue in 2003 with closer ties to major OEMs tour programs.

"Our work with Mission Hockey continues to expand and is now focused on the development of an industry leading hockey blade to go along with what we believe is the best composite hockey shaft in the sport.

"Based on a slow incoming order rate in the fourth quarter of 2002 and the absence of any projections for economic recovery in early 2003, no improvement is seen in the future performance of the golf equipment market in the near term," Mathewson continued.

"We are closely managing our costs in this extremely difficult market," said Mathewson. "The consolidation of the corporate staff into the Poway manufacturing facility will be completed early in the second quarter, and cost reduction benefits will start to be realized."

Aldila's fourth quarter and fiscal year results will be reviewed in a conference call at 8:00 a.m., PST, on Thursday, February 13, 2003, with Peter Mathewson, Chairman and CEO; Bob Cierzan, Vice President, Finance; and Mike Rossi, Vice President, Sales and Marketing. A live audiocast of the call can be accessed at http/www.aldila.com up to 15 minutes before the call. For telephone access to the conference call, dial 800/915-4836 for domestic calls and 973/317-5319 for international calls. Call moderator is Peter Mathewson. The call will be rebroadcast at 800/428-6051 for domestic calls and 973/709-2089 for international calls, Passcode #271921, from 10:00 a.m. (PST), Thursday, February 13, 2003, until 11:59 p.m. (PST), Monday, February 17, 2003.

Aldila manufactures high performance graphite golf shafts used in clubs assembled and marketed throughout the world by major golf club companies, component distributors and custom clubmakers. Aldila also manufactures hockey sticks and most recently hockey blades, in addition to composite prepreg material for its golf shaft business and external sales. Externally, Aldila also manufactures carbon fiber for internal use through an ownership interest in Carbon Fiber Technology LLC.

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 December 31, 2001, 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 September 30, 2002. 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;

-- the market for graphite shafts will continue to be extremely competitive, affecting selling prices and profitability;

-- our principal customers will be unwilling to satisfy a greater portion of their demand with shafts manufactured in China in place of either 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;

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

-- a general decrease in stock market prices would affect the price of our stock.

For additional information about Aldila Inc., please go to www.aldila.com.

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


                            Three months ended    Twelve months ended
                              December 31,           December 31,
                         ----------------------- ---------------------
                            2002        2001        2002       2001
                         ----------- ----------- ----------- ---------
                         (Unaudited) (Unaudited) (Unaudited)

NET SALES                    $9,087      $8,322     $37,462   $39,561
COST OF SALES                 8,234       9,300      32,828    33,304
                         ----------- ----------- ----------- ---------
  Gross profit (loss)           853        (978)      4,634     6,257
                         ----------- ----------- ----------- ---------

SELLING, GENERAL AND
 ADMINISTRATIVE               1,684       1,500       7,334     6,851
IMPAIRMENT OF GOODWILL            -      41,932           -    41,932
IMPAIRMENT OF
 TRADEMARKS & PATENTS             -      12,963           -    12,963
AMORTIZATION OF
 GOODWILL                         -         349           -     1,410
PLANT CONSOLIDATION             300          24         300       593
                         ----------- ----------- ----------- ---------
  Operating loss             (1,131)    (57,746)     (3,000)  (57,492)
                         ----------- ----------- ----------- ---------

OTHER EXPENSE
 (INCOME):
  Interest expense                9          33          94       375
  Other, net                     17          34          62        65
  Equity in earnings of
   joint venture                (77)        (71)       (269)     (231)
                         ----------- ----------- ----------- ---------

LOSS BEFORE INCOME
 TAXES                       (1,080)    (57,742)     (2,887)  (57,701)
PROVISION (BENEFIT) FOR
 INCOME TAXES                   697      (6,314)        (43)   (6,282)
                         ----------- ----------- ----------- ---------

NET LOSS                    $(1,777)   $(51,428)    $(2,844) $(51,419)
                         =========== =========== =========== =========


NET LOSS PER COMMON
 SHARE                       $(0.36)    $(10.15)     $(0.57)  $(10.10)
                         =========== =========== =========== =========

NET LOSS PER COMMON
 SHARE, ASSUMING
 DILUTION                    $(0.36)    $(10.15)     $(0.57)  $(10.10)
                         =========== =========== =========== =========

WEIGHTED AVERAGE NUMBER
 OF COMMON SHARES
 OUTSTANDING                  4,948       5,066       4,948     5,090
                         =========== =========== =========== =========

WEIGHTED AVERAGE NUMBER
 OF COMMON AND COMMON
 EQUIVALENT SHARES            4,948       5,066       4,948     5,090
                         =========== =========== =========== =========


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

                                            December 31, December 31,
                                                2002         2001
                                            --------------------------
ASSETS                                       (Unaudited)

CURRENT ASSETS:
  Cash and cash equivalents                       $3,286         $266
  Accounts receivable                              4,393        3,977
  Income taxes receivable                          1,185          723
  Inventories                                      8,538       11,472
  Deferred tax assets                                  -        2,366
  Prepaid expenses and other current assets          497          595
                                            --------------------------
    Total current assets                          17,899       19,399

PROPERTY, PLANT AND EQUIPMENT                      6,167        7,634

INVESTMENT IN JOINT VENTURE                        6,825        7,466

OTHER ASSETS                                         268          387
                                            --------------------------

TOTAL ASSETS                                     $31,159      $34,886
                                            ==========================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                $2,912       $2,921
  Accrued expenses                                 1,825        2,627
                                            --------------------------
    Total current liabilities                      4,737        5,548

LONG-TERM LIABILITIES:
  Deferred rent                                       69           74
  Deferred tax liabilities                             -           67
                                            --------------------------
    Total liabilities                              4,806        5,689
                                            --------------------------

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
   4,947,648 shares                                   49           49
  Additional paid-in capital                      41,983       41,983
  Accumulated deficit                            (15,679)     (12,835)
                                            --------------------------
    Total stockholders' equity                    26,353       29,197
                                            --------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $31,159      $34,886
                                            ==========================


                    ALDILA, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands)
                                                 Twelve months ended
                                                    December 31,
                                               -----------------------
                                                  2002        2001
                                               ----------- -----------
                                               (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                        $(2,844)   $(51,419)
  Depreciation and amortization                     1,921       3,840
  (Gain) Loss on disposal of fixed assets             (11)        363
  Impairment of goodwill                                -      41,932
  Impairment of trademarks & patents                    -      12,963
  Undistributed income of joint venture, net         (249)       (192)
  Changes in working capital items, net             3,656      (6,799)
                                               ----------- -----------
    Net cash provided by operating activities       2,473         688
                                               ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, plant and equipment          (362)       (835)
  Proceeds from sales of property, plant and
   equipment                                           19         266
  Proceeds from sales of marketable securities          -       3,104
  Distributions from joint venture                    890         190
                                               ----------- -----------
    Net cash provided by investing activities         547       2,725
                                               ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under line of credit                     887         750
  Payments under line of credit                      (887)       (750)
  Principal payments on long-term debt                  -      (8,000)
  Repurchases of common stock                           -        (750)
                                               ----------- -----------
    Net cash used for financing activities              -      (8,750)
                                               ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                        3,020      (5,337)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD        266       5,603
                                               ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD           $3,286        $266
                                               =========== ===========