Aldila Reports Fourth Quarter and 1998 Sales and Earnings.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)--Feb. 10, 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 $8.6 million and net income of $59,000 for the fourth quarter ended December December: see month. 31, 1998, excluding a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge of $1.2 million (after tax $720,000 or $0.05) related to additional charges for the company's consolidation of its Rancho ran·cho n. pl. ran·chos Southwestern U.S. 1. A hut or group of huts for housing ranch workers. 2. A ranch. Bernardo Bernardo enraged that member of a rival street-gang is making advances to his sister. [Am. Musical: West Side Story] See : Anger , CA. manufacturing operation into its Poway, CA. facility. After the charge, the company reported a fourth quarter net loss of $661,000 or ($0.04) per share. In the comparable 1997 quarter, Aldila had net sales of $11.3 million and a net loss of $1.6 million or ($0.10) per share, including plant consolidation charges and start-up Start-up The earliest stage of a new business venture. expenses related to the carbon fiber operation. For the year ended December 31, 1998, net sales were up 12% to $62.5 million and net income was up 82% to $2.8 million or $0.18 per share. In 1997, net sales were $55.7 million and net income was $1.5 million or $0.10 per share. "Lower 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 final 1998 quarter versus the 1997 quarter reflect the continued industry-wide weak demand for 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 in all market segments," 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. , Aldila Golf. "Despite the weak demand for golf clubs in the second half of 1998, Aldila's total unit growth increased 22% over 1997. As we entered 1999, golf club inventory levels at wholesale and retail remained very high and in the near-term near-term adj. Of, for, or involving a short period of time in the near future. , we believe that Aldila's net sales could decline between 25% to 45% in the first half of 1999 versus 1998." "The combination of slower club sales and over-capacity in graphite shafts creates an extremely competitive market environment; however, we believe our strategic assets 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 China, combined with our manufacture of prepreg and carbon fiber, provide Aldila with major technological and competitive advantages over the other U.S. based graphite shaft suppliers as shaft prices decrease," Mr. Mathewson said. "By the end of the first quarter of 1999, Aldila's new 80,000 square foot shaft facility in Zhuhai Zhuhai (j  -hī), city (1994 est. pop. 308,600), S Guangdong prov., on the Pearl River, N of Macao. , China will be operational,
greatly expanding the company's options for the manufacture of
premium and value shaft products. In addition, we are working diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d to qualify and move premium product lines from Aldila's U.S. plant to its operations in Tijuana Tijuana (tēhwä`nä), city (1990 pop. 698,752), Baja California state, NW Mexico, just south of the U.S. border. It is a gaudy border resort, noted for its racetracks and bullfights. An irrigated agricultural area surrounds the city. , Mexico and China," said Mr. Mathewson. Aldila said that historically it has not required borrowings to finance its operations or provide working capital and was able to establish its $16 million carbon fiber facility 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. from internal cash resources. However, beginning in 1999, the company said borrowings against an available line of credit may be required to meet short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. working capital needs and that discussions are in process with the lender to amend a line of credit facility beyond June June: see month. 30, 1999. "We are continuing to execute our growth strategy, although the immediate outlook for Aldila's business sectors presents many challenges," said Gary T. Barbera, Chairman of the Board and Chief Executive Officer, Aldila, Inc. "We met our carbon fiber production targets through the fourth quarter of 1998 and the fiber is being used in the manufacture of golf shafts." "The market potential for large tow carbon fiber-based products remains largely untapped and we are aggressively seeking opportunities for qualification of Aldila carbon fiber and prepreg in a variety of non-golf sports and industrial applications. These include bicycles, fishing rods, hockey sticks, sailboat masts A mast is a man-made support structure, commonly used on sailing ships as support for sails, or on land as radio masts and towers used to support telecommunication equipment such as radio antennas ("aerials" in the UK). This is a list of masts 300 meters or higher. and wind surfing surfing, sport of gliding toward the shore on a breaking wave. Surfers originally used long, cumbersome wooden boards but now ride lightweight synthetic boards that allow a greater degree of maneuverability. masts, as well as industrial and oil field applications," Mr. Barbera added. "Several of these markets were served with Aldila fiber in 1998 and the company is being uniquely positioned as a competitive source for superior performance carbon fiber and prepreg for all markets." "Furthermore, our initiatives of vertical integration, increased utilization of 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. in areas of lower labor and overhead cost, and aggressive pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. will, over time, strengthen our core golf shaft business as the market improves and enable us to build a strong presence in the emerging opportunities for composite products and materials," said Mr. Barbera. Aldila designs, manufactures and markets 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. throughout the world by leading golf club companies, pro shops, club shops and repair shops. Through vertical integration, the company supplies virtually all the graphite prepreg material for its golf shaft business. In 1998, the company began to supply carbon fiber from its new Evanston, Wyoming facility to its prepreg operation and is positioned to become a competitive source for high quality carbon fiber and prepreg for all markets. This 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 management's expectations as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" that necessarily contain certain assumptions and are subject to certain risks and uncertainties. The company does not undertake any responsibility to update these statements in the future. The company's 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 (i) risks associated with the addition of the new facility in China (such as the need to obtain required governmental permits and approvals, potential construction delays, and the need to hire and train additional employees), (ii) the ability to produce high volumes of carbon fiber at lower cost at the Evanston, Wyoming facility, which has been undergoing a "shakedown" period following its commencement of production early in 1998, (iii) changes in demand by the company's 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), (iv) the availability of raw materials for the company's manufacturing operations (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. ) at anticipated prices, (v) the ability of the company to develop new customer relationships with non-golf users of graphite prepreg and carbon fiber, (vi) risks resulting from the increasing portion of the company's 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), (vii) the company's ability to vacate To annul, set aside, or render void; to surrender possession or occupancy. The term vacate has two common usages in the law. With respect to real property, to vacate the premises means to give up possession of the property and leave the area totally devoid of contents. and sublease sublease n. the lease of all or a portion of premises by a tenant who has leased the premises from the owner. A sublease may be prohibited by the original lease, or require written permission from the owner. its Rancho Bernardo facility on a timely basis and in the manner anticipated (which in turn depends in part on the market for leased real property of this type in the vicinity of Rancho Bernardo), and (viii) the ability of the company to negotiate successfully an amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. line of credit facility on terms that are not burdensome to the company and that provide an adequate source of cash should the company need to borrow against it. The company's filings with the Securities and Exchange Commission present a more detailed discussion of these and other risks related to the forward-looking statements in this press release. -0-
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, December 31,
1998 1997
-------- --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,972 $ 3,046
Accounts receivable 3,421 4,640
Income taxes receivable -- 14
Inventories 17,326 13,186
Deferred tax assets 5,126 2,902
Prepaid expenses and other current assets 1,006 734
-------- --------
Total current assets 28,851 24,522
PROPERTY, PLANT AND EQUIPMENT 27,649 26,170
TRADEMARKS AND PATENTS 14,268 14,704
GOODWILL 46,198 47,625
DEFERRED FINANCING FEES 68 107
-------- --------
TOTAL ASSETS $117,034 $113,128
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,658 $ 4,051
Accrued expenses 3,897 3,696
Income taxes payable 1,565 --
Long-term debt, current portion 4,000 --
-------- --------
Total current liabilities 13,120 7,747
LONG-TERM LIABILITIES:
Long-term debt 16,000 20,000
Deferred tax liabilities 7,143 7,487
Deferred rent liabilities 517 611
-------- --------
Total liabilities 36,780 35,845
-------- --------
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 and 15,428,871 shares 155 154
Additional paid-in capital 42,627 42,456
Retained earnings 37,472 34,673
-------- --------
Total stockholders' equity 80,254 77,283
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $117,034 $113,128
======== ========
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
NET SALES $ 8,608 $ 11,255 $ 62,487 $ 55,636
COST OF SALES 6,737 8,810 44,689 38,742
-------- -------- -------- --------
Gross profit 1,871 2,445 17,798 16,894
-------- -------- -------- --------
SELLING, GENERAL AND
ADMINISTRATIVE 1,439 2,879 9,005 10,255
AMORTIZATION OF GOODWILL 356 357 1,427 1,428
PLANT CONSOLIDATION 1,200 1,500 1,200 1,500
-------- -------- -------- --------
Operating income (loss) (1,124) (2,291) 6,166 3,711
-------- -------- -------- --------
OTHER:
Interest expense 324 246 1,285 1,040
Other (income), net (36) (41) (218) (418)
-------- -------- -------- --------
INCOME (LOSS) BEFORE
INCOME TAXES (1,412) (2,496) 5,099 3,089
PROVISION (BENEFIT) FOR
INCOME TAXES (751) (935) 2,300 1,550
-------- -------- -------- --------
NET INCOME (LOSS) ($ 661) ($ 1,561) $ 2,799 $ 1,539
======== ======== ======== ========
NET INCOME (LOSS) PER
COMMON SHARE ($ 0.04) ($ 0.10) $ 0.18 $ 0.10
======== ======== ======== ========
NET INCOME (LOSS) PER
COMMON SHARE,
ASSUMING DILUTION ($ 0.04) ($ 0.10) $ 0.18 $ 0.10
======== ======== ======== ========
ALDILA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Twelve months ended
December 31,
--------------------
1998 1997
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,799 $ 1,539
Depreciation and amortization 5,996 5,373
Changes in working capital items, net (4,468) (5,702)
-------- --------
Net cash provided by operating activities 4,327 1,210
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (5,886) (14,791)
Other 313 33
-------- --------
Net cash used for investing activities (5,573) (14,758)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 156 71
Repurchases of common stock -- (3,165)
Other, net 16 12
-------- --------
Net cash provided by (used for)
financing activities 172 (3,082)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,074) (16,630)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,046 19,676
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,972 $ 3,046
======== ========
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