Aldila Reports Third Quarter and Nine Months 2002 Results.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. , Calif.--(BUSINESS WIRE)--Oct. 31, 2002 Aldila, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :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 announced operating results for the third quarter and nine months ended September September: see month. 30, 2002. For the third quarter 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 were $6.5 million, compared to net sales of $6.8 million for the 2001 third quarter. The company had a net loss of $699,000 ($0.14 loss per share) for the third quarter of 2002, compared to a net loss of $515,000 ($0.10 loss per share giving effect to the reverse stock split), for the third quarter of 2001. For nine months ended September 30, 2002, net sales were $28.4 million, compared to $31.2 million for the nine month period of 2001. The company reported a net loss of $1,067,000 ($0.22 loss per share) for the nine month period of 2002, compared to $9,000 of net income (breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations per share) for the nine month period of 2001, after plant consolidation charges of $569,000 and goodwill amortization of $1,061,000. For the nine months of 2002, the cash balance increased $2.1 million, resulting in an ending cash balance of $2.4 million. There are no outstanding borrowings. "Historically, the third quarter is our toughest period and coupled with a persistently difficult business environment, our sales declined 6% from the same period last year on 3% fewer 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. units sold in the 2002 quarter at essentially flat average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. ," 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 Chief Executive Officer. "Golf shaft units shipped in the nine month period of 2002 were 11% greater than in the 2001 period, with an 18% decline in average selling prices. Although incoming orders and third quarter ending backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. are up from year-ago levels, we believe fourth quarter sales could be slightly below last year's fourth quarter, given the current lackluster lack·lus·ter adj. Lacking brightness, luster, or vitality; dull. See Synonyms at dull. Adj. 1. lackluster - lacking brilliance or vitality; "a dull lackluster life"; "a lusterless performance" business climate in the overall golf equipment market." "We are continuing to build on the initial success of our new Aldila ONE which was introduced in January January: see month. . Every major distributor features the Aldila ONE among their product offerings and many have utilized special announcements and product introductions stressing the benefits of our patentable Segmented Flex A development system for Flash-based applications from Adobe. Introduced in 2004 as a J2EE application, Flex compiles ActionScript code and XML-based user interface descriptions (MXML) into binary Flash files (SWF files). Technology," Mr. Mathewson said. "Several major OEMs have picked up Aldila ONE in their custom club programs. Companies like Nike Nike (nī`kē), in Greek religion and mythology, goddess of victory, daughter of Pallas and Styx. Often an attendant of Zeus or Athena, she also presided over all contests, athletic as well as military. and Ping now offer Aldila ONE in their demo demo - /de'moh/ 1. A demonstration of a product, often of an early version or prototype. A demo is a far more effective way of inducing bugs to manifest themselves than any number of test runs, especially when important people are watching. 2. demo version. 3. and custom packages, and other major 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 announcements are expected in the near future." "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". , usage of Aldila shafts increased 25% this year over 2001. Most notable, Nick Price won the Mastercard MasterCard Worldwide (NYSE: MA) is a mutinational corporation based in Purchase, NY in the United States. Throughout the world, its principal business is to process payments between the banks of merchants and the banks of purchasers that use its "Mastercard" branded debit- and Colonial using the Aldila ONE shaft, and Rich Beem Richard Michael Beem (born August 24, 1970) is an American golfer who plays on the PGA Tour. Beem was born in Phoenix, Arizona, grew up in El Paso, Texas, and played golf at New Mexico State University in Las Cruces, New Mexico. He turned professional in 1994. won both the PGA Championship The PGA Championship (often referred to as the U.S. PGA Championship outside of North America) is an annual golf tournament conducted by the Professional Golfers Association of America as part of the PGA Tour. and the International after switching to Aldila shafts in all of his woods and irons," Mr. Mathewson said. "Our business with Mission Hockey Mission is a company that makes hockey equipment for both ice hockey and roller hockey. The company is known most for the roller hockey skates that they produce. Though initially only an inline company, due to their popularity in the inline world, Mission made its foray into the continues to evolve. In the third quarter, we added hockey stick assembly operations at our facility 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 Mission is experiencing greater demand among professional NHL NHL Non-Hodgkin's lymphoma, see there hockey players for Mission's new, distinctive blue M-l hockey stick," Mr. Mathewson said. Aldila, Inc. is the leading manufacturer of high performance 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 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 (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Aldila's third quarter and nine months' results will be reviewed in a conference call at 8:00 A.M., PST PST Paroxysmal supraventricular tachycardia, see there , on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , November 1, 2002, hosted by Peter Mathewson, 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. , Bob Cierzan, Vice President, Finance, and Mike Rossi, Vice President, Sales and Marketing. A live audio webcast of the call will be accessible on the Aldila website at http://www.aldila.com at least 15 minutes prior to the call to register. For telephone access, dial (800) 915-4836 for domestic calls, and (973) 317-5319 for international calls. Call leader is Peter Mathewson. The call will be rebroadcast at (800) 428-6051 for domestic calls, and (973) 709-2089 for international calls, conference ID #254851, from 10:00 A.M. (PST), Friday, November 1, until 8:59 P.M. (PST), Monday, November 4, 2002. 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 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, 2001, under "Business Risks" in Part I, Item 1, and "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, 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; -- 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 - UNAUDITED
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
--------------- -----------------
2002 2001 2002 2001
------- ------- -------- --------
NET SALES $6,450 $6,845 $28,375 $31,239
COST OF SALES 5,968 6,133 24,594 24,004
------- ------- -------- --------
Gross profit 482 712 3,781 7,235
------- ------- -------- --------
SELLING, GENERAL AND ADMINISTRATIVE 1,897 1,551 5,650 5,351
AMORTIZATION OF GOODWILL - 350 - 1,061
PLANT CONSOLIDATION - - - 569
------- ------- -------- --------
Operating income (loss) (1,415) (1,189) (1,869) 254
------- ------- -------- --------
OTHER EXPENSE (INCOME):
Interest expense 17 92 85 342
Other, net 9 (26) 45 31
Equity in earnings of
joint venture (52) (49) (192) (160)
------- ------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES (1,389) (1,206) (1,807) 41
PROVISION (BENEFIT) FOR INCOME TAXES (690) (691) (740) 32
------- ------- -------- --------
NET INCOME (LOSS) $(699) $(515) $(1,067) $9
======= ======= ======== ========
NET INCOME (LOSS) PER COMMON SHARE $(0.14) $(0.10) $(0.22) $0.00
======= ======= ======== ========
NET INCOME (LOSS) PER COMMON SHARE,
ASSUMING DILUTION $(0.14) $(0.10) $(0.22) $0.00
======= ======= ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 4,948 5,087 4,948 5,098
======= ======= ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT
SHARES 4,948 5,087 4,948 5,126
======= ======= ======== ========
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September December
30, 31,
2002 2001
-------- --------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $2,360 $266
Accounts receivable 2,878 3,977
Income taxes receivable 1,525 723
Inventories 9,793 11,472
Deferred tax assets 1,957 2,366
Prepaid expenses and other current
assets 313 595
----------- --------
Total current assets 18,826 19,399
PROPERTY, PLANT AND EQUIPMENT 6,566 7,634
INVESTMENT IN JOINT VENTURE 7,149 7,466
OTHER ASSETS 286 387
----------- --------
TOTAL ASSETS $32,827 $34,886
=========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $2,159 $2,921
Accrued expenses 2,457 2,627
----------- --------
Total current liabilities 4,616 5,548
LONG-TERM LIABILITIES:
Deferred rent 71 74
Deferred tax liabilities 10 67
----------- --------
Total liabilities 4,697 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 (13,902) (12,835)
----------- --------
Total stockholders' equity 28,130 29,197
----------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $32,827 $34,886
=========== ========
ALDILA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)
Nine months ended
September 30,
----------------
2002 2001
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,067) $9
Depreciation and amortization 1,451 3,023
(Gain) Loss on disposal of fixed assets (13) 211
Undistributed income of joint venture, net (198) (164)
Changes in working capital items, net 1,690 (2,843)
-------- -------
Net cash provided by operating
activities 1,863 236
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (300) (657)
Proceeds from sales of property, plant and
equipment 16 235
Proceeds from sales of marketable
securities - 3,104
Distribution from joint venture 515 190
-------- -------
Net cash provided by
investing activities 231 2,872
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit 887 750
Payments under line of credit (887) (132)
Principal payments on long-term debt - (8,000)
Repurchases of common stock - (381)
-------- -------
Net cash used for financing
activities - (7,763)
-------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,094 (4,655)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 266 5,603
-------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $2,360 $948
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