Aldila and SGL Form Joint Venture
POWAY, Calif. - Aldila, Inc. (NASDAQ/NMS:ALDA), today announced the formation of a joint venture company with SGL Technik GmbH, a 100%-owned subsidiary of SGL CARBON AG ("SGL") (NYSE:SGG) called Carbon Fiber Technology LLC.
In accordance with the previously announced Letter of Intent, SGL has purchased a 50% interest in Aldila's carbon fiber manufacturing operation in Evanston, Wyoming for approximately $7 million in cash. SGL CARBON GROUP is the world's largest producer of carbon and graphite products, including carbon fiber, with more than $1.2 billion in revenues in 1998.
The new joint venture company is headquartered at the 50,000 square foot carbon fiber facility in Evanston, Wyoming, which began operation in 1998 as a wholly-owned subsidiary of Aldila, Inc. Steve Russell, current head of the Evanston operation, has been named Chief Executive Officer of the joint venture company. Mr. Russell has over 25 years of experience in the carbon fiber business.
"This strategic partnership with SGL will allow us to produce carbon fiber at increased volume levels resulting in lower carbon fiber production costs," said Gary T. Barbera, Chairman and Chief Executive Officer, Aldila Inc. "The large tow carbon fiber being manufactured at the Evanston facility supplies virtually all of the internal prepreg needs for the manufacture of our golf shafts and is beginning to provide our core golf business with the added competitive edge we envisioned." Aldila will continue to manufacture graphite prepreg material in Poway, California for its golf shafts and outside sales. "By joining with Aldila in this strategic investment, we establish a carbon fiber manufacturing foothold in the U.S., home of many of our key customers," said Daniel J. Pichler, Chairman of SGL's Fibers & Composites Business Unit. "It fits well with our global strategy for growth of our carbon fiber business, through local production and customer service."
Aldila, Inc. is the world's leading manufacturer of graphite golf shafts used in clubs assembled and marketed throughout the world by leading golf club companies, distributors and custom clubmakers. Through vertical integration the company manufactures carbon fiber and composite prepreg for its golf shaft business.
This press release contains forward-looking statements based on our expectations as of the date of this 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, including:
- risks associated with our joint venture with SGL, including (a) the possibility that the carbon fiber facility will not produce sufficiently high volumes of high quality carbon fiber at low cost to meet our demands as well as those of SGL, (b) risks relating to difficulties in operating and managing the carbon fiber facility through the joint venture, including the risk of irreconcilable differences between SGL and Aldila as to the management of the joint venture, and (c) the risk that SGL will be unable to meet its financial obligations as to the joint venture;
- changes in demand by 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);
- the availability of raw materials (principally carbon fiber and acrylic fiber) for our manufacturing operations, including the carbon fiber facility, at anticipated prices;
- risks resulting from the increasing portion of our manufacturing operations that is conducted in Mexico and China (including the risk of political instability, export/import regulation, currency exchange rate risk, and cultural differences);
- the ability to develop new customer relationships with non-golf users of graphite prepreg and carbon fiber and changes in demand for carbon fiber and carbon fiber-based products;
- the nature and effectiveness of the competition for our products; and
- the availability of our line of credit facility to the extent necessary to meet Aldila's working capital needs, including in connection with principal payments under the company's outstanding senior notes, next due in March 2000.
Our filings with the Securities and Exchange Commission present a more detailed discussion of some of these and other risks related to the forward-looking statements in this press release, in particular under "Business Risks" in Part I, Item 1 of our Annual Report on Form 10-K for the year ended December 31, 1998 (the "Form 10-K"), "Management's Discussion and Analysis of Financial Condition and Results of Operation" in Part I, Item 7 of the Form 10-K, and "Management's Discussion and Analysis of Financial Condition and Results of Operation" in Item 2 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
Contact: Aldila, Inc., Poway Investor Contact: Robert J. Cierzan, Vice Pres. Finance Mary Lou Coburn, Investor Relations 858/513-1801 or Sard Verbinnen & Co., New York Media Contact: Anton Nicholas/Isadora Kriegel 212/687-8080