Aldila Fourth Quarter Sales Flat While Earnings Improve
POWAY, Calif. - Aldila Inc. (NASDAQ\NMS:ALDA) reported net sales of $11.2 million and net income of $0.9 million, including $0.7 million of tax benefit items for the fourth quarter ended Dec. 31, 2000.
In the corresponding quarter of 1999, the company reported net sales of $11.6 million and a net loss of $1.0 million, including a $0.5 million after-tax charge for plant consolidation. Earnings per share for the fourth quarter of 2000 were $0.06, including a tax benefit of $0.03 from revision of prior year estimates and a $0.02 tax benefit attributed to reduction in the effective tax rate based upon increased activity in foreign operations. In the fourth quarter of 1999, a $0.06 loss per share was reported including a $0.03 after-tax charge for plant consolidation.
For the year ended Dec. 31, 2000, net sales increased 24% to $55.9 million. Net income was $3.2 million, including $0.3 million after tax recovery of previous period charges and tax benefit items of $0.7 million. Earnings per share were $0.21, including recovery of $0.02 in previous period charges and $0.05 in tax benefit items. In 1999, the company reported net sales of $45.1 million and a net loss of $2.1 million, or a $0.14 loss per share including a $0.03 after-tax plant consolidation charge.
"2000 was a solid year for Aldila's golf shaft business with four successive profitable quarters. Shaft sales increased 44% over 1999 and total shaft unit shipments increased 46% which set an all-time record. Premium and value shaft shipments increased 58% and 33%, respectively, over 1999, resulting in a modest decline in average selling prices from 1999 levels of only 2%," said Peter R. Mathewson, chairman of the board and chief executive officer.
"Aldila's prepreg operation set a company production record in 2000 with a 59% increase in pounds of prepreg produced as compared to 1999, which supplied virtually all the prepreg requirements for our golf shafts," Mathewson continued. "At our joint venture operation in Evanston, Wyoming, carbon fiber production increased 40% in 2000, compared to the previous year."
"In 2000 we accomplished our long-term goal of qualifying Aldila's facilities in Mexico with the majority of our OEM customers for the manufacture of their premium shafts. This allows us to compete against our U.S.-based competitors on a lower cost basis from a close proximity," Mathewson continued.
"A rising level of interest in our China operation for production of premium shaft lines bodes well for the future. Delivery of value shafts in China to nearby club assemblers increased significantly in 2000, and all indications are this activity will expand to include Premium shafts," Mathewson said. "Our operation has made good progress in assuming expanded responsibilities in the areas of customer service, quality, credit issues and coordination of shipping schedules directly with local assemblers."
"We are pleased with the initial market response to the introduction of our new HM-2000 shaft for woods and the re-introduction of our all-time best seller, the HM-40 Tour Gold. Both shafts are targeted for OEM custom club fitting programs and the distribution market," Mathewson said.
"Following several months of development work, we have begun manufacturing a complete line of composite hockey sticks for Mission Hockey," Mathewson continued. "Mission Hockey increased their initial order following strong interest in their product line at two recent hockey trade shows. Although we don't expect these sales to impact total sales in the short term, the similarities in production methods and raw materials for our golf shafts make hockey sticks a good product fit."
On Jan. 17, 2001, the company announced authorization by its board of directors of a 1.0 million share buyback program (up to 6.5% of 15,462,204 common shares outstanding), at prevailing prices depending on market conditions. During the week of Jan. 22, 116,547 shares were repurchased at prevailing market prices.
The Aldila balance sheet continued to improve in 2000 with the retirement of $8.0 million of long-term debt, inventory reductions of $1.3 million over the year, and a Dec. 31, 2000 balance of cash and marketable securities at $8.7 million, which was $0.1 million higher than year-end 1999.
"The current economic climate and its potential effect on the golf industry is unclear at this early stage of 2001," Mathewson commented. "Presently, Aldila anticipates about the same level of operating performance in 2001 as attained in 2000."
Aldila will host a conference call at 8 a.m. PST, on Feb. 8, 2001, with Pete Mathewson, chairman and CEO; Bob Cierzan, vice president, finance, and Mike Rossi, vice president, sales and marketing. A live Webcast of the conference call can be accessed on the company's Web site at http://www.aldila.com/ at least 15 minutes before 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 call. The call will be rebroadcast at 800/642-1687, conference ID No. 278045, from 4 p.m. PST, Thursday, Feb. 8, until 7 p.m. PST, Friday, Feb. 9, 2001.
Aldila 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, and through its ownership interest in Carbon Fiber Technology LLC, externally manufactures carbon fiber for internal use.
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 under "Business Risks" in Part I, Item 1 of our Annual Report on Form 10-K for the year ended Dec. 31, 1999, "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 Sept. 30, 2000. 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 or Mexico instead of the United States;
- new product offerings 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, and;
- 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.
For additional information about Aldila Inc., go to the company's Web site at www.aldila.com.
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, December 31,
2000 1999
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $5,603 $4,077
Marketable securities 3,104 4,513
Accounts receivable 6,693 4,807
Inventories 11,001 12,326
Deferred tax assets 3,302 4,010
Prepaid expenses and other current
assets 607 741
Total current assets 30,310 30,474
PROPERTY, PLANT AND EQUIPMENT 9,277 11,298
INVESTMENT IN JOINT VENTURE 7,464 7,181
TRADEMARKS AND PATENTS 13,398 13,833
GOODWILL 43,342 44,770
DEFERRED FINANCING FEES 136 256
LICENSE/ROYALTY 252 --
OTHER ASSETS 148 191
TOTAL ASSETS $104,327 $108,003
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $4,405 $3,258
Accrued expenses 2,976 3,693
Income taxes payable 1,542 167
Long-term debt, current portion 8,000 8,000
Total current liabilities 16,923 15,118
LONG-TERM LIABILITIES:
Long-term debt -- 8,000
Deferred tax liabilities 5,981 6,338
Deferred rent liabilities 57 398
Total liabilities 22,961 29,854
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
shares 155 155
Additional paid-in capital 42,627 42,627
Retained earnings 38,584 35,367
Total stockholders' equity 81,366 78,149
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $104,327 $108,003
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
2000 1999 2000 1999
(Unaudited) (Unaudited)
NET SALES $11,244 $11,611 $55,859 $45,091
COST OF SALES 8,976 9,992 42,257 37,241
Gross profit 2,268 1,619 13,602 7,850
SELLING, GENERAL AND
ADMINISTRATIVE 1,330 1,885 7,483 7,179
AMORTIZATION OF GOODWILL 357 357 1,428 1,428
PLANT CONSOLIDATION -- 900 (566) 900
Operating income (loss) 581 (1,523) 5,257 (1,657)
OTHER EXPENSE (INCOME):
Interest expense 156 291 900 1,315
Other, net (139) (395) (570) (379)
Equity in earnings of joint
venture (81) (12) (220) (12)
INCOME (LOSS) BEFORE INCOME
TAXES 645 (1,407) 5,147 (2,581)
PROVISION (BENEFIT) FOR INCOME
TAXES (299) (435) 1,930 (476)
NET INCOME (LOSS) $944 ($972) $3,217 ($2,105)
NET INCOME (LOSS) PER COMMON
SHARE $0.06 ($0.06) $0.21 ($0.14)
NET INCOME (LOSS) PER COMMON SHARE,
ASSUMING DILUTION $0.06 ($0.06) $0.21 ($0.14)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 15,462 15,462 15,462 15,462
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT
SHARES 15,621 15,462 15,604 15,462
ALDILA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Twelve months ended
December 31,
2000 1999
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $3,217 ($2,105)
Depreciation and amortization 4,066 6,015
Gain on joint venture transaction -- (334)
Loss on disposal of fixed assets 56 13
Changes in working capital items, net 1,954 1,881
Net cash provided by operating
activities 9,293 5,470
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net (893) (1,042)
Proceeds from sales in joint venture
transaction -- 6,972
Investment in marketable securities 1,409 (4,513)
Investment in joint venture (283) (500)
Other -- (12)
Net cash provided by investing
activities 233 905
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (8,000) (4,000)
Other, net -- (270)
Net cash used for financing
activities (8,000) (4,270)
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,526 2,105
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 4,077 1,972
CASH AND CASH EQUIVALENTS, END OF PERIOD $5,603 $4,077