Aldila Reports Third Quarter Loss and Drop in Sales
POWAY, Calif., Oct. 24, 2001 - Aldila Inc. (NASDAQ:ALDA) today announced operating results for the third quarter and nine months ended Sept. 30, 2001.
For the third quarter net sales were $6.8 million, compared to net sales of $10.8 million for the 2000 third quarter. The company had a net loss of $515,000 ($0.03 loss per share) for the third quarter of 2001, compared to net income of $37,000, rounding to $0.01 per diluted share, in the 2000 third quarter.
For nine months ended Sept. 30, 2001, net sales were $31.2 million, compared to $44.6 million in the nine months of 2000. Net income for the nine months of 2001 after plant consolidation charges of $569,000 was $9,000, (breakeven per share), compared to net income of $2.3 million, or $0.15 per share, after plant consolidation recoveries of $566,000 in the nine months of 2000.
"The third quarter, our historically weakest quarter, was impacted by the global economic uncertainty," said Peter R. Mathewson, chairman and chief executive officer. "The incoming order rate in the third quarter was 26% below the same period of 2000 and ending backlog was at 65% of last year's third quarter-end level, suggesting fourth quarter sales could be 25% to 35% lower than the fourth quarter of 2000."
"Although we are maintaining market share, shorter product life cycles and their effect on inventories have prompted our customers to be very cautious in placing orders," continued Mathewson.
"Our relationship with Mission Hockey has been outstanding," Mathewson said. "Both sides are pleased with the progress made in the first year of our relationship and we are discussing various programs to expand the level of business for 2002."
"During the third quarter, the final payment of principal and interest totaling $4.1 million was made on an original $20 million note," said Mathewson. "Our balance sheet is currently strong with no long term debt and a current ratio of 3.6 to 1."
Aldila Inc. is the 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. Through an ownership interest in Carbon Fiber Technology LLC, the company externally manufactures carbon fiber for internal use.
Aldila will host a conference call at 8 a.m., PDT, on Thursday, Oct. 25, 2001 with Mathewson, Bob Cierzan, vice president, finance, and Mike Rossi, vice president, sales and marketing, to review Aldila's 2001 third quarter and nine months financial report. A live webcast of the conference call can be accessed on the Aldila Web site at www.aldila.com at least 15 minutes prior to the call to register and receive instructions for access to the webcast. For telephone access to the conference call dial 800/997-8642 and request connection to the Aldila conference call. Call leader is Mathewson. The call will be rebroadcast at 800/428-6051, conference ID No. 212680, from 10 a.m. (PDT), Thursday, Oct. 25, until 7 p.m. (PDT), Friday, Oct. 26, 2001.
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 Dec. 31, 2000, 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 in "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, 2001. 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 instead of 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, and
- attractive strategic alternatives will not be available to us on desirable terms.
For additional information about the company, visit the Aldila Web site at www.aldila.com.
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
Sept. 30, Dec. 31,
2001 2000
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $948 $5,603
Marketable securities -- 3,104
Accounts receivable 3,755 6,693
Inventories 13,117 11,001
Deferred tax assets 3,302 3,302
Prepaid expenses and other current
assets 600 607
Total current assets 21,722 30,310
PROPERTY, PLANT AND EQUIPMENT 7,961 9,277
INVESTMENT IN JOINT VENTURE 7,438 7,464
TRADEMARKS AND PATENTS 13,072 13,398
GOODWILL 42,281 43,342
OTHER ASSETS 429 536
TOTAL ASSETS $92,903 $104,327
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $2,932 $4,405
Accrued expenses 2,253 3,653
Income taxes payable 184 865
Line of credit 618 --
Long-term debt, current portion -- 8,000
Total current liabilities 5,987 16,923
LONG-TERM LIABILITIES:
Deferred tax liabilities 5,850 5,981
Deferred rent 72 57
Total liabilities 11,909 22,961
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 15,262,204
shares in 2001 and 15,462,204
shares in 2000 153 155
Additional paid-in capital 42,248 42,627
Retained earnings 38,593 38,584
Total stockholders' equity 80,994 81,366
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $92,903 $104,327
ALDILA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME -- UNAUDITED
(In thousands, except per share data)
Three months ended Nine months ended
Sept. 30, Sept. 30,
2001 2000 2001 2000
NET SALES $6,845 $10,820 $31,239 $44,615
COST OF SALES 6,133 8,177 24,004 33,281
Gross profit 712 2,643 7,235 11,334
SELLING, GENERAL AND
ADMINISTRATIVE 1,551 2,013 5,351 6,153
AMORTIZATION OF
GOODWILL 350 357 1,061 1,071
PLANT CONSOLIDATION -- -- 569 (566)
Operating income
(loss) (1,189) 273 254 4,676
OTHER EXPENSE (INCOME):
Interest expense 92 227 342 744
Other, net (26) (184) 31 (431)
Equity in earnings of
joint venture (49) (69) (160) (139)
INCOME (LOSS) BEFORE INCOME
TAXES (1,206) 299 41 4,502
PROVISION (BENEFIT) FOR
INCOME TAXES (691) 262 32 2,229
NET INCOME (LOSS) ($515) $37 $9 $2,273
NET INCOME (LOSS) PER
COMMON SHARE ($0.03) $0.01 $0.00 $0.15
NET INCOME (LOSS) PER COMMON SHARE,
ASSUMING DILUTION ($0.03) $0.01 $0.00 $0.15
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 15,262 15,462 15,294 15,462
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT
SHARES 15,262 15,717 15,379 15,600
ALDILA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -- UNAUDITED
(In thousands)
Nine months ended
Sept. 30,
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $9 $2,273
Depreciation and amortization 3,023 3,077
Loss on disposal of fixed assets 275 54
Changes in working capital items,
net (2,672) 3,411
Net cash provided by operating
activities 635 8,815
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment,
net (657) (445)
Proceeds from sales of marketable
securities 3,104 4,513
Purchase of marketable securities -- (3,052)
Investment in joint venture 26 (205)
Other -- (275)
Net cash provided by investing
activities 2,473 536
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit 750 --
Payments under line of credit (132) --
Principal payments on long-term debt (8,000) (8,000)
Repurchases of common stock (381) --
Net cash used for financing
activities (7,763) (8,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (4,655) 1,351
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 5,603 4,077
CASH AND CASH EQUIVALENTS, END OF
PERIOD $948 $5,428