SOURCE: Aldila, Inc.

July 27, 2005 16:15 ET

Aldila Reports 53% Increase in Net Sales and 68% Increase in Net Income for Second Quarter 2005

POWAY, CA -- (MARKET WIRE) -- July 27, 2005 -- Aldila, Inc. (NASDAQ: ALDA) announced today net sales of $21.8 million for the three months ended June 30, 2005, an increase of 53% over the same period in 2004, and net income of $3.6 million ($0.66 fully diluted per share), an increase of 68% over Q2, 2004. In the comparable 2004 second quarter, the Company had net sales of $14.3 million and net income of $2.2 million ($0.42 fully diluted per share). For the six months ended June 30, 2005, net sales increased by $10.1 million to $39.6 million, an increase of 34% over the same period in 2004 and net income increased by $2.5 million to $7.0 million, an increase of 56% over the same period in 2004.

"It is gratifying to report second quarter numbers that beat our strong first quarter results," said Mr. Peter R. Mathewson, Chairman of the Board and CEO. "Our second quarter sales increased by 53% versus the second quarter of last year. The average selling price of golf shafts increased by 31% quarter on quarter on a 20% increase in unit sales, which increases were driven by the increased sales of branded and co-branded shafts. Driven by continued strong sales of our flagship NV™ shaft line our second quarter 2005 branded sales exceeded our branded sales in the second quarter 2004 by 54%. Our net income of $7.0 million for the six months ended June 30, 2005 represents the best first half of the year the Company has had in the past 10 years," Mr. Mathewson said.

"Gross margin in the 2005 second quarter was affected by a charge for inventory obsolesce of approximately $385,000 as well as higher material costs versus the 2004 second quarter. SG&A spending in the 2005 second quarter was affected by expenses for Sarbanes-Oxley Section 404 Compliance in the amount of $102,000. The Company's backlog of sales orders as of June 30, 2005 of $12.7 million was 183% higher than at June 30, 2004," Mr. Mathewson said.

"Our results during the quarter and the first half of 2005 demonstrate the appeal and momentum of our NV™ Series of shafts in the marketplace. Our performance is validation that our business model built around Aldila branded and co-branded shafts is being embraced by OEMs in a wide range of programs," Mr. Mathewson said. "We are seeing both an expansion of existing programs with OEMs as they offer a wider range of NV™ shafts to their customers as well as the introduction of new club programs. Our NV™ Hybrid shaft, bolstered by its success on all Professional Tours, is selling briskly through distribution channels and to OEMs. The new NV™ graphite iron shaft, just introduced, is being evaluated by several OEMs and has been selected by one major customer as a custom upgrade option in their line," said Mr. Mathewson.

The Aldila NV™ Series of shafts continues to be one of the most popular shafts in play on the major Professional Tours. The Aldila NV™ was used to win both the men's and women's U.S. Open this year. At the British Open the NV™ Hybrid was the number one hybrid shaft, continuing its dominance as the leading hybrid shaft on both the PGA and Nationwide Tour. The NV™ graphite iron shaft scored its first win at the French Open on the European Tour.

"Outside sales of composite prepreg materials continued to grow during the quarter as sales increased by 69% versus the second quarter of 2004. Sales are up 61% through six months versus the comparable period last year. We are investing in new equipment to further grow this business," said Mr. Mathewson.

"Our hockey sales have been impacted by the NHL lockout situation but with the recent announcement of a resolution between the owners and the players union we are seeing a rapid increase in activity, which we expect will result in greater sales in the second half of the year," Mr. Mathewson said.

"Our balance sheet remains strong with $16.7 million in cash and no debt at June 30, 2005. Operations continue to provide strong cash flows accommodating the payment of $6.1 million in dividends in the first half of 2005, which included a $1.00 per share one time special dividend," said Mr. Mathewson.

Aldila, Inc. is a leader among manufacturers 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 and assembles hockey sticks and blades, in addition to the manufacture of composite prepreg material for its golf shaft business and external sales. Aldila also manufactures carbon fiber for internal use through an ownership interest in CFT.

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. Such forward-looking statements include, but are not limited to, implications concerning the acceptance of the NV™ shaft and that its success will continue to attract new customer accounts. Forward-looking statements are 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 December 31, 2004, under "Business Risks" in Part I, Item 1, and "Management's Discussion and Analysis of Financial Condition and Results of Operation" in Part I, Item 7 of the Form 10-K, and reports on Form 10-Q and Form 8-K. 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;
--  the market for graphite shafts will continue to be extremely
    competitive, affecting selling prices and profitability;
--  our product offerings, including the Aldila NV™ shaft and product
    offerings outside the golf industry, will not achieve success with
    consumers or OEM customers;
--  our business with Mission Hockey will not continue to grow;
--  our international operations will be adversely affected by political
    instability, currency fluctuations, export/import regulations or other
    risks typical of multi-national operations, particularly those in less
    developed countries;
--  CFT 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;
--  the Company will not be able to acquire adequate supplies of carbon
    fiber, other than that being produced at CFT, at reasonable market prices.
    
For additional information about Aldila, Inc., please go to the Company's Website at www.aldila.com.


                        ALDILA, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share data)

                                        June 30,     December 31,
                                         2005            2004
                                     -----------     -----------
ASSETS                                (Unaudited)

CURRENT ASSETS:
   Cash and cash equivalents         $    16,666     $    11,531
   Marketable securities                       -           4,971
   Accounts receivable                     8,367           5,214
   Income taxes receivable                     -           1,013
   Inventories                            10,188           8,292
   Deferred tax assets                     1,570           1,570
   Prepaid expenses and other
    current assets                           361             380
                                     -----------     -----------
         Total current assets             37,152          32,971

PROPERTY, PLANT AND EQUIPMENT              5,252           5,245

INVESTMENT IN JOINT VENTURE                3,213           3,072

DEFERRED TAXES                               634             634

OTHER NON-CURRENT ASSETS                     125             153
                                     -----------     -----------
TOTAL ASSETS                         $    46,376     $    42,075
                                     ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                  $     6,249     $     4,213
   Income taxes payable                      937               -
   Accrued expenses                        2,137           2,781
                                     -----------     -----------
         Total current liabilities         9,323           6,994

LONG-TERM LIABILITIES:
   Other long-term liabilities                20              20
                                     -----------     -----------
   Total liabilities                       9,343           7,014
                                     -----------     -----------

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 5,308,994
     shares in 2005 and 5,127,310 shares
     in 2004, respectively                    53              51
    Additional paid-in capital            44,973          43,864
    Accumulated deficit                   (7,993)         (8,854)
                                     -----------     -----------
         Total stockholders' equity       37,033          35,061
                                     -----------     -----------

TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY                $    46,376     $    42,075
                                     ===========     ===========



                        ALDILA, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
                    (In thousands, except per share data)


                             Three months ended       Six months ended
                                  June 30,                June 30,
                             2005          2004       2005        2004


NET SALES                   $  21,821   $  14,260   $  39,629  $  29,558
COST OF SALES                  13,703       8,281      24,076     17,455
                            ---------   ---------   ---------  ---------
    Gross profit                8,118       5,979      15,553     12,103

SELLING, GENERAL AND
 ADMINISTRATIVE                 2,558       2,329       4,880      4,764
                            ---------   ---------   ---------  ---------
    Operating income            5,560       3,650      10,673      7,339

OTHER EXPENSE (INCOME):
    Other, net                   (167)         18        (239)        15
    Equity in earnings of
     joint venture                (56)        (39)       (124)      (138)
                            ---------   ---------   ---------  ---------

INCOME BEFORE INCOME TAXES      5,783       3,671      11,036      7,462
PROVISION FOR INCOME TAXES      2,139       1,498       4,083      3,015
                            ---------   ---------   ---------  ---------

NET INCOME                  $   3,644   $   2,173   $   6,953  $   4,447
                            =========   =========   =========  =========

NET INCOME PER COMMON
 SHARE                      $    0.70   $    0.44   $    1.34  $    0.90
                            =========   =========   =========  =========

NET INCOME PER COMMON
 SHARE, ASSUMING DILUTION   $    0.66   $    0.42   $    1.28  $    0.87
                            =========   =========   =========  =========

WEIGHTED AVERAGE NUMBER
 OF COMMON SHARES
 OUTSTANDING                    5,238       4,976       5,191      4,926
                            =========   =========   =========  =========

WEIGHTED AVERAGE NUMBER
 OF COMMON AND COMMON
 EQUIVALENT SHARES              5,483       5,217       5,421      5,120
                            =========   =========   =========  =========



                      ALDILA, INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
                             (In thousands)

                                               Six months ended
                                                   June 30,
                                             --------    --------
                                               2005        2004
                                             --------    --------

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                               $  6,953    $  4,447
    Depreciation and amortization                 642         747
    Loss on disposal of fixed assets                4          32
    Undistributed income of joint
     venture, net                                (141)       (153)
    Changes in other assets &
     liabilities, net                          (1,688)      1,281
                                             --------    --------
         Net cash provided by
          operating activities                  5,770       6,354
                                             --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property, plant and
     equipment                                   (625)       (285)
    Proceeds from sales of property,
     plant and equipment                            -           3
    Proceeds from sales of marketable
     securities                                 4,971           -
    Distribution from joint venture                 -         750
                                             --------    --------
         Net cash provided by investing
          activities                            4,346         468
                                             --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Repurchases of common stock                     -        (287)
    Benefit from exercise of stock options        225           -
    Proceeds from issuance of common stock        886       1,438
    Dividend payment                           (6,092)       (256)
                                             --------    --------
         Net cash (used for) provided by
          financing activities                 (4,981)        895
                                             --------    --------

NET INCREASE IN CASH AND CASH EQUIVALENTS       5,135       7,717

CASH AND CASH EQUIVALENTS, BEGINNING OF
 PERIOD                                        11,531       6,919
                                             --------    --------

CASH AND CASH EQUIVALENTS, END OF PERIOD    $  16,666    $ 14,636
                                            =========    ========

Contact Information

  • Investor/Media Contacts:
    Robert J. Cierzan, Vice President, Finance
    Sylvia J. Castle, Investor Relations
    Aldila, Inc.
    (858) 513-1801