SOURCE: Aldila

May 07, 2008 16:15 ET

Aldila Reports Financial Results for First Quarter 2008

POWAY, CA--(Marketwire - May 7, 2008) - ALDILA, INC. (NASDAQ: ALDA) announced today net sales of $16.7 million and net income of $458,000 ($0.09 fully diluted per share) for the three months ended March 31, 2008. In the comparable 2007 first quarter, the Company had net sales of $20.7 million and net income of $2.7 million ($0.48 fully diluted per share).

Our golf shaft sales declined 18% in the first quarter of 2008 versus the first quarter of 2007. The average selling price of golf shafts decreased by 13% quarter on quarter on a 6% decline in unit sales. Composite materials sales were off 10% in the current quarter versus the 2007 quarter. In the 2007 quarter we had $572,000 of hockey sales, a business line which we discontinued in 2007. Our gross profit in the 2008 quarter declined by 37% of which 5% can be attributed to no longer owning 50% of a carbon fiber plant and the balance due to lower average selling prices for golf shafts and lower overall sales volumes. Selling, general & administrative expenses were higher in the current quarter driven by front-loaded marketing programs, increases in selling expenses, legal cost of approximately $81,000 related to the establishment of the credit facility with KeyBank and professional fees of approximately $104,000 in relation to the restatement of the Company's previously issued financial statements. The Company's backlog of sales orders of $9.9 million at March 31, 2008 was higher than the $9.5 million reported at March 31, 2007.

"A weakening economy and decreased industry retail sales compared to last year impacted our sales," said Mr. Peter R. Mathewson, Chairman of the Board and CEO. "Market participants appear to be taking a cautious approach to 2008. While we are disappointed with our sales we did remain profitable and we believe we are well positioned for the back half of the year. Production for new programs in which we will participate should begin during the late third quarter and should be in full swing during the fourth quarter," Mr. Mathewson said.

"It is still too early to gauge consumer acceptance of the new interchangeable shaft systems in the market place. One major club company did not ship their retail units to their accounts until late in the quarter. It will be a least another quarter until we get a good indication on how successful the early entrants have been in this new market segment," Mr. Mathewson said.

"We have made some organizational changes to better support our two business units of golf shafts and composite materials. Robert J. Cierzan, who has been serving as our Vice President, Finance / CFO and running our expanding Composite Materials business, will now devote his full time to this critical area and will be promoted to Senior Vice President, Composite Materials. In the last year we have continued to invest in additional capacity and have hired two key people in sales and resin development. Mr. Cierzan now has in place an organization that can support and take advantage of the opportunities we think exist in continuing to grow sales in our Composite Materials Division. Scott M. Bier, our Vice President, Controller, will be promoted to Vice President, Finance / CFO. Mr. Bier has been with the Company since 1998, prior to that he worked at Deloitte. He has worked in various roles throughout the accounting and finance department and has assisted Mr. Cierzan in his duties over the last several years as Mr. Cierzan has gradually spent more and more time growing the Composite Materials business. Mr. Bier is well qualified to excel in his new position. These changes will become effective after the Annual Meeting of Stockholders on May 15, 2008," said Mr. Mathewson.

"Our Vietnam facility continues to ramp up production to meet our targets for year end. The rising value of China's currency versus the U.S. dollar and a new labor law that will negatively impact costs increasingly in the years ahead has made our decision to open a factory in Vietnam all the more timely. This factory gives us options and helps to mitigate the risks of China manufacturing," Mr. Mathewson said.

"Our Composite Materials business declined 10% quarter on quarter. This can be attributed to the timing of customer orders and a general slowdown in the economy as evidenced by lower shipment volumes to the same customer base in 2007. This quarter represents the first negative quarterly comparison since we began focusing on the expansion in this segment of our business. We believe this to be temporary and our investments made in terms of capacity and personnel will resume their momentum in this segment latter in the year when economic factors hopefully improve for our customer base," said Mr. Mathewson.

"The Company ended the quarter with $7.8 million in cash and cash equivalents after paying a one-time five dollar special dividend payment to shareholders totaling $25.8 million during the quarter. The Company placed in service a $15.0 million dollar credit facility with KeyBank during the quarter and borrowed $8.0 million against this facility to help support the dividend payment," Mr. Mathewson said.

"Aldila has enjoyed a great start to the 2008 Tour season. On the PGA Tour, players using Aldila shafts have won 6 events including the World Golf Championship - CA Championship and the Verizon Heritage by Aldila advisory staff member, Boo Weekley. Players using Aldila shafts have also won 3 events on the Nationwide Tour and 6 events on the Champions Tour. On the LPGA Tour we have won every event but 2 and Paula Creamer, an Aldila LPGA staff member, has won twice including last weeks SemGroup Championship. We are also happy to see our entire high performance line continue to do well with players winning using our NV®, VS Proto™, DVS™, MOI Proto and soon to be released Voodoo shaft. In fact, our new Voodoo shaft is quickly becoming one of the most popular shafts on Tour and has already been used to win 4 events since its introduction. We are tooling up to produce this innovative new shaft concept in the fourth quarter of this year. We also continue to be the leading hybrid shaft on the PGA, Nationwide, LPGA and Champions Tours. Most weeks we have more than twice as many hybrid shafts in play than our nearest competitor," Mr. Mathewson said.

Aldila will host a conference call at 5 P.M. Eastern Time, on Wednesday, May 7, 2008, with Peter R. Mathewson, Chairman and CEO, and Robert J. Cierzan, Chief Financial Officer, to review Aldila's 2008 first quarter financial results. For telephone access to the conference call dial 800-952-4972 or 416-641-2140 for international calls and request connection to the Aldila conference call. A live webcast of the conference call can be accessed on the Aldila website at http://www.aldila.com. An archive of the webcast will be available through our website for 90 days following the conference call.

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. 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, 2007, 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, all of which can be obtained at www.sec.gov.

The forward-looking statements in this press release are particularly subject to the risks that:

--  our NV® and VS Proto™ shaft lines and their success may not
    continue to attract new customer accounts;
--  our product offerings, including the NV®, VS Proto™ and DVS™
    shaft lines and product offerings outside the golf industry, will not
    achieve or maintain success with consumers or OEM customers;
--  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 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;
--  the Company will not be able to acquire adequate supplies of carbon
    fiber at reasonable market prices;
--  acts of terrorism, natural disasters, or disease pandemics interfere
    with our manufacturing operations or our ability to ship our finished
    products.
    

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)

                                                   March 31,   December 31,
                                                      2008         2007
                                                  -----------  ------------
ASSETS                                            (Unaudited)

CURRENT ASSETS:
          Cash and cash equivalents               $     7,801  $     29,529
          Accounts receivable                           8,281         8,684
          Inventories                                  13,364        13,861
          Deferred tax assets                           1,542         1,521
          Prepaid expenses and other current
           assets                                         471           578
                                                  -----------  ------------
               Total current assets                    31,459        54,173

PROPERTY, PLANT AND EQUIPMENT                          13,435        13,308

DEFERRED TAXES                                            750           750

OTHER NON-CURRENT ASSETS                                  256           257
                                                  -----------  ------------
TOTAL ASSETS                                      $    45,900  $     68,488
                                                  ===========  ============
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
          Accounts payable                        $     4,223  $      4,758
          Dividends payable                               773             -
          Income taxes payable                            130         4,266
          Accrued expenses                              2,048         2,564
          Short term debt                               4,000             -
          Other current liability                         137           137
                                                  -----------  ------------
               Total current liabilities               11,311        11,725

LONG-TERM LIABILITIES:
          Deferred rent                                   169           170
          Long term debt                                3,833             -
          Other long-term liabilities                     840           827
                                                  -----------  ------------
               Total liabilities                       16,153        12,722
                                                  -----------  ------------
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 5,155,347
           shares as of March 31, 2008
           and 5,154,235 shares as of
           December 31, 2007                               52            51
          Additional paid-in capital                   43,774        43,702
          (Accumulated deficit) retained earnings     (14,079)       12,013
                                                  -----------  ------------
               Total stockholders' equity              29,747        55,766
                                                  -----------  ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $    45,900  $     68,488
                                                  ===========  ============


     

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




                                                     Three months ended
                                                          March 31,
                                                  ------------------------
                                                      2008         2007
                                                  -----------  ------------


NET SALES                                         $    16,663  $     20,662
COST OF SALES                                          12,104        13,472
                                                  -----------  ------------
          Gross profit                                  4,559         7,190
                                                  -----------  ------------

SELLING, GENERAL AND ADMINISTRATIVE                     4,033         3,372
                                                  -----------  ------------
          Operating income                                526         3,818
                                                  -----------  ------------

OTHER INCOME (EXPENSE):
          Interest income                                 220           199
          Interest expense                                (39)            -
          Other, net                                       40            43
          Equity in earnings of joint venture               -           105
                                                  -----------  ------------

INCOME BEFORE INCOME TAXES                                747         4,165
PROVISION FOR INCOME TAXES                                289         1,470
                                                  -----------  ------------

NET INCOME                                        $       458  $      2,695
                                                  ===========  ============


NET INCOME PER COMMON SHARE                       $      0.09  $       0.49
                                                  ===========  ============

NET INCOME PER COMMON SHARE, ASSUMING
 DILUTION                                         $      0.09  $       0.48
                                                  ===========  ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
 OUTSTANDING                                            5,155         5,525
                                                  ===========  ============

WEIGHTED AVERAGE NUMBER OF COMMON AND
 COMMON EQUIVALENT SHARES                               5,194         5,588
                                                  ===========  ============





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


                                                    Three months ended
                                                         March 31,
                                                  ------------------------
                                                      2008         2007
                                                  -----------  -----------
                                                               AS RESTATED
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income                                   $       458  $     2,695
     Depreciation and amortization                        452          376
     Stock-based compensation                              55           61
     Loss on disposal of fixed assets                       4            9
     Undistributed income of joint venture,
      net                                                   -         (104)
     Changes in working capital items, net             (4,193)       2,193
                                                  -----------  -----------
           Net cash (used for) provided
            by operating activities                    (3,224)       5,230
                                                  -----------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property, plant and
      equipment                                          (594)      (2,341)
     Proceeds from sales of property, plant
      and equipment                                        16            -
     Purchases of marketable securities                     -       (9,200)
     Proceeds from sales of marketable
      securities                                            -        4,800
                                                  -----------  -----------
           Net cash used for investing
            activities                                   (578)      (6,741)
                                                  -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Borrowings from credit facility                    8,000            -
     Payments on credit facility                         (167)           -
     Proceeds from issuance of common stock                18           17
     Dividend payments                                (25,777)           -
                                                  -----------  -----------
            Net cash (used for) provided
             by financing activities                  (17,926)          17
                                                  -----------  -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS             (21,728)      (1,494)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD         29,529        3,882
                                                  -----------  -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD          $     7,801  $     2,388
                                                  ===========  ===========


Contact Information

  • Investor/Media Contacts:
    Robert J. Cierzan
    Vice President, Finance

    Sylvia J. Castle
    Investor Relations

    Aldila, Inc.
    (858) 513-1801