SOURCE: Aldila

March 05, 2008 16:15 ET

Aldila Reports Fourth Quarter and Year End 2007 Financial Results

POWAY, CA--(Marketwire - March 5, 2008) - Aldila, Inc. (NASDAQ: ALDA) reported net sales of $17.7 million for the fourth quarter ended December 31, 2007 as compared to $17.9 million in the same quarter of 2006. The Company reported net income of $10.9 million ($2.09 earnings per share - fully diluted) for the fourth quarter of 2007 compared to net income of $1.3 million ($0.24 earnings per share - fully diluted) in the same quarter of 2006. In the 2007 fourth quarter the Company realized a pretax gain of $16.3 million from the sale of its 50% interest in Carbon Fiber Technology LLC ("CFT"). Excluding this gain the Company's net income would have been approximately $771,000 ($0.15 earnings per share - fully diluted).

For the year ended December 31, 2007 net sales were $69.1 million as compared to $72.4 million for the year ended December 31, 2006. The Company had net income of $16.0 million ($2.91 earnings per share - fully diluted) for 2007 as compared to net income of $11.2 million ($2.01 earnings per share - fully diluted) in 2006. In the 2007 fiscal year the Company benefited from a pretax gain of $16.3 million from the sale of CFT. Excluding this gain the Company's net income for 2007 would have been $5.7 million ($1.04 earnings per share - fully diluted). In the 2006 fiscal year the Company benefited from a pretax settlement of $2.2 million as a class member in a civil suit against certain carbon fiber producers. Excluding this benefit the Company's net income for 2006 would have been $9.8 million ($1.75 earnings per share - fully diluted).

The Company's aggregate cash and cash equivalents were $29.5 million as of December 31, 2007 after $3.3 million in dividend payments to stockholders, repurchasing $6.7 million in its common stock and spending $6.3 million for capital expenditures. The Company repurchased approximately 403,000 shares of its common stock during 2007, which represents approximately 7% of the Company's shares outstanding as of December 31, 2006. The Company's backlog of sales orders as of December 31, 2007 was $10.2 million versus $12.5 million as of December 31, 2006.

"Sales for the fourth quarter of 2007 were $17.7 million versus sales of $17.9 million in the fourth quarter of 2006," said Mr. Peter R. Mathewson, Chairman of the Board & CEO. "Sales of golf shafts were relatively flat and sales of composite materials were 13% higher. There were no sales of hockey products in the current quarter, as we exited that business during the second quarter of 2007, versus approximately $400,000 in hockey product sales during the fourth quarter of 2006," Mr. Mathewson said.

"Our consolidated sales of $69.1 million for 2007 were down 4% from 2006. Sales of golf shafts were $57.3 million in 2007 versus $61.4 million in 2006, representing a decline of 7%. Average selling price of shafts fell 3% for the year versus 2006 and overall units declined 4% in 2007. Sales of composite prepreg materials in fiscal 2007 were $10.0 million and represented a 13% increase over last year," said Mr. Mathewson.

"On November 30, 2007 we closed on the sale of our 50% interest in CFT to our joint venture partner, SGL Carbon Fiber and Composites, Inc. ("SGL"). The sale price was $17.0 million plus 50% of the working capital as of November 30, 2007, which amounted to $2.5 million. This sale allowed the Company to realize a significant gain on our investment in CFT and at the same time provide a secure source of carbon fiber through a supply agreement with CFT over the next five years. Additionally, it allows us to focus on our two core businesses of graphite golf shafts and composite prepreg materials," said Mr. Mathewson.

"The proceeds from the sale of CFT and a new $15.0 million credit facility recently put in place with Key Bank will be used to pay a $5.00 special dividend to shareholders on March 10, 2008. Since 2004, Aldila has declared dividends of $46.2 million, repurchased $8.2 million of the Company's common stock and spent $14.3 million for capital expenditures in support of its golf and composite materials businesses," Mr. Mathewson said.

"The year 2007 was a challenging year for our shaft business. Sales and average selling price were down versus last year. We continued to see a competitive environment across all market segments and we expect that this will continue in the foreseeable future. On a positive note, we have remained profitable every quarter in 2007, extending this run to over four years. Our Vietnam shaft factory is now ready to contribute to our earnings. Our new, wide composite prepreg line is installed and will begin operation shortly and provides us the opportunity to enter new composite prepreg markets," said Mr. Mathewson.

"During 2007, we moved to simplify our business. We exited our hockey business after five years of effort to build a growing, profitable business. Unfortunately, the volume required to make this an attractive business never materialized. We also made the decision to sell our 50% interest in CFT. This leaves us with two complementary core businesses; graphite golf shafts and composite prepreg materials," Mr. Mathewson said.

"Our new DVS™ shaft will be used in several OEM programs in 2008 and our VS Proto™ and NV® family of shafts continue to be used as upgrade options at most major club companies and as popular aftermarket shafts in the distribution market," said Mr. Mathewson.

"Aldila enjoyed tremendous success on Tour in 2007. Players using Aldila shafts won 19 events on the PGA Tour and nearly 50% of all the events on the Nationwide Tour. The recently introduced DVS™, along with the VS Proto™ and NV®, continue to be among the leading wood and hybrid shaft series on the PGA and Nationwide Tours. Aldila also won the Grand Slam of Shafts in 2007, as the leading shaft for both woods and hybrids at the four major championships on the PGA Tour in 2007. At the season ending PGA Tour Qualifying School, Aldila shafts were once again the most popular for players in both woods and hybrid shafts. In the recently released Darrell Consumer Survey for 2007, Aldila was the leading shaft choice in total shaft usage for Drivers, Fairway Woods and Hybrid clubs. In fact, the usage of Aldila shafts in hybrids outpaced our nearest competitor by nearly a 4 to 1 margin," Mr. Mathewson said.

"Our Composite Materials business continued to expand in 2007 with both the fourth quarter and full year sales results up 13%. As we enter 2008, we are optimistic that our decision to expand the capacity and product capability in this business will present sales growth opportunities based on expanding demand in the composite applications," said Mr. Mathewson.

Aldila will host a conference call at 5 p.m. Eastern time on Wednesday, March 5, 2008, with Peter R. Mathewson, Chairman and CEO and Robert J. Cierzan, Chief Financial Officer, to review Aldila's fourth quarter and year end 2007 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 web cast of the conference call can be accessed on the Aldila web site at http://www.aldila.com. An archive of the web cast will be available through our web site 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, 2006, 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 - UNAUDITED
                    (In thousands, except share data)



                                              December 31,   December 31,
                                                  2007           2006
                                              -------------- -------------
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                   $       29,529 $       3,882
  Marketable securities                                    -        11,300
  Restricted cash                                          -         1,444
  Accounts receivable                                  8,684         8,862
  Income taxes receivable                                  -         1,237
  Inventories                                         13,861        13,691
  Deferred tax assets                                  1,521         1,360
  Prepaid expenses and other current assets              578           795
                                              -------------- -------------
       Total current assets                           54,173        42,571

PROPERTY, PLANT AND EQUIPMENT                         13,308         8,794

INVESTMENT IN JOINT VENTURE                                -         3,091

DEFERRED TAXES                                           750         1,144

OTHER NON-CURRENT ASSETS                                 257           296
                                              -------------- -------------
TOTAL ASSETS                                  $       68,488 $      55,896
                                              ============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                            $        4,758 $       4,479
  Income taxes payable                                 4,266             -
  Accrued expenses                                     2,564         2,042
  Other current liability                                137             -
                                              -------------- -------------
       Total current liabilities                      11,725         6,521

LONG-TERM LIABILITIES:
  Deferred rent                                          170            49
  Other long-term liabilities                            827             -
                                              -------------- -------------
       Total liabilities                              12,722         6,570
                                              -------------- -------------
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
   5,154,235 shares as of December 31, 2007
   and 5,524,250 shares as of December 31, 2006           51            55
  Additional paid-in capital                          43,702        49,903
  Retained earnings (accumulated deficit)             12,013          (632)
                                              -------------- -------------
       Total stockholders' equity                     55,766        49,326
                                              -------------- -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $       68,488 $      55,896
                                              ============== =============



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


                                    Three months ended  Twelve months ended
                                       December 31,        December 31,
                                    ------------------- -------------------
                                      2007      2006      2007      2006
                                    --------- --------  --------- ---------

NET SALES                           $  17,668 $ 17,874  $  69,146 $  72,370
COST OF SALES                          14,230   13,558     49,181    48,087
                                    --------- --------  --------- ---------
   Gross profit                         3,438    4,316     19,965    24,283
                                    --------- --------  --------- ---------

SELLING, GENERAL AND ADMINISTRATIVE     2,519    2,813     12,256    10,731
                                    --------- --------  --------- ---------
   Operating income                       919    1,503      7,709    13,552
                                    --------- --------  --------- ---------

OTHER INCOME (EXPENSE):
   Interest income                        194      183        910       714
   Other, net                          16,308      (23)    16,312     2,148
   Equity in earnings of
    joint venture                         155      240        435       407
                                    --------- --------  --------- ---------

INCOME BEFORE INCOME TAXES             17,576    1,903     25,366    16,821
PROVISION FOR INCOME TAXES              6,666      555      9,413     5,585
                                    --------- --------  --------- ---------

NET INCOME                          $  10,910 $  1,348  $  15,953 $  11,236
                                    ========= ========  ========= =========


NET INCOME PER COMMON SHARE         $    2.11 $   0.24  $    2.94 $    2.04
                                    ========= ========  ========= =========

NET INCOME PER COMMON SHARE,
 ASSUMING DILUTION                  $    2.09 $   0.24  $    2.91 $    2.01
                                    ========= ========  ========= =========

WEIGHTED AVERAGE NUMBER OF COMMON
 SHARES OUTSTANDING                     5,171    5,524      5,433     5,518
                                    ========= ========  ========= =========

WEIGHTED AVERAGE NUMBER OF COMMON
 AND COMMON EQUIVALENT SHARES           5,227    5,582      5,485     5,591
                                    ========= ========  ========= =========



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


                                                    Twelve months ended
                                                        December 31,
                                                  ------------------------
                                                      2007         2006
                                                  -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                      $    15,953  $    11,236
  Depreciation and amortization                         1,587        1,322
  Stock-based compensation                                323          255
  Loss on disposal of fixed assets                        106           43
  Undistributed income of joint venture, net             (382)        (365)
  Gain on sale of joint venture                       (16,334)           -
  Purchases of marketable securities                  (14,200)     (11,000)
  Proceeds from sales of marketable securities         25,500       13,600
  Changes in other assets & liabilities, net            9,259       (8,015)
                                                  -----------  -----------
      Net cash provided by operating
       activities                                      21,812        7,076
                                                  -----------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment           (6,253)      (4,570)
  Proceeds from sales of property, plant and
   equipment                                               67            2
  Distribution from joint venture                         286          169
  Proceeds from sale of joint venture                  19,521            -
                                                  -----------  -----------
       Net cash provided by (used for)
        investing activities                           13,621       (4,399)
                                                  -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repurchases of common stock                          (6,735)      (1,211)
  Benefit from exercise of stock options                   73        1,549
  Proceeds from issuance of common stock                  134        2,270
  Dividend payments                                    (3,258)      (3,324)
                                                  -----------  -----------
      Net cash used for financing
       activities                                      (9,786)        (716)
                                                  -----------  -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS              25,647        1,961

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD          3,882        1,921
                                                  -----------  -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD          $    29,529  $     3,882
                                                  ===========  ===========

Contact Information

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