Aldila, Inc. reported GAAP net sales of $10.8 million in for the third quarter ended September 30, 2004, an increase of 35% from net sales of $8.0 million in the comparable period of 2003. ALDA reported net income of $3.3 million, or 62 cents per diluted per share, for the third quarter, an increase of $3.1 million from net income of $189,000 for the comparable period of 2003.

During the quarter the Company benefited from a $2.7 million, or 52 cents per diluted per share, reduction in its provision for income taxes. Before the effect of the income tax expense adjustments, the Company's net income was $533,000, or 10 cents per diluted per share.

For the nine months ended September 30, 2004 net sales were $40.3 million, which represented an increase of $12.3 million, or 44%, from net sales of $28.0 million in the comparable period of 2003. The Company reported net income of $7.8 million, or $1.49 fully diluted per share, which represented an increase of $8.2 million from a net loss of $451,000, or $.09 loss per share in the comparable period of the prior year. During the nine month period ended September 30, 2004, the Company benefited from a $1.7 million, or $0.33 fully diluted per share, reduction in its provision for income taxes as noted above. Before the effect of the income tax expense adjustment, the Company's net income was $6.1 million, or $1.16 fully diluted per share.

Based upon the improvement of the Company's results in the current year, the Company addressed the appropriateness of its valuation allowance against its deferred tax assets, which was established in the fourth quarter of 2002 and the circumstances that led to the establishment of its valuation allowance in accordance with GAAP. The Company believes there has been a change in circumstances, and that its deferred tax assets will be realized in future years. Accordingly, the Company, in accordance with GAAP has reduced its valuation allowance against the related deferred tax assets to zero in the quarter, which provided a benefit to income tax expense of $1.7 million. In addition, the Company reduced its income tax provision by $1.0 million based upon the Company anticipating a lower effective tax rate for the year from the realization of deferred tax assets.

“Our strong third quarter sales increase of 35% was led by the continuing acceptance of our market leading NV(TM) shaft line for drivers and fairway woods and our NV(TM) Hybrid for utility clubs. Golf shaft units shipped increased 8.9% and average selling prices on these units increased by 11.8% in the 2004 third quarter as compared to the same period in 2003. At the end of the 2004 third quarter our cash and cash equivalents balance was $15.0 million after the payment of our second quarterly dividend of $256,000 on September 16, 2004 ($0.05 dividend per share),” said Peter R. Mathewson, Chairman and CEO.

“Aldila's popular NV(TM) continues to be the shaft of choice in the OEM stock custom and custom upgrade segments as well as the leading premium branded shaft sold in the distribution arena. NV(TM) Hybrid has a very strong presence in the rapidly growing Hybrid market segment with multiple retail programs in place with major club manufacturers' 2005 offerings. The Hybrid programs in general reflect a major shift in consumer demand away from historic steel shafted long irons to more user friendly graphite shafted Hybrid clubs. Recent estimates project that graphite represents a 70% share of the Hybrid segment,” said Mr. Mathewson.

“NVS(TM), also featuring Aldila's exclusive Micro Laminate Technology(TM), is emerging as a popular choice in all market segments for players seeking a higher launch angle in both wood shafts and Hybrid shafts. NV(TM) iron shafts will soon be introduced and will offer manufacturers and discriminating players a premium performance option and improved feel compared to decades old steel iron shaft designs. We continue to enjoy solid success on the worldwide professional tours as we head into 2005,” Mr. Mathewson continued.

“Our composite prepreg business continues to expand and currently represents approximately 9% of net sales for the nine month period ended September 30, 2004 as compared to 5% for the same period in 2003. Carbon fiber availability from our joint venture carbon fiber facility in Evanston, Wyoming, Carbon Fiber Technologies LLC (“CFT”) enables us to continue our third party prepreg sales expansion in today's market where carbon fiber is in short supply. Our installation of a fifth prepreg line is on schedule to be operational by the end of this year,” said Mr. Mathewson.

“Our hockey business in the 2004 third quarter continued to improve from the first two quarters of this year and we currently anticipate full year sales results comparable to 2003,” Mr. Mathewson said.

“Carbon fiber continues to be in very short supply globally and there appears to be no relief in sight. We are working diligently to maximize what we believe will be a competitive advantage with our jointly owned carbon fiber facility, CFT. This operation is rapidly approaching full capacity and is beginning to realize the lower costs associated with a scaled up production plan. We are encouraged with our progress in our quest to develop a 24k carbon fiber tow to run along with our 45k carbon fiber. Successful development of a 24k tow fiber will significantly broaden our off-take from CFT and alleviate to a great extent our exposure to the steadily rising prices and availability concerns for carbon fiber,” Mr. Mathewson said.

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

                            Three months ended       Nine months ended
                               September 30,           September 30,
                             2004        2003        2004        2003
                           --------    --------    --------    --------

NET SALES                  $ 10,772    $  7,995    $ 40,330    $ 28,022
COST OF SALES                 8,248       6,102      25,703      22,877
                           --------    --------    --------    --------
  Gross profit                2,524       1,893      14,627       5,145
                           --------    --------    --------    --------

SELLING, GENERAL AND
 ADMINISTRATIVE               1,892       1,741       6,656       5,643
                           --------    --------    --------    --------
  Operating income (loss)       632         152       7,971        (498)
                           --------    --------    --------    --------

OTHER EXPENSE (INCOME):
  Interest expense                -           2           -          19
  Other, net                    (19)         (2)         (4)         43
  Equity in earnings of
   joint venture                (71)        (37)       (209)       (109)
                           --------    --------    --------    --------

INCOME (LOSS) BEFORE
 INCOME TAXES                   722         189       8,184        (451)
(BENEFIT) PROVISION
 FOR INCOME TAXES            (2,596)          -         419           -
                           --------    --------    --------    --------

NET INCOME (LOSS)          $  3,318    $    189    $  7,765    $   (451)
                           ========    ========    ========    ========

NET INCOME (LOSS)
 PER COMMON SHARE          $   0.65    $   0.04    $   1.55    $  (0.09)
                           ========    ========    ========    ========

NET INCOME (LOSS)
 PER COMMON SHARE,
 ASSUMING DILUTION         $   0.62    $   0.04    $   1.49    $  (0.09)