Aldila net sales were $10.8 million for the third quarter ended September 30, 2004, which was an increase of $2.8 million, or 35% from net sales of $8.0 million in
the comparable period of 2003. The Company reported net
income of $3.3 million, or $0.62 fully diluted per share, for the third quarter ended September 30, 2004, 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 $0.52 fully 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 $0.10 fully 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)
======== ======== ======== ========
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 5,127 4,932 4,994 4,942
======== ======== ======== ========
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES 5,377 4,952 5,210 4,942
======== ======== ======== ========
