Aldila announced that Carbon Fiber Technology LLC, a joint venture owned by it and an undisclosed partner, has entered into a non-binding letter of intent to sell selected assets, including property, plant, equipment, and know-how to an also undisclosed independent third party with which a previously announced non-binding letter of interest was signed in September 2003.

If the transaction is consummated, Aldila and its joint venture partner would share equally in the net proceeds of the sale by CFT. The letter of intent also contemplates Aldila and its joint venture partner purchasing a fixed amount of fiber from the purchaser during the twelve-month period following the closing. The proposed transaction is subject to various conditions, including the completion of purchaser's due diligence and negotiation and execution of definitive agreements.

Although the letter of intent is generally non-binding, Aldila, its joint venture partner and CFT would be precluded from negotiating with any other proposed purchaser before March 31, 2004. Aldila anticipates the value of its investment in CFT is impaired in the range of $2.1 million to $2.5 million as a result of the valuation contemplated by the letter of intent.