Aldila to Sell Its Interest in Its Carbon Fiber Joint Venture

Aldila, Inc. has reached a tentative agreement, subject to conditions, and entered into a non-binding letter of intent with its joint venture partner, SGL Carbon Fibers and Composites, Inc., to sell its interest in Carbon Fiber Technology, LLC to SGL.

Carbon Fiber Technology is a carbon fiber production joint venture between Aldila and SGL. The non-binding letter of intent contemplates that Aldila will transfer its equity interest in CFT to SGL by the first quarter of 2006. Carbon Fiber Technology, located in Evanston, Wyoming, was established by Aldila in 1998, and SGL purchased a 50% interest in CFT in October, 1999.

The transaction is subject to satisfaction of certain conditions, some of which are beyond Aldila’s control, including negotiation of definitive agreements satisfactory to the parties and the requirement that SGL enter into various agreements with third parties.

Aldila expects to receive approximately $3.5 million in cash in increments following the execution of definitive agreements and liquidation of CFT’s working capital, subject to the completion of certain other matters and to the satisfaction of certain conditions. Aldila and SGL would also enter into a long-term supply agreement to provide Aldila with a fixed amount of heavy tow carbon fiber. After definitive agreements are negotiated and the value of the transaction is ascertainable, Aldila will determine and record the amount of the adjustment to the carrying value of its investment in the joint venture.